HELP! - Partner and I have about $40k available for first investment

[Michaela DeJesus]

Me and my partner have about $40k to fund our first deal. Ideally we would like to do it for less if possible. I wouldn't qualify for a traditional mortgage due to not having a traditional w-2 income. Partner is a full time nurse but I wouldn't feel comfortable or right about putting the mortgage solely in her name! Therefore, we are going to go the DSCR route. We also live in NJ where real estate is extremely expensive so we are looking to invest in an out of state market.

If you were us, and had $40k cash to start investing, what would you do with it? Looking for creative and strategic answers only from investors who have been at a similar starting point. Any attractive markets you can recommend? Open to any and every suggestion or piece of advice for what strategy we should use for our first investment.

PS- this is a business partner, not a spouse, so for obvious reasons we aren’t interested in house hacking!

Thank you in advance.

[Melissa Justice]

@Michaela DeJesus,

You're thinking about this the right way, especially avoiding traditional financing and being open to DSCR or creative terms.

What I’d do with $40K if I were starting over today:
DSCR Loan on Turnkey SFH or Small Duplex (Midwest or Southeast):
With $30K–$35K, you can get into a $120K–$140K deal using a DSCR lender. These loans are perfect for your situation since they focus on property cash flow, not personal income.

Markets where I’ve seen good returns:
Cleveland, OH – Solid cash flow, strong Section 8 play if managed right
Memphis, TN – Tons of investor inventory, good DSCR potential, just vet the neighborhoods carefully
Columbus, GA – Another under-the-radar gem: strong rental demand due to Fort Moore (military base), decent cash flow, and properties in the $150K–$200K range that work well for DSCR

With your mindset, I have no doubt you’ll get that first deal done. 

Always happy to chat more about specific markets or run deal scenarios side by side! 

Best of luck,

Melissa