Best way to invest with $20-$25K?

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Best way to invest with $20-$25K?

Raeshelle C.
anywhere, MA · Member since 2015 · 116 posts · 61 votes

I'm currently saving right now, but I estimate that in 3 years I will have saved $20K-$25K. I'm 27.

I want to make $10K/mo and retire early. What I'm having trouble with is, if I use that $20-25K on real estate, I need help finding out how I should begin with my investing. I know I am just saving now, but I like to create a plan. I don't know which is the best path to go down if I want to make $10K/mo within 10 years of buying my first rental. I live in MA and houses here are not cheap. What I'd like to do is buy multifamilies that are in fair/good condition (no repairs needed) using the FHA loan, but all the multifamilies around here that's cheap, near where I work, all need repairs. The cheap multifamilies that dont need work are far from my job so I can't live in them with FHA. I don't have extra money to pay for repairs, and saving extra for that would take even longer, and that would delay my wealth.

Then I was thinking, I'll just invest in out-of-state turnkey single families in places like Alabama, Georgia and Florida because down payments for those houses would be cheap, since the houses down there are cheap. But I would also be taking out one loan after another to buy these single family houses. I fear I would get rejected by the banks, like they may not allow me to have all these loans; I also fear it's too dangerous to take out so many loans too (I cant buy houses in cash). I know I'd only be making around $250/mo in cash flow after expenses too, per turnkey single family house, in the first couple years. I just really don't know what the best option is as far as real estate investing, that's doable for me. I'd only have $20-25K to start with.

Can anyone give strategies?

1Reply
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Brian Pickens
Tampa, FL · Member since 2016 · 1 post · 18 votes
9y

I don't know know why everyone continues to throw their hat in the ring just to get some rude retort. She obviously knows what she's doing.

@Raeshelle Cooke

You specifically asked, "Can anyone give strategies?" - then why are you so defensive and jumping all over these people who are taking the time out of their day and simply offering their answer to your question. Perhaps they are just giving you some different things to consider, seeing as that you're new to all this. Challenge is good sometimes, it doesn't always have to be filled with such vitriol.

We don't know what you do or don't know. This is a forum to give feedback, discuss ideas and options. If you already have an answer to anything anyone is going to suggest, then you don't need anyone's help in this forum.

Your attitude alone, and the fact that you aren't even open to hearing what may be opposing viewpoints, is discouraging and really, in my opinion, where you need to start. Drop the chip on your shoulder, open your mind, and just have a polite and friendly conversation. We're all here to help one another.

Good luck to you!

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  • David Creed
    Seattle, WA · Member since 2017 · 5 posts · 4 votes
    9y

    @Raeshelle C. I love seeing these threads - its always surprising how much you can have in common with someone on the other side of the country. I'm following closely as my goals and current restrictions align very nearly with yours, good luck!

    1Reply
  • Lisa Phillips
    Real Estate Investor · Arlington, VA · Member since 2012 · 302 posts · 277 votes
    9y

    @Raeshelle Cooke

    There are a lot os strategies for that prkce range. You heard the others. Personally, I am of the strategy of investing in lower income, safe working class neighborhoods, majority of which tend to be in aftican american communities. This works for me and other investors as many times, like me, they grew up and come from these neighborhoods and can spot a gem easily. Check my profile out to join our 1500 active group that focuses on this niche alone with a LOT of success. And ask this same wuestio  there - since its focused, you tend to get cmplementing answers sinfe we are all investing in the same asset class for the same goals.

    3Reply
  • Raeshelle C.
    OP
    anywhere, MA · Member since 2015 · 116 posts · 61 votes
    9y
    Originally posted by @Ian Walsh:

    Pretend you don't have the 20-25k and figure out how to make it in this business with out it.  Once you do that, you will know exactly what to do with that money.  Wholesaling is a good place to start. 

     I don't have the 20K and I do know how to make it in this business without it. I choose not to go those routes of wholesaling and flipping. It's not about not knowing what to do with anything. It's about making the right decisions and going down the right path that will align with my goal. 

    2Reply
  • Igor Messano
    Philadelphia, PA · Member since 2015 · 177 posts · 64 votes
    9y
    Originally posted by @Raeshelle C.:
    Originally posted by @Andrey Y.:
    Originally posted by @Raeshelle C.:
    Originally posted by @Andrey Y.:
    Originally posted by @Raeshelle C.:

    I'm currently saving right now, but I estimate that in 3 years I will have saved $20K-$25K. I'm 27.

