The Best Way to Start Investing in Real Estate With $50,000

The Best Way to Start Investing in Real Estate With $50,000

4 min read
Engelo Rumora

Engelo Rumora is a real estate investor, your favorite Australian, and the Real Estate Dingo.

Experience
Engelo quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate all over the world and has bought, renovated, and sold over 500 properties (at which point he stopped counting).

Engelo runs the most reputable turnkey real estate investment company in the country: Ohio Cashflow (ranked multiple times on the Inc. 5000). He is currently in the process of launching a real estate brokerage, “List’n Sell Realty,” that will disrupt the entire industry.

He is also known for giving houses away to people in need and his crazy videos on YouTube.

His mission in life is to be remembered as someone that gave it his all and gave it all away.

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Today we’re talking about how to invest $50,000. Let’s get it started.

OK, so you wouldn’t believe how many investors that I’ve spoken to over the last five years that have $50,000 to invest. I don’t know why, but I guess it’s a magical number.

Everyone goes out, works hard, lives frugally, and then they save $50,000 and want to start investing in real estate. And that is something that I think is absolutely fantastic. I think you all are troopers for saving that much money to invest in real estate. I also think that is a great amount to get started with real estate investing.

You’ve proven to yourself that you can work hard and live frugally. You can save, and you have aspirations, desires, and dreams of financial freedom or making a lot of money in real estate—hopefully to help out your loved ones and create a bigger and better course for your life.

How to Invest $50,000 in Real Estate

Now, here’s the deal. All of you who have $50,000 and want to buy turnkey properties or want to purchase buy and hold properties, I am not a fan of that. I’m not a fan, because I think that you’re going to tie up every last penny that you have in a certain amount of real estate that is not going to produce the result that you need to live the life that you want to be living.

Things are getting expensive these days, and there’s a bigger gap between very wealthy people and very poor people. Middle America is superior; I’m sure you’ve seen it plastered all over the news. I’ve read a lot of articles out there, where people have millions of dollars in their bank account but don’t feel rich because their cost of living is probably very high. So, times have changed.

All in all, I don’t feel that taking $50,000 and using leverage to go and buy two to five turnkey properties with debt on every single property is going to give you the cash flow to make a significant dent on your monthly lifestyle. I also don’t believe that taking $50,000 and buying one property with cash is going to get you where you need to be.

Related: Why You Should Only Invest in $50,000 Properties or Less

All good things take time. Money makes money. I’m just finishing a book right now, where I’m talking a lot about these things. I just don’t believe in doing something for nothing. I also don’t believe in borrowing a lot of money or leveraging out the wazoo—especially when you don’t know what you’re doing when you’re first starting out.

Using leverage should be for experienced investors. Using leverage should be for investors who understand what expenses come with owning investment properties. And you’re not going to understand those expenses until you’ve been in the game for two to five years.

The furnace screws up, hot water heater blows up, or the tenant vandalizes the property. A lot of you guys don’t know these things, and I’m telling you if you don’t think it’s going to happen to you, Uncle Dingo here (or the “Real Estate Dingo,” your favorite Aussie) is telling you that it will happen.

Always underestimate your income and overestimate your expenses, which is something that I’ve been saying for a very long time. And always base your investment decisions on a worst-case scenario.

If You Only Have $50K, DON’T Do This

With that said, if you only have $50,000 to your name and you want to go all-in and park every single penny in an investment property… If you don’t have any reserves set aside for any catastrophe that could happen to you and your loved ones… I don’t think you should do it.

Guys, don’t invest what you can’t comfortably afford to lose. Always have enough money set aside for an emergency. Please, you have to look after yourself and you have to look after your loved ones. Forget about real estate.

Now that we’ve got that out of the way—you’ve got $50,000, so what do you do? You take that money, and you move to the Midwest.

I’m sorry. There’s no other way that I know of. I did it. I went from Australia to bloody Toledo, Ohio, and I’ve made millions here. I suggest you do something like that.

Depositphotos 24554261 original

Find the market, find your niche, and pack up your family (if that’s what you have to do), and remember that nothing comes easy in life. It’s all going to take a lot of work and sacrifice, and it’s not going to happen overnight.

You can take $50,000 and find some amazing properties in the Midwest in Michigan, Indiana, Ohio, Illinois, Kansas, Missouri, and Wisconsin. Guys, there are some amazing B-class properties—even A-class properties—that you could purchase distressed via auction for $20,000 to $40,000. Then, put in $10,000 to $30,000 in rehab.

You could do the work yourself and project manage the job. Then, I think you could sell it for $100,000 or more and make a great profit on the deal. Then, you can rinse and repeat. The more deals that you do, the more money you will accumulate.

Related: How to Save $50,000 in 2 Years on a Modest Salary

So, the deals are out there, especially in the Midwest. People still want to live here, kids still go to school here, and there are jobs here. This is the market to be in. All of you East and West Coast folks: personally, I would not be investing half a million dollars to make $50,000. That’s too much risk.

I’d rather be investing $50,000 in a market like Toledo, Ohio, to make $30,000. I think that makes so much more sense, and it’s worth the sacrifice and worth the move.

Once you have enough lazy capital lying around, where you do not need it to support your fix and flip efforts, use that capital and tie it up in a buy and hold property. Simple as that. Keep buying, fixing and flipping, and remembering money makes money. Accumulate as much of it as you can, and then, once you have lazy capital lying around that you do not need for your fix and flip efforts, park that money in an investment property.

And keep parking that money until you get to the desired cash flow, where you and your loved ones can live the lifestyle that you want to live.

That’s my 0.2 Australian cents. I hope you enjoyed this blog!

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Do you agree or disagree with my opinion? If you disagree, what would you do with $50K?

I’d love to hear from you in a comment below.