I'm Planning to use $5000 cash to invest in Real Estate.

38 Replies

Good Afternoon. My name is Randy Mbouge. I'm a real estate agent in Houston, Tx. and I'm at a place in my life where building wealth is one of my priorities. My initial plan was to purchase a single family residential property with 3% down but I understand that more doors, creates an opportunity for more cash flow. So, I'm leaning more into owning a duplex or triplex property for my first rental property. I just wanted to see what all of you would do in my position? 

Also that $5000 cash is just a tentative number. I can provide more given the numbers and deal makes sense. Thank you all. I am very grateful. 

@Randy Mbouge not a ton to go off of, but if you're thinking about only using around 5k you'd be looking at buying a home with a 3.5% down payment FHA loan with a down payment assistance program when also considering closing cost. As you know, you can help yourself out with up front costs using paragraph 12 in the 1-4 Family Contract. In my experience most lenders also want to see 2 months of reserves minimum in your bank account.

Ok to your question...yes small multifamily is a great way to scale up, but for the very brief info you gave, it might make most sense to buy something like a 4 bedroom home and rent out the other 3 rooms to reduce your cost of living and possibly still make a little extra on top of that.

Feel free to shoot me a message if you want to talk about it anymore.

I definitely appreciate your advice. That’s what I was thinking as well. And I thank you for giving me the paragraph and line number. I’ll keep you guys posted on what I do next. 

Originally posted by @Matthew Rolf :

@Randy Mbouge not a ton to go off of, but if you're thinking about only using around 5k you'd be looking at buying a home with a 3.5% down payment FHA loan with a down payment assistance program when also considering closing cost. As you know, you can help yourself out with up front costs using paragraph 12 in the 1-4 Family Contract. In my experience most lenders also want to see 2 months of reserves minimum in your bank account.

Ok to your question...yes small multifamily is a great way to scale up, but for the very brief info you gave, it might make most sense to buy something like a 4 bedroom home and rent out the other 3 rooms to reduce your cost of living and possibly still make a little extra on top of that.

Feel free to shoot me a message if you want to talk about it anymore.

 

@Randy Mbouge Building wealth is huge. I think house hacking a small multifamily is honestly the best way to start. If you can't do that cause the prices are too high, you can try a single family house hack where you rent out the bedrooms.

You might want to look into government down payment assistance programs if you need more for the closing cash and potentially using sellers concessions!

@Randy Mbouge

That’s an excellent way to get started. You’ll learn a bunch and save probably 8-12k a year on rent payments. Highly recommend for a year or two depending on your family situation. I did it for a year and it was a great way to get the ball rolling.

@Randy Mbouge congrats on getting your license and planning on prioritizing wealth building! One of the great things about being an agent and investor is that you can expedite your learning. One reason I got my license was so that I could learn the ins and outs of real estate transactions. A few other reasons was so I could learn my market better, help people achieve their goals, and get into a business/industry that doesn't have an income ceiling. 

I'm not sure of your prices in your area, but you may want a little more than $5,000 to start investing with. What happens when the hot water heater and HVAC system go out? Best to have ample cash set aside in reserves so you are ready to weather those storms WHEN they happen. Do a few more deals, save a little more money, and come get after it when you have a little more experience and cash. 

In terms of reserves, having 6 months of cash reserves (calculated by multiplying the mortgage rate X 6) is a good place to start. As you become more experienced you can adjust that number. Putting big ticket purchases on a CC isn't a great idea...