    I want to make $10K/mo and retire early. What I'm having trouble with is, if I use that $20-25K on real estate, I need help finding out how I should begin with my investing. I know I am just saving now, but I like to create a plan. I don't know which is the best path to go down if I want to make $10K/mo within 10 years of buying my first rental. I live in MA and houses here are not cheap. What I'd like to do is buy multifamilies that are in fair/good condition (no repairs needed) using the FHA loan, but all the multifamilies around here that's cheap, near where I work, all need repairs. The cheap multifamilies that dont need work are far from my job so I can't live in them with FHA. I don't have extra money to pay for repairs, and saving extra for that would take even longer, and that would delay my wealth.

    Then I was thinking, I'll just invest in out-of-state turnkey single families in places like Alabama, Georgia and Florida because down payments for those houses would be cheap, since the houses down there are cheap. But I would also be taking out one loan after another to buy these single family houses. I fear I would get rejected by the banks, like they may not allow me to have all these loans; I also fear it's too dangerous to take out so many loans too (I cant buy houses in cash). I know I'd only be making around $250/mo in cash flow after expenses too, per turnkey single family house, in the first couple years. I just really don't know what the best option is as far as real estate investing, that's doable for me. I'd only have $20-25K to start with.

    Can anyone give strategies?

    Your fears in the last paragraph are correct. If something is cheap, its cheap for a reason -- ie. people don't want it. That should tell you if you should invest there.

    You want to find properties in a great location, not expensive, and require no repairs. I hate to break it to you, but that is a dream. You are going to have to bust your butt to create value. Everyone wants to (or thinks they do) make $10/month and retire early.

    You are pretty young, keep educating yourself, and level up your mind and mindset. Don't save too much money. Go out, travel and get a feel of how people are living, what else is out there, and get some perspective. Or give some of your money to a good cause. Figure out what your goals are from there. You may realize you need a lot less or a lot more than $10k a month.

    Saving doesn't work as a general strategy. You cannot shrink your way to wealth. It only works for Dave Ramsey or Suze Orman who are making money to tell people they should save their pennies. Good luck!

     I disagree. I know myself. I'm not a naive little girl that doesn't know myself, what I want or anything about life. I know that I want to make $10K/mo. $5K after taxes will also do. 

    I've traveled and do continue to, and live.

    Saving money will get me there. It does work. Just because it didn't work for you doesn't mean it won't work for me. 

    I will give money to causes once I have the money to give. 

    I already know what my goals are.

    I listened to an audio book, The Science of Getting Rich, and it warned me about not getting distracted or discouraged from people that say the things you do. So, I'll just keep scrolling and keep on working towards my goals. I will get there. I've already decided.

    Name me one person that has created wealth or financial independence by "saving money"? It has never happened, not to me nor anyone else. All saving money does is decrease your quality of life. You can only save so much, probably not much more than you already do. Wealth is created by income generation, which takes as much effort as saving money, if not less. Say you have been supporting yourself on $3k a month for the last year or two, you will be very hard pressed to go down to $2.5k a month, if you don't believe me, then try it.

    You're reply comes off as defensive. There is likely an underlying reason why you felt that way. No one told you to stop working towards your goals, by the way.

    I'm not arguing with you. I'm going to save and I'm going to buy with my savings. It's GOING to happen. 100%. It's not going to magically not happen now because you said it won't. You basically just dismissed every investor on this forum. Or maybe you're saying I'm dumber than every investor on this forum and can't and won't do what they all already did. I will save and buy.  And when I do, I will post here that I did, and I will tag you so that you don't come on other people's posts in the future arguing with them, telling what's not going to work for them. Have a good night. 

    I think what Andrey is trying to explain to you is that simple saving your money and thinking that with only that you will make 10K per month in 10 years doesn't add up. That is not to say that you won't get to your goal, but it does mean that in the current rate that you are saving you aren't going to get there with that strategy. In 3 years when you have 24K and you buy your first rental, what happens then? You wait another 2-3 years to save enough again? 

    A $55,000 home will cost you more than 12K to acquire traditionally. Unfortunately with the exception of transfer taxes which is a % of the price, closing costs on lower cost homes are expensive since some of the costs are not based on % and are fixed since the bank makes so little money on a 40K loan. Things like origination fees, appraisals, title search and insurance, etc will add up to 5-6K on top of your down payment.

