Investor · Santa Cruz, CA · Member since 2017 · 61 posts · 50 votes
So, my wife and I have been have been saving for a while, which isn't really easy. (Two kids, tuition, CA prices..) But we do live a pretty thrifty lifestyle. 2001 ford truck for me and 2010 Pilot for the Mrs. All paid off and very little CC debt. Mortgage on our PR is $1500/mo.
That said, where would you park your $40k? Strongly feeling this bubble is near the popping point, and don't want to make the same mistake I've seen so many make. I'm really getting interested in MF syndication.
Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes
9y
I'm not you so I'm answering this from my perspective. I had around $60,000 to invest.
I bought 3 cheap/low income houses paying cash. I'm bringing in $1,650/month and own the properties free and clear. Used that money and just put a 4th one under contract that will close those week which will bring my monthly income to $2,350/month. Once again I own everything free and clear. Already have my 5th one lined up as well. Just going to wait another month to save up another $2,000 that I can use towards repairs on the 5th house.
Los Angeles, CA · Member since 2017 · 4 posts · 2 votes
9y
Same situation here. But I have $30k. I have never invested. I do drive all day and have notice lots n lots of open leases, vacant businesses,properties for sale, apartments for rent. this looks dangerous like everybody is leaving somewhere else. I'm in Los Angeles.
Salt Lake City, UT · Member since 2017 · 28 posts · 9 votes
9y
Don't have much to add but am in a similar financial situation so will be following to see what everyone says. The market is so high in Utah right now that it's hard to find a property that cash flows.
Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes
9y
I'm not you so I'm answering this from my perspective. I had around $60,000 to invest.
I bought 3 cheap/low income houses paying cash. I'm bringing in $1,650/month and own the properties free and clear. Used that money and just put a 4th one under contract that will close those week which will bring my monthly income to $2,350/month. Once again I own everything free and clear. Already have my 5th one lined up as well. Just going to wait another month to save up another $2,000 that I can use towards repairs on the 5th house.
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
9y
Robert DeForge
That is an interesting question as that is about the same amount as I have available to invest right now.
I do believe you should invest directly in property. I also love buy and hold and cash flow investing. I personally don't like syndications because you lack control as an investor.
Stock indices have withheld the test of time, that's where I've placed my savings as I wait to gather enough knowledge/cash to invest in a property.
Even after the housing market crash in 2008 where the price of the S&P 500 dropped from ~$1300 in August 2008 to ~$700 in March 2009, the price recovered to ~$1100/share by October 2009.
Definitely my preferred investment method. I am pretty risk averse, though.
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
If you want to invest passively in RE and don't want to invest locally (and/or may not have sufficient funds) then you should look into REITs. At least then you will be diversified, have scale, and top notch management with a verifiable track record. You need to consider not only the "best" return, but also all of the risks you are taking on in order to get that return and the likelyhood of not only return on capital but also return of capital.
I'm also in a similar spot. Did a cash out refi on our former PR, now STR - we close on Tuesday. Should have $50k to invest. We're in a hot market. Can't find anything that will cash flow. Most places need quite a bit of rehab, even if you can get it for $200k. Hoping to pick up a property at auction here pretty soon. Been watching it for months now, but if that falls through, I'm hoping maybe there will be a shift in the market so we can use our money wisely elsewhere and kickstart our REI biz.
I'm also in a similar spot. Did a cash out refi on our former PR, now STR - we close on Tuesday. Should have $50k to invest. We're in a hot market. Can't find anything that will cash flow. Most places need quite a bit of rehab, even if you can get it for $200k. Hoping to pick up a property at auction here pretty soon. Been watching it for months now, but if that falls through, I'm hoping maybe there will be a shift in the market so we can use our money wisely elsewhere and kickstart our REI biz.
Following!
Yep, hands on local like you are doing is the way to go IMO ... if you are willing and able, have the funds, and have the discipline to NOT pull the trigger on anything that isn't a great deal. Doing things this way, I have no doubt you can do better than you could with a REIT ... the OP states that he does not want to and/or can't invest hands on local, so I think the next best for a newbie that isn't going to be able to control their RE investments hands on and local is a REIT.
Investor · Wichita, KS · Member since 2017 · 584 posts · 813 votes
9y
You can buy all in investment rental properties in the Midwest for 40K all day long in C class areas. I bought a 2 bedroom 1 bath home with a detached two car garage for 18k. I spent 14k to rehab it and it is rented for $675 a month. People will sell virtually turnkey in the Midwest for 40k. It's a great place to park your money.
Investor · Santa Cruz, CA · Member since 2017 · 61 posts · 50 votes
9y
I'm currently pre-approved and looking in the KC area. It would be a totally different story if I was out there. I see so many $30-50k that look like they need about $10-20k in rehab to be killer rentals. I have a rehab team here in CA just not KCMO..
Investor · Wichita, KS · Member since 2017 · 584 posts · 813 votes
9y
The cost of labor in the KC area is cheap. For 20k in rehab you should have a new ac and furnace, hot water heater, updated plumbing, a new sink in the kitchen and bathroom, laminate flooring in the kitchen, new tile work in the bathroom, refinished floors, new ceiling fans, some light exterior work and some misc etc. I got all that and a riser with a new breaker panel for 14k. One guy did the labor aside from the hvac and electrical. Putting that kind of money in a rental is good idea I think, certainly on the major stuff like ac and furnace etc because you won't have to mess with it for 15+ years. Start putting together your KC team, perhaps you will have to go through a contractor or two before you find your guy but when you find him he has been found. There are tons of KC investors on Bigger Pockets, call in a favor. Good luck!
