New to Real Estate: How should I invest $50,000

5 Replies

Hi,

My first experience with Real Estate was a few years ago. I purchased a foreclosed home for $99,000 in 2011. The bank had already laid new carpet and applied new paint. I invested no money in refurbishing it. I lived in it until 2015 and then was able to sell it for $120,000 as the market began to pick up. I then took that money and started a business in another state. 

I hoped that the worth of that house would increase but I really I no idea. Obviously I was excited that it did and it gave me more of an interest in real estate.

I am now about to sell my company in early 2017. My share in that company after taxes, etc will probably be $50,000. I am interested in learning different strategies on how I can invest my $50,000 in real estate. I know there are a plethora of opportunities but I'd appreciate info from those that are currently investing. 

To give you an idea the median house sales price is $195,000 with the average price per square foot at $114. 

The area is growing and houses are being snatched up hours after they hit the market. Prices are up 10% since this time last year.

Thanks,

Chris 

@Chris Maxey

Congratulations! 

You could buy a distressed property say less than $130K ($130K minus rehab costs) using your $50K to get a HML.

Fix it up, rent it and refinance cash out. And do it again and again. Look for BRRRR strategies on BP.

And you could network with seasoned investors in your area looking for funding and either do JV or offer them a loan for a good interest.

Or you can also look into crowd funding opportunities. 

There are a lot of different ways to invest. Make sure you get educated and go through all the podcasts. 

Hi Chris,

The short answer is "invest more time learning more about  real estate at BiggerPockets".  Once you know what you want to do, such as flip or buy-and-hold, then you can plan the milestones to get to your goal.  What kind of financing do you have?  Since you mentioned that you sell your business, I'm not sure if you have any other source of incomes.

I tried mailing out yellow letters in my area, but when houses are snatched up by the hours that's most likely not the place for you to be mailing out yellow letters. I prefer buy-and-hold, but then the hot market is killing me because most people would rather go with MLS listing. When I buy a property for rent, I would like to get some cashflow, so I start looking for other areas where I can get good cash flow.

There are many ways to invest in real-estate and you just have to find the one that works for you.

In case you are looking for other options.  I recently invest in high-dividend stocks.  After I picked up the stocks, I am collecting over $100/month dividend with no effort.

@Chris Maxey - How you should invest $50K is really up to you. There are generally two types of investors out there; Buy&Hold and Fix&Flip. What you decide to do is up to you. Flippers tend to make quite a bit if they are successful but it can be risky. Holders may not get the returns that the Flippers get but they do have steady returns. It really comes down to what type of investor you think you are. Some Buy&Hold investors are able to renovate a property (like a Flipper) then refi rather than sell and hold it. This is a way to get the best of both worlds. The thing to think about is that with $50K in hand you really have a buying power of $200K. This is because a lender well likely come to the table with 75% LTV for you. This allows you to maximize your ROI. If you plan on Flipping it could be as much as $330K this is because those loans can be as high as 85% LTV. That's not counting the rehab money that you may be able to get without putting anything extra down. Bottom line with $50K you have quite a few options I'd find a broker that can help you navigate them. If you have any other questions feel free to reach out to me.

Hey Chris! I recommend you look into multifamily investing. Make sure you remember to leverage your capital!

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