What can you do with $10,000?

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What can you do with $10,000?

Chandler Williams
Member since 2022 · 3 posts · 5 votes

Hey investors!

I'm a total newbie, so bare with me here. But I've read a few books this past year on various real estate investment strategies. I've been analyzing deals all over the country for the past month or so.
I've also been saving up some cash over time and have been trying to decide the best way to use it.

But I guess you could say I'm in a state of analysis paralysis LOL.

I know $10,000 isn't a lot of cash to work with, but I wanted to challenge the minds of some seasoned veterans here and ask what they would do if they only have $10,000 to invest starting out.

Since I don't own a home yet, I'm leaning toward a house hack with a 5-10k downpayment to get started. That strategy seems most feasible for me. However, I'm curious to see what others would do if they were in my situation.

Thoughts? or creative possibilities?

I look forward to reading your responses.

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Drew C Grossman
Investor · Jacksonville, FL · Member since 2019 · 135 posts · 106 votes
3y

Hi @Chandler Williams… welcome to the real estate world!

There is a million ways this question can be answered and it really comes down to your goals and expectations on what you want out of this? Find out what is realistic, what fires you up and formulate a strategy based on the resources you already have. 

It’s sounds like you have limited capital at $10,000 but may have the time/energy to put a deal together? Assuming you have the drive, capability and desire to be more of active investor/player this is what I would do if I had $10,000 to start out.

I would first get really really good at underwriting deals …and then find a property that has a 25% amount of equity upside in the deal day one and also a combination of healthy cash flow that can support the property DAY 1!!!. This is where you can go down the rabbit hole of where to find these deals…different philosophies and what is even realistic ect…this is super market specific and a whole conversation of itself….however still very possible as this is how I started out. Most important thing is to build a base of education to know what even exist out there? Don’t be a tire kicker that doesn’t know what’s realistic and looking for a fairy tale. This knowledge is essential 

Assuming you source a good deal (with multiple potential exit strategies), I would then bring in a capital partner to fund the down payment or Property acquisition…and get some sort of sweat equity (depending on your experience and value brought to table) and then invest the $10,000 you do have into the deal itself to add your stake, add some skin to the game and align your interest with your capital partner. Although it won’t super easy to find a capital partner, it will be easier than finding a good deal! Once you have a good deal, everything else will fall into place. Hard work will pay off. 

Here is a realistic example of what's achievable in my market for your situation. You could find (with good amount of work) a new construction build for under 200k using cash and source a good deal…bring in a capital partner with $190k…you add $10k of your own money and get 5% equity + 5% equity for sourcing the deal for a total of 10%. Now you have a brand new property that has no mortgage, rents for $2,000 a month with $300 a month in taxes, insurance ect…profit $1,700 a month. You're investor makes close to 10% cash on cash if you keep all your money in the deal…however if you do this process right you will have equity upside after closing on the property snd then can decide if you want to refinance ect based on your business plan. Again…multiple exit strategies. Using this example, with an ARV of $250k you could refinance out 65% …get close to 160k out of the deal recovering most of your partners capital while still having 35% equity in the property and having positive cash flow.

I hope this example helps and best of luck on your journey!



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  • Drew C Grossman
    Investor · Jacksonville, FL · Member since 2019 · 135 posts · 106 votes
    3y

    Hi @Chandler Williams… welcome to the real estate world!

    There is a million ways this question can be answered and it really comes down to your goals and expectations on what you want out of this? Find out what is realistic, what fires you up and formulate a strategy based on the resources you already have. 

    It’s sounds like you have limited capital at $10,000 but may have the time/energy to put a deal together? Assuming you have the drive, capability and desire to be more of active investor/player this is what I would do if I had $10,000 to start out.

    I would first get really really good at underwriting deals …and then find a property that has a 25% amount of equity upside in the deal day one and also a combination of healthy cash flow that can support the property DAY 1!!!. This is where you can go down the rabbit hole of where to find these deals…different philosophies and what is even realistic ect…this is super market specific and a whole conversation of itself….however still very possible as this is how I started out. Most important thing is to build a base of education to know what even exist out there? Don’t be a tire kicker that doesn’t know what’s realistic and looking for a fairy tale. This knowledge is essential 

    Assuming you source a good deal (with multiple potential exit strategies), I would then bring in a capital partner to fund the down payment or Property acquisition…and get some sort of sweat equity (depending on your experience and value brought to table) and then invest the $10,000 you do have into the deal itself to add your stake, add some skin to the game and align your interest with your capital partner. Although it won’t super easy to find a capital partner, it will be easier than finding a good deal! Once you have a good deal, everything else will fall into place. Hard work will pay off. 