Same situation here. But I have $30k. I have never invested. I do drive all day and have notice lots n lots of open leases, vacant businesses,properties for sale, apartments for rent. this looks dangerous like everybody is leaving somewhere else. I'm in Los Angeles.
Miguel, I'm in L.A too. What part of L.A are you seeing this. It's a huge city of course and I see it more in parts of the city versus other parts. Apartments for rent and homes for sale happens in a good market too. Usually those apartments get rented in days and homes under contract in a week or less is what it seems like...as long as they are priced right.
I know with commercial things can be slower and it can take longer to rent and sell them though.
There will be a downturn at some point, but I'm not seeing any signs of it right now and haven't heard anything else about it.
A lot of people do leave L.A for other cities, especially Texas these days...but then they get 'replaced' with out people that are often higher income earners. This is what helps to increase prices and gentrification as well.
You don't really see this for example in many smaller cities across the country as it's mostly a local population living there without too many people moving in and out.
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Gala Klein, @Anthony Gayden, @Craig J Chelette, @Miguel De Dios, @Robert DeForge. Sounds like you all are in the same boat. A lot of options and it depends on your goals. You could use the money to invest in other parts of the country like others have said. You could invest in a commercial syndication or you could put your money in a safe/liquid investment, so when the bubble pops you're ready to pounce. I have a lot of experience in buying houses/duplexes that you could get into with a mortgage for under $40k. I also have experience in syndicating. If you want more info on either one, feel free to PM me. There are also some good BP posts and podcasts on those as well. I would say no matter what you do, research it diligently, make sure it aligns with your overall goals and then take actions.
Congratulations on having money saved by the way, most Americans can't say that, best of luck!
I feel I can find $40k properties too, just not in a condition to move people in. The ones I'm seeing in that range will certainly need some work, and I'm not in a position to run a job in Missouri from CA.
If you know where I can get my hands on $40k rentable Duplexes, let me know! :)
Investor · Joplin, MO · Member since 2017 · 15 posts · 9 votes
9y
I'd say look for something as cheap as possible but quickly rentable and run a scenario where if the market does crash, will you still be breaking even or cash flowing? If you're going to be completely wrecked if the market collapses then look for something else.
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
9y
When the above poster claims he is "parking his money" he doesn't know it, but he means permanently. I don't care what those Midwest houses appraise for. Just cuz some guy with a clipboard and fancy paperwork tells you the house is worth $65K doesn't mean you'll find a buyer ready, willing and able to pull the trigger on that deal and when the dust settles, that sales price is likely to be much lower than fancy clipboard guy claims it should be. That house will be on the market, vacant, along with lots of other on the market, vacant, houses all looking for the same low income, subprime buyer who is most likely more happy being a renter. I've got two of those awesome deals left in my holdings. Awesome deals I did when I didn't know what I was doing. Now they are anchors producing crappy returns and I almost can't give them away. As they say; when you lie down with dogs, you get up with fleas.
If I only had $40K to work with, I'd find a proven flipper in a market very close to me and I'd lend him/her the money secured by real estate, using escrow and getting a lender's title policy. I've done lots of these exact small loans when I was starting out and they were the only early on deals that paid off very well again and again.
Flipper/Rehabber · St Petersburg, FL · Member since 2016 · 44 posts · 14 votes
9y
@Robert DeForge You can do a bridge loan to someone who's doing Fix and Flip project with hard money and needs 10-15% towards purchase and x% for repairs. That won't work in CA, where you're at, but it may work pretty much anywhere in US.
Real Estate Agent · Englewood, NJ · Member since 2017 · 95 posts · 31 votes
9y
All of you in the same boat need to continue to build up your money and for the time being learn more about RE investing and educate yourselves. Knowledge is key and I'm sure there are some decent opportunities in your local areas -- check Craigslist daily, speak with real agent agents about investment properties, go to meet ups, etc. Develop a game plan and then pounce.....your do diligence will pay off. Good luck!!
Investor · Wichita, KS · Member since 2017 · 584 posts · 813 votes
9y
I'm just going to leave one final post on this as my strategy is under attack @Aaron Mazzrillo. Granted Aaron is a pro, I've listened to his podcast even before he chimed in here and I give respect where respect is due, the guy deserves respect. I think he has an amazing strategy. Robert asked what I would do with 40k. I think a buy and hold strategy with his all cash investment is an excellent way to invest his 40k. Personally, I think he should park his money there-permanently. Let's just do some fun math. On my deal I get $675 a month in rent. If I never raise the rent $675 X 50 years is $405,000- minus expenses. Let's say I picked a real loser and only rented it six months a year, that is $202,500. Personally, I don't see the point in selling it, I'll have my investment back in a handful of years and a free and clear property to will to my kids. If you create a nice product, it will rent. Tons of people rent apartments, go find one to upgrade. I wouldn't recommend buying a property surrounded by vacant houses, I didn't do that. There are lots of great real estate strategies, this one is mine. If you can find a deal in your area, that is of course the best thing.