    What this does mean is that you need to improve and adapt your strategy to match your goal. Eventually your cash flow will start to snowball and help you buy more properties quicker but 2 properties at 200/m each wont be enough in the beginning. Add on top of that you want to buy perfect properties that don't need any work. You will have a hard time finding properties like this for cheap consistently. These are usually an exception and not the rule.

    What I would suggest to start with is any strategy that you could put some sweat equity into to increase the value. Maybe a property that doesn't need a full rehab but a couple of thousand to make it really shine to tenants or to buyers in the future? Maybe a 2-4 unit property that you can live in 1 and rent the others and slowly improve the property to drive value? If you live in a 4 unit or less property you can get an FHA loan which would require as low as 3% down payment.

    One last thing to consider is that if you find a property where you can spend some $ or sweat to improve the value, you can then refinance the property and get some cash out. This would allow you to purchase your next property quicker instead of relying on just cash flow and personal savings. I admire your drive and not allowing people to tell you that you cannot do something. But there is a balance between being driven and persistent and ignoring sound advice. There is always a way but that doesn't mean that it will work just because you want it to, so you just need to find how to do get it done. BP is an amazing resource and so is the podcast and certain books. Start reading books on investing with low or no money and it will at least give you an idea on how to get more for your dollars and how to use what you have to snow ball into the next property. Good luck with everything and I look forward to hearing that you purchased your first property.

    4Reply
  • Igor Messano
    Philadelphia, PA · Member since 2015 · 177 posts · 64 votes
    9y

    @Lisa Phillips,

    Hi Lisa,

    I also invest in low income housing and looking at your profile I would love to join your group. However, following the provided link all I see is a signup for "13 tips". Is this group a BP sub forum or a separate place?

    0Reply
  • Justin NeroPro Member
    Investor · Oakland, CA · Member since 2014 · 23 posts · 9 votes
    9y
    Originally posted by @Hazel Wiggs:

    @Larry Fried It's not self-directed. If i decide to leave my employer, i would have the opportunity to elect it as a self-directed.  I wonder if the penalties of withdrawing the funds would be worth it? I'm sure in some cases, it may be but i don't know if it would be for me since i only have 21K. I would love to explore the possibilities of withdrawing the funds. I think my best bet is to contact Fidelity directly. 

     I'm not sure of your specifics, but it often makes more sense to just get a loan on your 401K. Usually you can borrow half and you pay the interest to yourself.

    1Reply
  • Hazel Wiggs
    Union City, CA · Member since 2017 · 35 posts · 13 votes
    9y

    @Justin Nero hi Justin! Thank you. I'd have to contact them directly to find out the specifics. The borrowing and interest being paid to me is something i don't understand. I had another BP member tell me the same thing. Sounds like something i would love to learn more about.

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    9y

    @Raeshelle C. first of all, you have nothing to prove to @Andrey Y. or anyone else for that matter. There is no reason to prove Andrey wrong. Prove yourself right. People who challenge your ideas can actually be very helpful. It forces you to think things through. You are completely inexperienced in owning or managing rentals. I was once in your same shoes and it didn't stop me from jumping in, but I made lots of mistakes. Some were made because I thought I knew better than more experienced people. 

    The key is in the details. You need a plan to get to $10K per month. If your plan is buying houses that cash flow at $250 per house, then you need 40 houses.  It sounds like think you can get 3-4 with your $25K down payments. That will give you $750-1000 cash flow per month. You will add $10K worth of income the first year, which will allow you to purchase a couple more properties. It will snowball pretty quickly, but that is assuming your numbers are correct.

    Based on your down payment, you are looking at houses in Birmingham worth $20K to $40K. I did a Zillow search and the homes in that price range have not appreciated in value over the last 15 years. That is warning sign that it is a bad area. The houses likely have deferred maintenance which will cost you money and you will struggle to break even should you decide to sell. Just something to think about.

    4Reply
  • Raeshelle C.
    OP
    anywhere, MA · Member since 2015 · 116 posts · 61 votes
    9y
    Originally posted by @Igor Messano:
    Originally posted by @Raeshelle C.:
    Originally posted by @Andrey Y.:
    Originally posted by @Raeshelle C.:
    Originally posted by @Andrey Y.:
    Originally posted by @Raeshelle C.:

    I'm currently saving right now, but I estimate that in 3 years I will have saved $20K-$25K. I'm 27.

