Quote from @Jeff Hines:
Hey everyone,
I am a 28 year old who currently lives in 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 a family member whp 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!
Hi Jeff,
Sorry for your loss. The inheritance is a good thing to fuel a nest egg or retirement, and the fact that you received it at a relatively young age gives you some really good options for long-term growth through compounding interest. Biggerpockets folks will advocate for real estate as a long-term investment and I'm no different, but while you're thinking about it, I'd also recommend you consider and research treasuries through treasurydirect.gov while rates are still relatively high. It's hard to beat risk-free bonds, especially short-term ones. 30-60 day t-bills are going at around 5.2-5.4%. There's very little complexity to buying treasuries, you can buy them quickly and if you buy 4-week t-bills they'll mature quickly. And it's one of the few, true, "set it and forget it" investments out there, as there is no maintenance and virtually no risk - the only risk is a US Government default (which would be apocalyptic and thus one of the few things our gov't would never do). Becoming familiar with how treasuries work also gives a lot of insight into how mortgage financing works because mortgage rates move with the 10-year treasury most of the time - so following the 10-year will give you insight into the real estate cycle as a side benefit. Buying real estate is ultimately my recommendation as well for the long-term, and I'd suggest house hacking to start, but while you're looking into that I think short-term treasuries is the best place to park your money and learn. Alternatively, there are high-yield online savings accounts like Marcus or others - the difference is that banks have some inherent risk, thus the FDIC insurance. Let me know if I can assist in any way, I started in 2019 and investing has been good to me, I'm happy to share what I learned.
