Should I start to Invest or keep saving?

Question

Hi everyone,

I am 23 years old and currently make 60k yearly after taxes. Right now I have $15,000 in savings and I don't know if that's enough. I don't want to do a FHA loan (I don't want to live at the property, I rather invest in Texas and live with my family in New Jersey). Should I start and look for properties with my 15k or should I keep waiting and get 30k and then start investing? Ideally my goal is to travel while renting out this property. I'm torn between waiting or to start looking at deals.

Jonathan Greene · Answer

Of course you should not invest with only 15k in the bank. As @Alecia Loveless said, that is just your reserves. You still need a downpayment, closing costs, inspection money, repairs. Basically, you are trying to jump the gun. Keep saving and saving and saving and earning so your lendability gets stronger.

Alecia Loveless · Answer

@Brian Castro Honestly I don’t think $15,000 would be enough. Maybe for your reserves.

Especially if you’re putting down 20% for an investment property you’ll be very hard pressed to find a deal that doesn’t need a lot of renovations for $75,000.

Also a word to the wise if you do decide to invest in Texas be aware that in many parts of the state property taxes are increasing exponentially year after year. When researching property and doing your due diligence I’d request the tax information going back 3-5 years to get a good feel for what that local jurisdiction is doing with regards to taxes.

Carlos Valencia · Answer

Hello Brian,

Personally I would wait to save more because you want to have the flexibility when you buy your first investment. The good thing is that rates have slowly started to drop. Allowing you to borrow money at a cheaper cost. In order to qualify for your first investment loan you will need to put down 25% of the properties purchase price. Hence why 15k wont get you too far unless the properties your looking at are 100k and below but even at 100k you still need 25k so your 10k short. Plus you will need money for closing cost as well.

I know you mentioned you do not want to live in the property. But what many new investors do in order to buy with low down payment is they buy it as primary so they can acquire with 3-5% down. If you can deal with living there for 12 months then move out with your family afterwards then you are good as you just acquired your first rental property. Just make sure that when doing this house hacking strategy that you run the numbers to make sure you will cash flow or at the very least break even upon moving out. You don't want to get yourself in a situation where you have to cover part of the monthly mortgage every month otherwise how will you get to travel and live the investor life right?

You mentioned you want to travel while renting out this property. Is your job remote or do you think that just having one rental property will be enough to retire and live the retired life? If this is your goal to live off of rental income you will need to acquire many properties until you reach your overall goal of making enough off rents that will cover all of your living expenses plus a little extra for fun stuff. Just stuff to think about when beginning your journey. This will be a long term game plan. Be patient and last tip is to keep your active income as long as you can and try to continue to increase that active income every year as that will help you grow your rental portfolio much faster and live below your means.

@Albert Bui @Matthew Kwan

Shawn Mcenteer · Answer

Hi @Brian buying out of state works it just takes a substantially larger sum of money to do and scale.   No right or wrong answer, just glad to hear you're open minded to real estate investing.  Leveraging an owner occupied loan locally most of the time will take far less cash.  Quick math $200k property out of state = $50k down payment $500k property owner occupied= $25k down payment. Best part is I don't do FHA as well, low money down conventional tends to be go to option for investing locally in NJ.

Diego A. · Answer

You have to think that you want to learn in the process. Being out of state, you will learn all but bad things of the process and make you think if you made the right decision.

You have to start low and close, meaning trying to house Jack locally is the best.

An FHA loan requires you to live in the property.

Maddie Delayo · Answer

Hi Brian! There are down payment assistance programs in NJ right now offering $15k grant towards your down payment if you live at the property and meet certain income requirements. I recommend buying a multi-family, using the DPA, and getting as much credit as you can at closing. Depending on the area, the deals are out there.

Eric Gerakos · Answer

Keep saving.

Wale Lawal · Answer

@Brian Castro

At 23 with a solid income and $15,000 savings, 23 is well-positioned to invest in real estate in Texas. However, consider your down payment and closing costs. Research Texas markets with affordable prices and strong rental demand. Waiting for up to $30k offers more options and a financial buffer. Creative financing options like seller concessions or hard money loans can help bridge the gap.

Good luck!

John Steffen · Answer

Definitely keep saving or househack local. When the time comes, if Texas is too far or expensive - don't forget about the Scranton market - that's a hot spot where a ton of NJ / NY residents to start buying affordable rentals.

Madri Koppe · Answer

Agree with others. If you have the opportunity to live with family and save money, I’d continue doing that and then really consider buying locally when you can or house hack when you move out.

Should I start to Invest or keep saving?

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