    I want to make $10K/mo and retire early. What I'm having trouble with is, if I use that $20-25K on real estate, I need help finding out how I should begin with my investing. I know I am just saving now, but I like to create a plan. I don't know which is the best path to go down if I want to make $10K/mo within 10 years of buying my first rental. I live in MA and houses here are not cheap. What I'd like to do is buy multifamilies that are in fair/good condition (no repairs needed) using the FHA loan, but all the multifamilies around here that's cheap, near where I work, all need repairs. The cheap multifamilies that dont need work are far from my job so I can't live in them with FHA. I don't have extra money to pay for repairs, and saving extra for that would take even longer, and that would delay my wealth.

    Then I was thinking, I'll just invest in out-of-state turnkey single families in places like Alabama, Georgia and Florida because down payments for those houses would be cheap, since the houses down there are cheap. But I would also be taking out one loan after another to buy these single family houses. I fear I would get rejected by the banks, like they may not allow me to have all these loans; I also fear it's too dangerous to take out so many loans too (I cant buy houses in cash). I know I'd only be making around $250/mo in cash flow after expenses too, per turnkey single family house, in the first couple years. I just really don't know what the best option is as far as real estate investing, that's doable for me. I'd only have $20-25K to start with.

    Can anyone give strategies?

    Your fears in the last paragraph are correct. If something is cheap, its cheap for a reason -- ie. people don't want it. That should tell you if you should invest there.

    You want to find properties in a great location, not expensive, and require no repairs. I hate to break it to you, but that is a dream. You are going to have to bust your butt to create value. Everyone wants to (or thinks they do) make $10/month and retire early.

    You are pretty young, keep educating yourself, and level up your mind and mindset. Don't save too much money. Go out, travel and get a feel of how people are living, what else is out there, and get some perspective. Or give some of your money to a good cause. Figure out what your goals are from there. You may realize you need a lot less or a lot more than $10k a month.

    Saving doesn't work as a general strategy. You cannot shrink your way to wealth. It only works for Dave Ramsey or Suze Orman who are making money to tell people they should save their pennies. Good luck!

     I disagree. I know myself. I'm not a naive little girl that doesn't know myself, what I want or anything about life. I know that I want to make $10K/mo. $5K after taxes will also do. 

    I've traveled and do continue to, and live.

    Saving money will get me there. It does work. Just because it didn't work for you doesn't mean it won't work for me. 

    I will give money to causes once I have the money to give. 

    I already know what my goals are.

    I listened to an audio book, The Science of Getting Rich, and it warned me about not getting distracted or discouraged from people that say the things you do. So, I'll just keep scrolling and keep on working towards my goals. I will get there. I've already decided.

    Name me one person that has created wealth or financial independence by "saving money"? It has never happened, not to me nor anyone else. All saving money does is decrease your quality of life. You can only save so much, probably not much more than you already do. Wealth is created by income generation, which takes as much effort as saving money, if not less. Say you have been supporting yourself on $3k a month for the last year or two, you will be very hard pressed to go down to $2.5k a month, if you don't believe me, then try it.

    You're reply comes off as defensive. There is likely an underlying reason why you felt that way. No one told you to stop working towards your goals, by the way.

    I'm not arguing with you. I'm going to save and I'm going to buy with my savings. It's GOING to happen. 100%. It's not going to magically not happen now because you said it won't. You basically just dismissed every investor on this forum. Or maybe you're saying I'm dumber than every investor on this forum and can't and won't do what they all already did. I will save and buy.  And when I do, I will post here that I did, and I will tag you so that you don't come on other people's posts in the future arguing with them, telling what's not going to work for them. Have a good night. 

    I think what Andrey is trying to explain to you is that simple saving your money and thinking that with only that you will make 10K per month in 10 years doesn't add up. That is not to say that you won't get to your goal, but it does mean that in the current rate that you are saving you aren't going to get there with that strategy. In 3 years when you have 24K and you buy your first rental, what happens then? You wait another 2-3 years to save enough again? 

    A $55,000 home will cost you more than 12K to acquire traditionally. Unfortunately with the exception of transfer taxes which is a % of the price, closing costs on lower cost homes are expensive since some of the costs are not based on % and are fixed since the bank makes so little money on a 40K loan. Things like origination fees, appraisals, title search and insurance, etc will add up to 5-6K on top of your down payment.