    Here is a realistic example of what's achievable in my market for your situation. You could find (with good amount of work) a new construction build for under 200k using cash and source a good deal…bring in a capital partner with $190k…you add $10k of your own money and get 5% equity + 5% equity for sourcing the deal for a total of 10%. Now you have a brand new property that has no mortgage, rents for $2,000 a month with $300 a month in taxes, insurance ect…profit $1,700 a month. You're investor makes close to 10% cash on cash if you keep all your money in the deal…however if you do this process right you will have equity upside after closing on the property snd then can decide if you want to refinance ect based on your business plan. Again…multiple exit strategies. Using this example, with an ARV of $250k you could refinance out 65% …get close to 160k out of the deal recovering most of your partners capital while still having 35% equity in the property and having positive cash flow.

    I hope this example helps and best of luck on your journey!



    7Reply
  • Tim Johnson
    Real Estate Agent · Skagit Valley, WA · Member since 2021 · 256 posts · 283 votes
    3y

    Hey Chandler, good for you on getting started. Are you employed? Can you qualify for a loan? How much can you save each month? How much time can you commit to REI? All of these will make a difference on your strategies and goals. I would tend to think that 10K is a bit thin to jump into a house purchase. How about going full-in on frugality for a few months and doubling that? Then your options open up even further.

    2Reply
  • Mike Swenson
    Real Estate Agent · Minneapolis/St. Paul, MN · Member since 2021 · 12 posts · 9 votes
    3y

    3 Things You Can Do To Add Value:

    - Time

    - Expertise

    - Money

    If you have 10k and are new, focus on how you can help get a deal done utilizing your time to find a deal and trying to find a partner with money and expertise to complete the triangle. If you're willing to put your 10k into a deal and you have time to give, you could negotiate with someone who has some money and expertise to put a deal together.

    Otherwise, finding a way to utilize that 10k to a house hack, find some people to live with you and pay rent, gain some sweat equity, etc, and you'll be well on your way with your 2nd property!

    Best of luck! It's an exciting time!

    2Reply
  • Jacob St. MartinPro Member
    Investor · Charlottesville Virginia · Member since 2021 · 348 posts · 346 votes
    3y

    Hey Chandler! It is awesome that you have been saving up and educating yourself. I was in a similar position to you a year and a half ago and here is what I did. My $10,000 was not enough for a down payment in my market so I became an expert on the market, got great at analyzing deals, and started networking. I found an amazing opportunity for a house hack and found a co-investor to provide the rest of the down payment and cosign on the loan. The property makes excellent cash flow for both me and my partner! I would highly recommend doing something like this. Feel free to reach out if you want to discuss more in depth about what I did and how you might be able to replicate it!

    5Reply
  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    3y
    Quote from @Chandler Williams:

    Hey investors!

    I'm a total newbie, so bare with me here. But I've read a few books this past year on various real estate investment strategies. I've been analyzing deals all over the country for the past month or so.
    I've also been saving up some cash over time and have been trying to decide the best way to use it.

    But I guess you could say I'm in a state of analysis paralysis LOL.

    I know $10,000 isn't a lot of cash to work with, but I wanted to challenge the minds of some seasoned veterans here and ask what they would do if they only have $10,000 to invest starting out.

    Since I don't own a home yet, I'm leaning toward a house hack with a 5-10k downpayment to get started. That strategy seems most feasible for me. However, I'm curious to see what others would do if they were in my situation.

    Thoughts? or creative possibilities?

    I look forward to reading your responses.


    Hi Chandler, it's great that you've decided to get started on your real estate journey. I would agree and recommend to FHA into a duplex, rent out one side to substantially lower living costs, generate equity, and build cash flow.

    I’d recommend listening to Biggerpockets podcasts, there’s also a great selection of books available that help break down each aspect of Real Estate investing.

    Then honestly, just look and study the area that you are interested in starting out in to get a feel for everything and think about each property you see. Figure out what you’d like to achieve with investing and set small & big goals to help create a roadmap. Apply, move forward, fail, review, adjust, retry, succeed, create new goals & repeat.

    4Reply
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    3y

    $10K could buy a distressed SFH (depending on market). If it's livable and qualifies for loans you could probably do a 3-5% DP and afford a new roof. The rest could go towards remodeling the bathroom(s), kitchen, and paint. It's a stretch but with stable income you'll have options to remodel what you can afford it.

