How to get started in real estate with 150k cash

Question

Hey everyone,

I am a 28 year old who currently lives in Charlotte, NC. I  just want to explain my circumstances and see how people with experience and knowledge in real estate would move forward if they were in my shoes. I have $150k in cash that I received from an inheritance and would like to use it to invest in real estate(I already have 6 months of reserves of my own money saved). I also have a credit score of 756.

My overall goal is to buy enough doors to supplement working full time so one day I can focus full-time on becoming an entrepreneur. I know that will take some time but I would like to get started ASAP! I took a few years out of work to take care and spend time with my father who passed, so I have only been working for a year now. This has caused me to have trouble with getting approved for loans/mortgages due to my work gap. I have done some research and have found a few ways I could possibly start investing in real estate. If you would take a different route than the ones I’m going to list below please let me know.

• Since I can’t afford to pay cash for a home here in North Carolina, pay cash for a home in places like Detroit, Alabama, or Ohio. I would then renovate, rent, and refinance. Rinse and repeat this process over time.
• Instead of paying cash use that money and spread them over multiple dscr loan so I can own more doors and just collect the cash flow after expenses.
• Wait another year so I can have two years of work history/W-2s. This would increase my chances of being approved for a FHA loan. This would allow me to save money compared to paying cash or the huge Down-payment DSCR loans require.

Are there any other no documentation loans other than DSCR loans that I should look into?

If anyone has any advice or recommendations on how you would get started in real estate if you were in my shoes please let me know any and all suggestions would be greatly appreciated!

Grace Walser · Answer

I also live in Charlotte, NC but have been investing in Cleveland, OH due to their lower price points. I'm able to purchase turn key properties and still cashflow. With the higher rates of a DSCR loan it might be difficult to cash flow here in Charlotte since rent will be lower than your mortgage payment. If your main goal is to supplement working full time I would purchase as many properties you can in a different state instead of paying cash for one property.

I also had issues getting a loan since I haven't been in real estate for 2 years yet but I was told if I file my taxes in early 2024 I would be able to get approved so you could see if that would work for you. You most likely just need another year's worth of work history.

Another good way to start is house hacking here in Charlotte or doing a live in flip, rent it out, and purchase your next house-hack or live in flip. I'm a real estate agent in Charlotte so happy to help you look in to some options or talk more about investing out of state!

Carrie Matuga · Answer

I'd take a different approach - instead of looking at tougher markets with lots of D neighborhoods (think Detroit, Milwaukee, Cleveland, Philly...) that seem like they have amazing cashflow, I'd go into solid B/C+ neighborhoods. There's a high risk that you might find the tenant base in developing neighborhoods is harder on your properties and more sensitive to changes in the economy and has a lower rate of making on-time payments. Learn from my mistake and if I were getting started again, I'd buy a solid value-add building in an economically strong area in the best neighborhood. Reach out if you want to talk more.

Travis Biziorek · Answer

With $150k available you can definitely go with option #1 in a market like Detroit. That's how I built my portfolio quickly and it's a great way to scale quickly as long as you know what you're doing.

Finding a primary would also be a priority seeing as you don't have one yet. That said, given prices and rates it doesn't make as much sense to own vs. rent as it used to (I just did a LOT of research on this and happy to share).

The good thing is you have options. So definitely take the time to weigh them all.

Christian Ehlers · Answer

I agree with househacking first, you need a place to live anyways and might as well pay yourself part of the mortgage vs paying somebody else's, it's also one of the lowest risk ways to start investing. Caleb Brown had all great points here. You shouldn't need a full 2 years work history in a lot of cases unless you're self employed

Caleb Brown · Answer

Do you own a home currently or are you renting? Any previous experience in investing?

Devante S. · Answer

Hey Man! I'm gonna go the opposite way here instead of telling you a bunch of complicated methods. Heres what I have. Buy a place that's ready to rent or just needs a few touch ups in a more rural area. (or on outskirts of cities)  Don't overspend. and Don't overspend your time. Rent it out. Maybe live in one unit if the property allows for it. Build up your income and work history and then Slowly move onto the next. Investing is a process. If you want I can send you a guide I wrote on how to rent out your first couple units without needing to pay a property manager or attorney.

Michael Margarella · Answer

Hi Jeff, investing in a syndication or fund could be a good fit given your situation.

Even if there is a crash, and people downsize, those people will have a need for self-storage, as evidenced by storage occupancy rates during past recessions. And during inflationary times rental rates increase. Pick solid operators and solid asset classes.

We syndicate self-storage projects. These syndication can provide an 8%+ cash-on-cash return - providing you monthly cash flow - and a 15-20% IRR over the length of the project. We're also able to evaluate our rates, and keep pace with inflation, on a monthly and quarterly basis because of shorter term leases. Feel free to reach out

Grace Walser · Answer

Yes including 5% for capex, 5% for maintenance, and 8% for property management and still receiving a 16% cash on cash return.

How to get started in real estate with 150k cash

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