    What this does mean is that you need to improve and adapt your strategy to match your goal. Eventually your cash flow will start to snowball and help you buy more properties quicker but 2 properties at 200/m each wont be enough in the beginning. Add on top of that you want to buy perfect properties that don't need any work. You will have a hard time finding properties like this for cheap consistently. These are usually an exception and not the rule.

    What I would suggest to start with is any strategy that you could put some sweat equity into to increase the value. Maybe a property that doesn't need a full rehab but a couple of thousand to make it really shine to tenants or to buyers in the future? Maybe a 2-4 unit property that you can live in 1 and rent the others and slowly improve the property to drive value? If you live in a 4 unit or less property you can get an FHA loan which would require as low as 3% down payment.

    One last thing to consider is that if you find a property where you can spend some $ or sweat to improve the value, you can then refinance the property and get some cash out. This would allow you to purchase your next property quicker instead of relying on just cash flow and personal savings. I admire your drive and not allowing people to tell you that you cannot do something. But there is a balance between being driven and persistent and ignoring sound advice. There is always a way but that doesn't mean that it will work just because you want it to, so you just need to find how to do get it done. BP is an amazing resource and so is the podcast and certain books. Start reading books on investing with low or no money and it will at least give you an idea on how to get more for your dollars and how to use what you have to snow ball into the next property. Good luck with everything and I look forward to hearing that you purchased your first property.

     It is not sound advice. Judging by your response and his response, you both have no idea what my plan is. Who in the world said that by simply saving $24K I will earn $10K/mo? I never said that. I said I will buy my first property with my $24K. That was very clear. AFTER that, obviously I would reinvest my cash flow to buy a second property, and reinvest to buy my 3rd, and so on and so forth and eventually the cash flow would equal to my goal. 

    Don't say that assumptions is "sound advice". It's not. My sound advice to you and that other guy is, ask next time what my plan is and don't assume. 

    Have a good day.

    0Reply
  • Raeshelle C.
    OP
    anywhere, MA · Member since 2015 · 116 posts · 61 votes
    9y
    Originally posted by @Joe Splitrock:

    @Raeshelle C. first of all, you have nothing to prove to @Andrey Y. or anyone else for that matter. There is no reason to prove Andrey wrong. Prove yourself right. People who challenge your ideas can actually be very helpful. It forces you to think things through. You are completely inexperienced in owning or managing rentals. I was once in your same shoes and it didn't stop me from jumping in, but I made lots of mistakes. Some were made because I thought I knew better than more experienced people. 

    The key is in the details. You need a plan to get to $10K per month. If your plan is buying houses that cash flow at $250 per house, then you need 40 houses.  It sounds like think you can get 3-4 with your $25K down payments. That will give you $750-1000 cash flow per month. You will add $10K worth of income the first year, which will allow you to purchase a couple more properties. It will snowball pretty quickly, but that is assuming your numbers are correct.

    Based on your down payment, you are looking at houses in Birmingham worth $20K to $40K. I did a Zillow search and the homes in that price range have not appreciated in value over the last 15 years. That is warning sign that it is a bad area. The houses likely have deferred maintenance which will cost you money and you will struggle to break even should you decide to sell. Just something to think about.

     This has absolutely nothing to do with someone more experienced giving me sound advice that I ignored. I seek advice from experienced people ALL the time. I take their advice ALL the time. I never ignore sound advice from more experienced people, and I DO NOT think I know more. That was not the situation with that guy. What that guy did was misunderstand what I said, and because he has poor communication skills, he did not ask me what my plan was but instead assumed. That is NOT sound advice from an experienced person, that is a person that misunderstood and assumed things he didn't know, and didnt bother to ask. 

    Yes, I carved a plan and did the numbers already and if the numbers went as planned, I would get 10k/mo in 10 years, assuming I invested in single families. If I invest in multifamilies, I'm sure it will be  even sooner. I have detailed step by step plans for different strategies whether it be single family or multifamiliy, or turnkey. 


    Regarding the Birmingham, the houses I was referring to was on Noradarealestate, and they get really good reviews. Not only that but it was just an idea and an alternative option from  many of the various ideas I throw around in my head. It isn't the only option or path. I was giving several ideas in my post. 