    Or, take $2k and invest in knowledge. BLOW UP your mind with focused market research (think specific neighborhoods), networking events, more books, or maybe a financial coach. Save the rest for REI opportunities when you learn to see them.

    3Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Chandler Williams

    Invest in a fund

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  • Chris Davidson
    Real Estate Agent · Boise, ID · Member since 2016 · 1k+ posts · 888 votes
    3y

    @Chandler Williams plane ticket to Vegas and put the remaining on Black! Seriously house hack is a great strategy if you can afford it in your market. Now is a great time to buy as competition is down and buyers have some leverage. If you are wanting advice outside of that, get sound at analyzing deals and finding deals bring it to someone with capital to take it down and throw in the EM for a little skin in the game.

    What ever you do sit down pick a strategy and write it and your timeline down and make it happen!

    2Reply
  • Adam Upchurch
    Investor · Atlanta GA, USA · Member since 2020 · 20 posts · 11 votes
    3y
    Quote from @Mike Swenson:

    3 Things You Can Do To Add Value:

    - Time

    - Expertise

    - Money

    If you have 10k and are new, focus on how you can help get a deal done utilizing your time to find a deal and trying to find a partner with money and expertise to complete the triangle. If you're willing to put your 10k into a deal and you have time to give, you could negotiate with someone who has some money and expertise to put a deal together.

    Otherwise, finding a way to utilize that 10k to a house hack, find some people to live with you and pay rent, gain some sweat equity, etc, and you'll be well on your way with your 2nd property!

    Best of luck! It's an exciting time!


     This is the way^^ 

    You'll realize that cash is a commodity. A LOT of people have it. So your competitive advantage while starting out is time. Invest your time to help experienced people find and do deals. 

    But also, yes, house hacking is probably going to make the biggest difference in your life in the short term if you have a decent w2. Or figure out wholesaling.

    Good luck out there man! 

    2Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    3y

    @Chris Seveney

    I think I've challenged you on this before... but do you really think a brand new investor should put their life savings into a fund?  How do they find a reputable one?

    Your advice is usually 99.9% spot on... except for when I see this for newbies.  Savings accounts and treasury bonds are paying decent interest rates right now, so if OP needs a year to save up more he actually has options for the first time in years.  I know someone will say "but inflation!"  To which I say, but OP needs to keep his capital liquid.  He can't lock it up for 3 years or take a chance that it does down 20%, inflation notwithstanding.

    @Chandler Williams

    BiggerPockets has gotten new investors to mix up "analysis paralysis" and "not having any money."  You don't have analysis paralysis.  You're fine.

    Save up enough to house hack.  If you can house hack where you are with 10K, great.  If not... save up until you have enough.

    2Reply
  • Nate Sanow
    I​nvestor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes
    3y

    I would focus on owning your primary residence, assuming you haven’t already done so. House hacks aren’t limited to duplexes, single families can be rented by the room. Or, the place could look like your Aunt Gertrude’s house and some elbow grease, sweat equity hustle and two years later sell for a profit. 

    Skipping owning your primary to invest that $10k will make living in what you own more difficult later. Not impossible but more difficult. 


    1Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y
    Quote from @Nicholas L.:

    @Chris Seveney

    I think I've challenged you on this before... but do you really think a brand new investor should put their life savings into a fund?  How do they find a reputable one?

    Your advice is usually 99.9% spot on... except for when I see this for newbies.  Savings accounts and treasury bonds are paying decent interest rates right now, so if OP needs a year to save up more he actually has options for the first time in years.  I know someone will say "but inflation!"  To which I say, but OP needs to keep his capital liquid.  He can't lock it up for 3 years or take a chance that it does down 20%, inflation notwithstanding.

    @Chandler Williams

    BiggerPockets has gotten new investors to mix up "analysis paralysis" and "not having any money."  You don't have analysis paralysis.  You're fine.

    Save up enough to house hack.  If you can house hack where you are with 10K, great.  If not... save up until you have enough.


     If $10k was my life savings, I would do what most people would tell you to do - Diversify. I would diversify in something you understand and some in what you want to learn. Depending on how liquid I need it to be, I potentially would use some for an I-bond, some in a 3 month CD, I would still invest some in funds. I would look at several funds to invest in so I can learn more about the process. For example on Dalmorefg.com are several regulation a+ funds that you can invest in as little as $100. For example Boxabl is a cool company, Worthy Bonds has been around a while, Phoenix Capital invests in gas (just to name a few). Just because a company is cool does not mean you should invest but do your due diligence, read the offerings, understand the difference, throw $100 or $500 in a company or too and learn about them as they look to grow. the only way to learn is by doing.

