Originally posted by @Raeshelle C.:
Originally posted by @Andrey Y.:
Originally posted by @Raeshelle C.:
Originally posted by @Andrey Y.:
Originally posted by @Raeshelle C.:
I'm currently saving right now, but I estimate that in 3 years I will have saved $20K-$25K. I'm 27.
I want to make $10K/mo and retire early. What I'm having trouble with is, if I use that $20-25K on real estate, I need help finding out how I should begin with my investing. I know I am just saving now, but I like to create a plan. I don't know which is the best path to go down if I want to make $10K/mo within 10 years of buying my first rental. I live in MA and houses here are not cheap. What I'd like to do is buy multifamilies that are in fair/good condition (no repairs needed) using the FHA loan, but all the multifamilies around here that's cheap, near where I work, all need repairs. The cheap multifamilies that dont need work are far from my job so I can't live in them with FHA. I don't have extra money to pay for repairs, and saving extra for that would take even longer, and that would delay my wealth.
Then I was thinking, I'll just invest in out-of-state turnkey single families in places like Alabama, Georgia and Florida because down payments for those houses would be cheap, since the houses down there are cheap. But I would also be taking out one loan after another to buy these single family houses. I fear I would get rejected by the banks, like they may not allow me to have all these loans; I also fear it's too dangerous to take out so many loans too (I cant buy houses in cash). I know I'd only be making around $250/mo in cash flow after expenses too, per turnkey single family house, in the first couple years. I just really don't know what the best option is as far as real estate investing, that's doable for me. I'd only have $20-25K to start with.
Can anyone give strategies?
Your fears in the last paragraph are correct. If something is cheap, its cheap for a reason -- ie. people don't want it. That should tell you if you should invest there.
You want to find properties in a great location, not expensive, and require no repairs. I hate to break it to you, but that is a dream. You are going to have to bust your butt to create value. Everyone wants to (or thinks they do) make $10/month and retire early.
You are pretty young, keep educating yourself, and level up your mind and mindset. Don't save too much money. Go out, travel and get a feel of how people are living, what else is out there, and get some perspective. Or give some of your money to a good cause. Figure out what your goals are from there. You may realize you need a lot less or a lot more than $10k a month.
Saving doesn't work as a general strategy. You cannot shrink your way to wealth. It only works for Dave Ramsey or Suze Orman who are making money to tell people they should save their pennies. Good luck!
I disagree. I know myself. I'm not a naive little girl that doesn't know myself, what I want or anything about life. I know that I want to make $10K/mo. $5K after taxes will also do.
I've traveled and do continue to, and live.
Saving money will get me there. It does work. Just because it didn't work for you doesn't mean it won't work for me.
I will give money to causes once I have the money to give.
I already know what my goals are.
I listened to an audio book, The Science of Getting Rich, and it warned me about not getting distracted or discouraged from people that say the things you do. So, I'll just keep scrolling and keep on working towards my goals. I will get there. I've already decided.
Name me one person that has created wealth or financial independence by "saving money"? It has never happened, not to me nor anyone else. All saving money does is decrease your quality of life. You can only save so much, probably not much more than you already do. Wealth is created by income generation, which takes as much effort as saving money, if not less. Say you have been supporting yourself on $3k a month for the last year or two, you will be very hard pressed to go down to $2.5k a month, if you don't believe me, then try it.
You're reply comes off as defensive. There is likely an underlying reason why you felt that way. No one told you to stop working towards your goals, by the way.
I'm not arguing with you. I'm going to save and I'm going to buy with my savings. It's GOING to happen. 100%. It's not going to magically not happen now because you said it won't. You basically just dismissed every investor on this forum. Or maybe you're saying I'm dumber than every investor on this forum and can't and won't do what they all already did. I will save and buy. And when I do, I will post here that I did, and I will tag you so that you don't come on other people's posts in the future arguing with them, telling what's not going to work for them. Have a good night.
I think what Andrey is trying to explain to you is that simple saving your money and thinking that with only that you will make 10K per month in 10 years doesn't add up. That is not to say that you won't get to your goal, but it does mean that in the current rate that you are saving you aren't going to get there with that strategy. In 3 years when you have 24K and you buy your first rental, what happens then? You wait another 2-3 years to save enough again?
A $55,000 home will cost you more than 12K to acquire traditionally. Unfortunately with the exception of transfer taxes which is a % of the price, closing costs on lower cost homes are expensive since some of the costs are not based on % and are fixed since the bank makes so little money on a 40K loan. Things like origination fees, appraisals, title search and insurance, etc will add up to 5-6K on top of your down payment.
What this does mean is that you need to improve and adapt your strategy to match your goal. Eventually your cash flow will start to snowball and help you buy more properties quicker but 2 properties at 200/m each wont be enough in the beginning. Add on top of that you want to buy perfect properties that don't need any work. You will have a hard time finding properties like this for cheap consistently. These are usually an exception and not the rule.
What I would suggest to start with is any strategy that you could put some sweat equity into to increase the value. Maybe a property that doesn't need a full rehab but a couple of thousand to make it really shine to tenants or to buyers in the future? Maybe a 2-4 unit property that you can live in 1 and rent the others and slowly improve the property to drive value? If you live in a 4 unit or less property you can get an FHA loan which would require as low as 3% down payment.
One last thing to consider is that if you find a property where you can spend some $ or sweat to improve the value, you can then refinance the property and get some cash out. This would allow you to purchase your next property quicker instead of relying on just cash flow and personal savings. I admire your drive and not allowing people to tell you that you cannot do something. But there is a balance between being driven and persistent and ignoring sound advice. There is always a way but that doesn't mean that it will work just because you want it to, so you just need to find how to do get it done. BP is an amazing resource and so is the podcast and certain books. Start reading books on investing with low or no money and it will at least give you an idea on how to get more for your dollars and how to use what you have to snow ball into the next property. Good luck with everything and I look forward to hearing that you purchased your first property.