    1Reply
  • James Skelton
    Investor · Annapolis, MD · Member since 2014 · 25 posts · 5 votes
    9y

    I would like to say, I think you should start with your first purchase. That should be your own home, you will learn first hand the in's and out's of owning  Real Estate. Best of all you can take some spare time and put some sweat equity in your home. If you work smart there you can build up that equity and use it to build your Business. I have been working on houses, Rentals and Flips for years, that's how I made it happen and you can too! Good Luck

    0Reply
  • Lisa Phillips
    Real Estate Investor · Arlington, VA · Member since 2012 · 302 posts · 277 votes
    9y

    @Igor Messano You'll get the invite immediately upon signing up. Its just a completely different beast, you'll see - you'll love it, you'll be amazed.

    0Reply
  • Sid Leibowitz
    Contractor · Glen Cove, NY · Member since 2016 · 209 posts · 89 votes
    9y

    IMHO I would not be thinking of buying real estate at this point. I would start by taking a real estate salespersons course which should cost about 300.00 with the study guides. The coarse is easy enough and takes about 75 hours and may vary from state to state. You will get a new perspective and the education will be valuable. You will find the advantages of flipping vs becoming a landlord. and you may even move forward and become a licensed real estate sales person which will give you exposure to properties in your area that are on the market and give insight to geographical areas. There is a lot to discover. You may be able to make money by selling houses to obtain more working capital. I started with buying stock on a small scale before advancing into buying real estate and went for my real estate license at the same time. Talk with a financial adviser about buying stock and then real estate and get there opinion.   

    1Reply
  • Linda S.
    Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    9y

    If you have $20-$25K in cash, that's great.. but when it comes to fixer uppers, that's peanuts.    If you want to do fixer uppers, you better have around $20-40K more in available funds to fix it up, and that's on the conservative side. 

     The idea of making it out of state, says right off the bat you're in the hands of a contractor who knows you have $$$, and you better believe-- they are out there to make money themselves.   I  would NEVER suggest an out of state investment as your first property.  The most concerning statement you made was " . I don't have extra money to pay for repairs, and saving extra for that would take even longer, and that would delay my wealth" ---  let me just say,  stuff breaks, if it can break (especially with fixer uppers)-- it will break.   It will be expensive, and again-- if it's out of state, you're paying someone else to do everything-- i don't even want to imagine those numbers.      I am absolutely baffled at home many people just want to find these magical duplexes for cheap, that have great renters, and don't need any work... not gonna happen, or it will happen for a hefty profit of the seller. 

    If I were in your shoes,  and you really want to get involved in real estate, buy a multi-family that's 1-2 hrs away, get a roommate for your unit, and have that be your permanent address for a year or so, and rent a room closer to your work.   Sketchy, but I'm sure you wouldn't be the first. 

    Lastly, if you really want to do renovations, check out the local trade school and go take some classes on electrical, or plumbing, dry wall, learn how to hang cabinets.. all this stuff you will be paying for -- why not learn to do it yourself?   I say this, because as am woman, I can do laminate and tile flooring,  just did a back splash last weekend and am pretty awesome at  drywall now too!    

    2Reply
  • Jolandi Gevers
    Investor · Arlington, MA · Member since 2017 · 3 posts · 0 votes
    9y

    What I have found in my years of investing is there is nothing quite like practical experience. Buy your first property as soon as you have enough capital to do so. But make sure you know enough or get the right advice to avoid buying a bad investment.

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    9y
    Originally posted by @Raeshelle C.:
    Originally posted by @Joe Splitrock:

    @Raeshelle C. first of all, you have nothing to prove to @Andrey Y. or anyone else for that matter. There is no reason to prove Andrey wrong. Prove yourself right. People who challenge your ideas can actually be very helpful. It forces you to think things through. You are completely inexperienced in owning or managing rentals. I was once in your same shoes and it didn't stop me from jumping in, but I made lots of mistakes. Some were made because I thought I knew better than more experienced people. 

    The key is in the details. You need a plan to get to $10K per month. If your plan is buying houses that cash flow at $250 per house, then you need 40 houses.  It sounds like think you can get 3-4 with your $25K down payments. That will give you $750-1000 cash flow per month. You will add $10K worth of income the first year, which will allow you to purchase a couple more properties. It will snowball pretty quickly, but that is assuming your numbers are correct.

