My wife and I have saved $30k and are currently accruing %12 APY via hard money loans through her grandfather. Her grandfather lends a larger portion of money to house flippers and has first position on any returns on the houses. Seems like a safe investment, however, it is very steady or . It is simply based on whether or not someone is in need of the loan and the length varies from 5 months to a couple of years at which point we have to cross our fingers for the next loan. Not to mention the connections are all through her grandfather who won't be around forever. We are in our mid twenties with no kids and are looking to perhaps be a little more aggressive with our money. Perhaps something with a little more risk with and in turn, a higher yield. We are currently able to save an average of $2,500/ month and would like to continually invest that as well. Any advice would be greatly appreciate as we have little experience in this field having started from the bottom, if you will.
@Cory Blum You're much closer than you think. If I were you, and I was at one time, this is what I would do:
1 - Start by deciding what your investment criteria is based on why you are investing in the first place. What are you going to do with the returns?
2 - Develop your investment criteria based on the numbers from step #1
3 - This will dictate the amount of cash you would need to invest with in 1 typical property (meaning there are a number of them with the same criteria) that fits your investment criteria.
4 - Continue what you are doing until you reach the number needed to start as a cash partner in a deal (see step #3).
5 - Find a partner that can/will manage and refinance the property you are putting your cash into.
6 - Buy/rehab, put in a tenant, and refinance the property making sure that you get all your initial cash investment out...and you are still cash flowing positively.
7 - Repeat steps 4 - 6 (yes, step 4 too).
Wow Corey! You're going to do well because you are delaying gratification (by saving) and asking the right questions. Read, learn, join RE investor groups, listen to podcasts, and find a mentor if possible. The world's your oyster! (hope you like oysters)
Hi @Cory Blum - congrats on getting where you're currently at and it sounds like you're headed in the right direction! Southern California is a very competitive market, but from what I've seen over the last couple years, now is a good time to get into the Real Estate biz here. Inventory is starting to loosen up a little and Sellers are realizing they may be a little overpriced. There are lots of good buy and hold properties as well as fix and flip properties around here, I am in San Diego as well. Good time to find some diamond in the ruffs and negotiate some great deals! Let me know if I can be of any assistance.
Best of luck!
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