Advice for Breaking into Real Estate with 25k Savings

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Advice for Breaking into Real Estate with 25k Savings

Sara Donohue
Jacksonville, FL · Member since 2020 · 20 posts · 4 votes

Hi everyone,

I’m hoping to get some advice from those of you with real estate experience. Here’s a bit of background on my situation:

I currently own my home, and my monthly expenses are about $2,000. Right now, there isn’t much opportunity for rental income with my current property. By the end of this month, I’ll have saved up around $25,000, and I’m really eager to break into real estate.

If you were in my shoes, how would you use that 25k to get started? I’m open to any advice or suggestions on how to make the most of it.

Thanks in advance for any guidance—I appreciate your insights!

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
2y
Quote from @Sara Donohue:

I don't know your market, your skills, your goals, etc. It's hard to give directions when I don't know where you are going, where you are starting from, or whether you are walking, riding a bicycle, or driving a car.

One thing I do know: do not spend all your money! If you have $25,000 saved up, I would keep at least $5,000 of it as a reserve to handle unexpected expenses.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    2y
    Quote from @Sara Donohue:

    I don't know your market, your skills, your goals, etc. It's hard to give directions when I don't know where you are going, where you are starting from, or whether you are walking, riding a bicycle, or driving a car.

    One thing I do know: do not spend all your money! If you have $25,000 saved up, I would keep at least $5,000 of it as a reserve to handle unexpected expenses.

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  • Nelisa Lee
    Rental Property Investor · Jacksonville, FL · Member since 2024 · 50 posts · 43 votes
    2y

    Hey Sara! As Nathan already mentioned, it's tough to provide guidance without your goals, skillset, etc. I did see you were in Jacksonville, FL which is a great investing community to be in. The wealth of knowledge and transparency that so many successful investors are willing to openly share is great to have that I've heard can be challenging to find in other markets. If you haven't been to any local meetups, I highly recommend it! 

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  • Rajan S V
    Investor · Member since 2021 · 3 posts · 0 votes
    2y

    I am going to make some assumptions and see what I'd do. I'd start looking at properties that are in desirable rental locations. Once I find and buy one, I'd move in and rent out my current house. I understand that might not be a great rental but in Jax I should still be able to make it work with the difference in payment for the new property as primary. You'll need to set aside some reserves so you won't be able to put all the 25k down. The worst will hit only when you don't have reserves.  You want to avoid a fire-sale.

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  • Denis PonderPro Member
    New to Real Estate · Yuma, AZ · Member since 2023 · 280 posts · 246 votes
    2y

    Right now, I would wait and save up some more money.  As a complete newbie, I would have went full steam ahead with that $25k and bought something.  I have only been at this a little over a year, but have learned patience really is a strong virtue in this.  Think 10-15 years down the road and you will stay out of some risky situations.  Save up some more money so you open up your options.  You will be glad you did.

    Have a strong and funded personal emergency fund as well before you start down this path.

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  • Chris Grenzig
    Property Manager · Orlando, FL · Member since 2016 · 479 posts · 277 votes
    2y
    Quote from @Sara Donohue:

    Hi everyone,

    I’m hoping to get some advice from those of you with real estate experience. Here’s a bit of background on my situation:

    I currently own my home, and my monthly expenses are about $2,000. Right now, there isn’t much opportunity for rental income with my current property. By the end of this month, I’ll have saved up around $25,000, and I’m really eager to break into real estate.

    If you were in my shoes, how would you use that 25k to get started? I’m open to any advice or suggestions on how to make the most of it.

    Thanks in advance for any guidance—I appreciate your insights!

     @Sara Donohue I would re-iterate what someone else said and make sure you have cash reserves for any real estate you're doing because problems happen and sometimes you have to come out of pocket to fix them. 

    However, my general guidance is usually to work backward. Figure out your future goals of what you want to do and work backward to find a strategy that helps you accomplish that goal. Do you want to be passive or active? Do you want to replace your salary and be full-time in real estate? Do you want higher risk and more return or low risk and lower returns?

    Once you start answering those for yourself you'll be able to find a few strategies that could work, then you can start researching them, and then you just pick one and start trying to do it. Once you pick one give it a serious dedicated effort, but if it's producing no fruit after several months you can always pivot and shift. 

    I started trying to flip homes in NY, then flip out of state, then buy tax deeds in Philly and all 3 of those I failed at. Then I started doing small MF investing out of state and did a few deals with mentors, then worked for a company doing 100-500 unit MF for 4.5 years. Then moved to FL and bought 150+ units with partners and investors and we owned, managed, and renovated them. We still own 51 units today. Then we decided to also get licensed to start managing for other people while still buying MF too. 

    Real Estate is a journey, so enjoy the ride

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  • Sara Donohue
    OP
    Jacksonville, FL · Member since 2020 · 20 posts · 4 votes
    2y

    Thank you so much for chiming in here Chris... and yes absolutely I completely understand on the cash reserves. I should of clarified, I meant an additional 25k set aside that I'd like to specifically use for investing and getting started somehow. I'm going to sit down and get clear on my goals and then maybe circle back with some more well thought out questions. thanks again!

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    2y

    You live in Jacksonville which is a market that has homes at the lower price point compared to the nation.

    I would do one of two things

    1) Get a new property via 3.5% down and use the rest as reserves
    2) save up another $10,000 and then buy a $125,000 home using $25,000 down.
    This will give you $10,000 as reserves just incase something goes wrong

    Best of luck.

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