    There are some others on there as well that I do know. 

    Remember I do not care what you invest in, real estate, stocks, crypto etc. Whatever you are investing in you have to understand there is a chance it all can go bye bye. 

    Sidenote: I would not buy and house hack right now, as home prices are going down and $10k will leave you with negative equity unless you are handy and buy something that needs work. Right now I would wait to buy. 

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  • Kerry Noble JrPro Member
    Investor · Indianapolis, IN · Member since 2018 · 2k+ posts · 1k+ votes
    3y

    I would use $500 to buy books and listen to podcasts.....

    I would bird dog and wholesale to get more capital. Then Househack in the midwest where you can get cheaper deals

    1Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    3y

    @Chris Seveney

    OK!  Much more nuanced take than "put 10k into a fund."  Upvoted.

    Have you looked into Arrived Homes at all? Seems to me like the worst of all possible worlds - you get a high risk investment (a random SFH) and zero control. But was curious on others' takes on it. I guess it's a way to "get into" real estate investing just like owning 1 share of Microsoft is.

    0Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    3y

    @Chandler Williams while some of the posts have been good and helpful. Others have not been very realistic or probable. For instance, I think partnering up would be a good option, however, it is unlikely that you will find a capital partner at this point because you are brand new and you don't know what to do when things doing go according to the plan.  So you would be a bad investment at this point.  Instead of looking for a capital partner, you should become someone else's capital partner.  In other words, finding someone who is doing real estate deals and building a relationship with them is a good first step.  The next step would be for you to ask them (after you have vetted them of course) if you could put 10k into their next deal to help fund the rehab in exchange for watching the process.  Then you continue to save more money during the process.  You actively watch over the process and participate as much as you can in the process.  One thing to note here though is you want to make sure that you deposit your money through title and that you get a deed of trust on the property to protect your 10k.  

    After you participate in the process you now have more experience and you have connections and contacts to help you get hard money loans and to get a property fixed up.  

    This is a much more realistic and better way to start.

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    3y

    @Shiloh Lundahl

    I have the same comment for you that I had for Chris Seveney.  I just do not see how investing their only 10k into another deal is good advice for a new investor, especially in today's market.  And I doubt there are many experienced investors who would even want to deal with the hassle of borrowing 10k from a newbie that they don't need.  This just does not seem like good advice.

    Other than that, your BP contributions are awesome, and you're awesome.  I just think this might be a case where it's tough for experienced investors to set aside what they know now and look back.

    Now, if OP has 50K of reserves and 10K for investing, maybe it's a different story.  But I didn't read that in his post.  Maybe he can tell us.  =)

    Feedback welcome.

    0Reply
  • Nick Riccio
    Lender · Boston, MA · Member since 2018 · 171 posts · 137 votes
    3y

    @Chandler Williams Congrats on taking action! While that might be a challenge, here’s a few things I’d consider.

    1. Continue to save more. That might work for a DP in your market, but you’ll need to consider additional reserves, expenses, maintenance, etc. I’d like to see more of a cushion for you.

    2. Explore Low DP & DP Assistance programs: There are many options available (FHA loan for multifamily) & DP Assistance programs so that you can save your liquid funds for reserves, etc.

    3. Network. If you haven’t already, network. Meet other investor, agents, lenders, etc. It’ll help drastically. 

    4. Learn. Spend time learning, listening to podcasts, underwriting deals.

    Once you’re ready. Strike. 

    Best of luck!


    2Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    3y

    @Nicholas L. as an experienced investor and coach with around 250 units, that is what I would suggest. I don’t believe 10k is sufficient enough to really do a deal on one’s own for the most part. And without experience, things will likely go wrong. It will be unlikely that a sophisticated or  knowledgeable investor would be the money partner on a deal with someone with no experience.

    If he instead partners with someone with experience, he can piggyback on the experienced investors success. He can have a win and then he can share that win with others. That will count towards his experience. So rather than saying he is new, he can say he has done a deal with a partner. It will give him credibility.

    I have done this with several new investors where they lend to me on one of my deals and they are added to our WhatsApp group where they can observe the process and ask questions. They can visit the property, they can get access to the contracts that we use and how we make it a profitable deal. They also get a return on their money lent. Usually 8-10% APR.