    Based on your down payment, you are looking at houses in Birmingham worth $20K to $40K. I did a Zillow search and the homes in that price range have not appreciated in value over the last 15 years. That is warning sign that it is a bad area. The houses likely have deferred maintenance which will cost you money and you will struggle to break even should you decide to sell. Just something to think about.

     This has absolutely nothing to do with someone more experienced giving me sound advice that I ignored. I seek advice from experienced people ALL the time. I take their advice ALL the time. I never ignore sound advice from more experienced people, and I DO NOT think I know more. That was not the situation with that guy. What that guy did was misunderstand what I said, and because he has poor communication skills, he did not ask me what my plan was but instead assumed. That is NOT sound advice from an experienced person, that is a person that misunderstood and assumed things he didn't know, and didnt bother to ask. 

    Yes, I carved a plan and did the numbers already and if the numbers went as planned, I would get 10k/mo in 10 years, assuming I invested in single families. If I invest in multifamilies, I'm sure it will be  even sooner. I have detailed step by step plans for different strategies whether it be single family or multifamiliy, or turnkey. 


    Regarding the Birmingham, the houses I was referring to was on Noradarealestate, and they get really good reviews. Not only that but it was just an idea and an alternative option from  many of the various ideas I throw around in my head. It isn't the only option or path. I was giving several ideas in my post. 

    I didn't say his advice was sound and I have no idea what his experience level is. I said it is good when people challenge your ideas. Sometimes you may change your mind, other times you just say thanks and move on. You are the one who posted the question asking if people had strategies or input to help you. You come across very defensive and seem to already have your mind made up on what you want to do. 

    Turnkey companies are notorious for over estimating rents and selling properties above market. I use tools like Zillow to see what houses really rent and sell for. There are houses on the same street as the Noradrealestate houses that are selling for less money and have not gone up in value for 15-20 years. Do your own research instead of trusting reviews. Reviews are designed to sell you on their service. 

    It sounds like you have several good plans. That is the first step. Next I would find a mentor and then make your first purchase. Your plan will change once you get started, but that is just part of the process. Good luck. 

    0Reply
  • Raeshelle C.
    OP
    anywhere, MA · Member since 2015 · 116 posts · 61 votes
    9y

    My goal is to earn passive income so I don't want to flip houses or become a real estate agent. I understand that's probably a way to get in I guess, but that's not what I want to do. For those that gave me advice on different paths to take to buy real estate with $20K to earn passive income, thank you. Eventually I not only want to earn passive income, but I want to move out of MA and move down south, so if passive income is what I want and I don't plan to stay here too, too long, a multifamily house definitely makes the most sense. I'm going to look into the $203 FHA loan as that seems like the best bet.

    I have my answers now. Thanks.

    0Reply
  • Brian Pickens
    Tampa, FL · Member since 2016 · 1 post · 18 votes
    9y

    I don't know know why everyone continues to throw their hat in the ring just to get some rude retort. She obviously knows what she's doing.

    @Raeshelle Cooke

    You specifically asked, "Can anyone give strategies?" - then why are you so defensive and jumping all over these people who are taking the time out of their day and simply offering their answer to your question. Perhaps they are just giving you some different things to consider, seeing as that you're new to all this. Challenge is good sometimes, it doesn't always have to be filled with such vitriol.

    We don't know what you do or don't know. This is a forum to give feedback, discuss ideas and options. If you already have an answer to anything anyone is going to suggest, then you don't need anyone's help in this forum.

    Your attitude alone, and the fact that you aren't even open to hearing what may be opposing viewpoints, is discouraging and really, in my opinion, where you need to start. Drop the chip on your shoulder, open your mind, and just have a polite and friendly conversation. We're all here to help one another.

    Good luck to you!

    18Reply
  • Steve Kontos
    Investor · Great Neck, NY · Member since 2016 · 679 posts · 467 votes
    9y

    @Raeshelle C. 

    @Hazel Wiggs

    Ladies, I am just reading this trail and to be perfectly honest with you the theory that you need to save to buy is a rather outdated one.  When I started, I leveraged my credit and did not even use my own cash.  I did this to purchase property out of state (I am located in New York).  I am seeing a common theme here that quite a few individuals do not understand the different aspects of leveraging.  I am by no means knocking on the "save and buy" method but there are many people who have done extremely well in real estate and did not use that method.  Hope this helped a bit.  PM me if you have any further questions.

    2Reply
  • Hazel Wiggs
    Union City, CA · Member since 2017 · 35 posts · 13 votes
    9y

    Thanks @Steve Kontos PMing you now.

    0Reply
  • Raeshelle C.
    OP
    anywhere, MA · Member since 2015 · 116 posts · 61 votes
    9y
    Originally posted by @Brian Pickens:

    I don't know know why everyone continues to throw their hat in the ring just to get some rude retort. She obviously knows what she's doing.

    @Raeshelle Cooke

    You specifically asked, "Can anyone give strategies?" - then why are you so defensive and jumping all over these people who are taking the time out of their day and simply offering their answer to your question. Perhaps they are just giving you some different things to consider, seeing as that you're new to all this. Challenge is good sometimes, it doesn't always have to be filled with such vitriol.

    We don't know what you do or don't know. This is a forum to give feedback, discuss ideas and options. If you already have an answer to anything anyone is going to suggest, then you don't need anyone's help in this forum.

    Your attitude alone, and the fact that you aren't even open to hearing what may be opposing viewpoints, is discouraging and really, in my opinion, where you need to start. Drop the chip on your shoulder, open your mind, and just have a polite and friendly conversation. We're all here to help one another.

    Good luck to you!

     I don't have an attitude problem. In fact, some people have messaged me privately and said they love my attitude. It just rubs you and a few other men the wrong way, but that's not my problem. Since it's bothering you so much then don't read my posts. You're clearly not here to help but to start arguments. Because of that, I'm not going to read anymore of your posts.  

    0Reply
  • Raeshelle C.
    OP
    anywhere, MA · Member since 2015 · 116 posts · 61 votes
    9y
    Originally posted by @Steve Kontos:

    @Raeshelle C. 

    @Hazel Wiggs

    Ladies, I am just reading this trail and to be perfectly honest with you the theory that you need to save to buy is a rather outdated one.  When I started, I leveraged my credit and did not even use my own cash.  I did this to purchase property out of state (I am located in New York).  I am seeing a common theme here that quite a few individuals do not understand the different aspects of leveraging.  I am by no means knocking on the "save and buy" method but there are many people who have done extremely well in real estate and did not use that method.  Hope this helped a bit.  PM me if you have any further questions.

     Thanks I'm going to message you now about how to use credit in this way. 

    0Reply
  • Gloria Jeffries
    Chicago, IL · Member since 2017 · 4 posts · 1 vote
    9y
    I can help you guys find some great deals and you'll be able to get a bang for your buck. I'm currently looking for a partner in crime, if you're interested.
    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Raeshelle C. there is an ignore button.. so you can ignore folks you don't want to hear from.

    good luck.. Norada is a real estate sales agency not the owner most of the time just fyi.

    jumping into real estate when your under capitalized is very dangerous and could set you back many many years if you have a tenant tear up your home. and that WILL happen if you buy in the neighborhoods @Lisa Phillips  is suggesting....

    if your going into those neighborhoods you need to start with 5 homes right off the bat.. so you can income average.. 10 is better.

    for cash flow you may want to look at Notes.. this could be a nice happy medium.. properly picked much safer than rentals..

    Over the years I have seen many folks start with notes and in 7 to 10 years reach the goals your talking about.  

    Also why does it have to be real estate... there are plenty of other small business s that will do much better than rentals.. JUST a thought  don't shoot me  :)

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    1Reply
  • Lisa Phillips
    Real Estate Investor · Arlington, VA · Member since 2012 · 302 posts · 277 votes
    9y

    @Jay Hinrichs - WRONG. Dont go into ANY market under capitalized, not "Markets Lisa Phillips Suggests." Just wrong if you think thats specific only to lower priced neighborhoods and not all markets. 

     So, that means dont go under capitalized if its a 150k home (which can literally end very badly for many many years - how can you make up for a mistake that large), and dont go into for a property you paid 20k for under capitalized (which will set you back significantly less than a 150k or 100k mistake). 

    Like i mentioned, we're doing very, very well in our group, but we understand what this is about. This is NOT for everyone, so if you're uncomfortable with the idea, don't do it, but don't put your uncomfortable feelings on everyone who are quite comfortable in those neighborhoods.

    @Raeshell

    @Raeshelle C. there are a lot of strategies, see which one resonates financially and to your comfort level. People hold their noses up in the areas at the neighborhoods I teach about investing in, but I came from those neighborhoods and we're doing just fine in my sub30k group.

    2Reply
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