    I am not just suggesting this in order to somehow benefit me. This is the advice that I would give even if I weren’t doing it myself.

    There is a lot to be said about getting proximity to people who are successful in the things you want to learn about and be successful in yourself.

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  • Shiela R.
    Investor · Boulder, CO · Member since 2017 · 304 posts · 347 votes
    3y

    @Chandler Williams I'd suggest investing in yourself to learn specific strategies of owning with little money down.  $10k is not nothing but it's also pretty thin to buy conventionally.  You can parlay that into quite a lot if done properly.  Learn your market by farming, wholesale to build capital and gain experience as suggested by a few already.  Sandwich lease options are my fav way to acquire properties with little to no money down.  I paid my mentor $5k to teach me everything he knew about creative financing and split my first 2 deals with him.  Best money I ever spent.

    3Reply
  • Bradley Dosch
    Real Estate Agent · Seattle, WA · Member since 2019 · 301 posts · 188 votes
    3y

    Hey Chandler, great post and question. As you alluded to, buying a house hack with a low down payment is the way to go. Keep things simple and don't overcomplicate. Continue saving up cash and learning. Reach out to a lender and agent in your area to get started! Lmk if you have any more questions about this strategy - I've done it three times :) Good luck Chandler 

    2Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Nicholas L.

    I am familiar with them but have not reviewed the offering to consider investing as it didn’t fit my criteria. Not saying it’s a bad investment I don’t know

    What I will say for anyone looking at a regulations offering is:

    1. Look at fee structure and how does investor get paid?

    2. What is the experience of the operator? Do they have a background in their offering?

    Each regulation a+ will list how money is allocated and the fees. Think / how do I make money

    They also list a bio of the sponsor key people.

    It’s important to know this type of info

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  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    You can do a lot in Killeen Texas 

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  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    3y

    @Chandler Williams

    There are many investment deals that transpire throughout the real estate market every year. Most of them are achieved through traditional lenders and institutions like banks, but some are accomplished through less traditional means. In most cases, it’s because the investor couldn’t raise the capital or didn’t have the credit score to do so. Here are 11 ways to invest in real estate with no money:

    1. Hard Money Lenders
    2. Private Money Lenders
    3. Wholesaling
    4. Equity Partnerships
    5. Home Equity
    6. Option To Buy
    7. Seller Financing
    8. House Hacking
    9. Government Loans
    10. Microloans
    11. REITs

    It’s important to note that while investing in real estate with no money down offers numerous benefits, not all cashless deals are worthwhile. Investors equipped with a superb credit score will not only receive a wider array of options for working capital, but they’ll have more control over their financial obligations. As a real estate investor, it’s in your best interest to ensure that score remains top-notch, as it will provide the best money-saving outlet.

    There are, however, situations where utilizing these options makes more sense. Consider the fact that cash buyers are viewed as more direct than conventional loan purchases when compared to traditional loans, which are slow to fulfill. With cash in hand, this strategy can provide an unprecedented upper hand at the negotiation table.

    All the best!

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  • Saaj Patel
    Real Estate Agent · 901 Market st Suite 3065 Philadelphia, PA 19107 · Member since 2021 · 71 posts · 37 votes
    3y

    Personally, I would save up some more cash and wait for a time with better deals. 

    But you could use $10k to buy a SHF in markets around me in Philadelphia. I have seen plenty of investors get flips for that price here.

    Let me know if you want to talk.

    1Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    2y

    @Chandler Williams

    Investing $10,000 into real estate is not really practical… sorry, but I've been there, back in 2009, when I was just starting, I didn't have a massive pile of cash. Instead, I looked for opportunities where the barrier to entry was lower. That's how I stumbled upon turnkey rentals. These properties were a gem because they were already rehabbed, often with a tenant ready to go. Places like Atlanta, Birmingham, and Indianapolis were my hunting grounds, where you could find properties for around a hundred thousand dollars.

    Here's the catch though: in those lower price markets, you still need a 20% down payment. Typically, you're looking at needing $20,000 to $30,000 at least for the down payment, plus some extra for cash reserves. It's a harsh reality of real estate investing; it grows steadily and offers good leverage, but getting to that first rung on the ladder requires a solid financial foundation.

    So, what can you do with $10,000? My recommendation is to start with index funds. It's a more accessible way to grow your initial investment until you can hit that $20,000 to $40,000 liquidity mark, which opens more doors in real estate.

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