Best way to start out investing with $10K?

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How would you invest in your first rental property if you had $10K? I am going to get a personal loan so that I can get started. I want to buy and hold. I live in MA. I could house-hack first and do it through FHA and live there for a year, but I want to buy a multifamily that doesn't need repairs or else I'd have to do the 203K loan which seems to be more complicated, but I guess if it comes to that I'll get guidance from a buyer's agent who knows the whole process.

I know there's also owner financing or turnkey. My goal is to make good cash flow (after expenses) per month, and eventually, have 10 units at the least. And whatever path is easier to do a 1031 Exchange down the road. 

What would you do with $10K to start out investing in real estate with these goals in mind?

Goals are good.  Yours are very specific, and at least one (the 1031 exchange) is somewhat bizarre.  Tax avoidance tactics are something you use when you need them, not usually a goal unto themselves.

I expect you know that you are not going to get a multi-family in Taunton for $7000 down.  Especially not one that needs no repairs.  So that is step one:  Be prepared to move.

It is not true that any property that needs work will require a 203k loan.  

You should also remember that being a landlord requires some form of cash or cash-equivalent reserves.  You need to be able to immediately replace a furnace that goes bad, because your tenants cannot be left in the cold. 

Honestly, with that amount down, I think househacking is your only alternative if you want to buy now..  

Better, I personally think, is to spend the $1000-$2000 is would take to become a licensed real estate agent and affiliate with a broker, then sell real estate part time and set aside what you make for a larger down payment.  You will learn a lot doing this, and that will keep you from having to learn lessons the hard way.

Whatever you do, do not listen to anyone saying you should spend your $10,000 on "coaching" or their "system" or their seminar or training.  They just want to take your money.

Originally posted by @Richard C. :

Goals are good.  Yours are very specific, and at least one (the 1031 exchange) is somewhat bizarre.  Tax avoidance tactics are something you use when you need them, not usually a goal unto themselves.

I expect you know that you are not going to get a multi-family in Taunton for $7000 down.  Especially not one that needs no repairs.  So that is step one:  Be prepared to move.

It is not true that any property that needs work will require a 203k loan.  

You should also remember that being a landlord requires some form of cash or cash-equivalent reserves.  You need to be able to immediately replace a furnace that goes bad, because your tenants cannot be left in the cold. 

Honestly, with that amount down, I think househacking is your only alternative if you want to buy now..  

Better, I personally think, is to spend the $1000-$2000 is would take to become a licensed real estate agent and affiliate with a broker, then sell real estate part time and set aside what you make for a larger down payment.  You will learn a lot doing this, and that will keep you from having to learn lessons the hard way.

Whatever you do, do not listen to anyone saying you should spend your $10,000 on "coaching" or their "system" or their seminar or training.  They just want to take your money.

Thanks for your thoughts but my goal is not to become a real estate agent. I do not want to be a real estate agent. I know people that have jumped into investing with real estate without doing the RE agent route. 

The 1031 Exchange I don't believe is bizarre at all. I giggled at that one. I want to one day retire and buy a portfolio of property that is worth 200K+ to 1M and the 1031 Exchange is  a great way to get rich and do that. 

I am prepared to move to either Worcester or Providence or Fitchburg, but no further. I am also not opposed to investing out of state. With $10K, I could put $5K down and still have a few thousand for reserves. I do not plan on landlording. I'm going to work with a property manager who will deal with the tenants. I have very specific goals, yes. 

It looks like so far I will have to do a 203K loan. I do not have extra funds to buy AND fix up a house. And I have waited years while reading up on this field, and I'm not going to wait anymore.

I agree with @Richard C. do not spend money on coaching or classes.  House hacking is probably your best option if you want to start immediately if you find that what you can afford is a bit underwhelming you can always wait and save a bit more.

So everyone that started out had over $10K in their hands? How did you get the money then?

Your plan is solid. House hack a duplex but like Richard said don't spend the whole 10K. Keep 2 or 3K for reserves. 

Also, the property can need cosmetic repairs with FHA just nothing major. Can also depend on how strict the inspector is.

Good luck!

Great goals!  I also suggest you house-hack for the amount you have and your goals.  I was in the same situation, studied for years then was super anxious to make the first purchase becasue I didn't want to wait anymore.  I bought a 3-fam that was "move-in ready" but within the first few months of living there I had to pay thousands in fixing plumbing and electrical issues - whole situation was SUCH a headache.  So one peice of advice is don't jump into the first deal you come across because you really want it, make sure you scrutinize everything before you buy because you don't want any surprises!

Originally posted by @Nicole Dunlap :

Great goals!  I also suggest you house-hack for the amount you have and your goals.  I was in the same situation, studied for years then was super anxious to make the first purchase becasue I didn't want to wait anymore.  I bought a 3-fam that was "move-in ready" but within the first few months of living there I had to pay thousands in fixing plumbing and electrical issues - whole situation was SUCH a headache.  So one peice of advice is don't jump into the first deal you come across because you really want it, make sure you scrutinize everything before you buy because you don't want any surprises!

Thanks for the advice! Do inspectors usually look at the plumbing and electric?

@Raeshelle C.

What do you mean by:

The 1031 Exchange I don't believe is bizarre at all. I giggled at that one. I want to one day retire and buy a portfolio of property that is worth 200K+ to 1M and the 1031 Exchange is a great way to get rich and do that. 

I have done 1031 exchanges and I'm not sure what you are getting at? I used it to sell commercial property and role the money into more investment properties without having to get taxed on the profit, but it certainly isn't a path to get rich, at least that I know of...

Originally posted by @David Boroughes :

@Raeshelle Cooke

What do you mean by:

The 1031 Exchange I don't believe is bizarre at all. I giggled at that one. I want to one day retire and buy a portfolio of property that is worth 200K+ to 1M and the 1031 Exchange is a great way to get rich and do that. 

I have done 1031 exchanges and I'm not sure what you are getting at? I used it to sell commercial property and role the money into more investment properties without having to get taxed on the profit, but it certainly isn't a path to get rich, at least that I know of...

It definitely is a path to get rich. Maybe you should read up on it, especially if you're "not sure by what I'm getting at". https://www.biggerpockets.com/renewsblog/2015/09/24/1031-exchanges-real-estate/

Originally posted by @Raeshelle C. :
Originally posted by @David Boroughes:

@Raeshelle Cooke

What do you mean by:

The 1031 Exchange I don't believe is bizarre at all. I giggled at that one. I want to one day retire and buy a portfolio of property that is worth 200K+ to 1M and the 1031 Exchange is a great way to get rich and do that. 

I have done 1031 exchanges and I'm not sure what you are getting at? I used it to sell commercial property and role the money into more investment properties without having to get taxed on the profit, but it certainly isn't a path to get rich, at least that I know of...

It definitely is a path to get rich. Maybe you should read up on it, especially if you're "not sure by what I'm getting at". https://www.biggerpockets.com/renewsblog/2015/09/2...

I know what it is, I have done it. It can save you a few $ on taxes, but it can be complex to work out with the timing and all. Besides counting on properties to appreciate, how do you see the 1031 as a path to 'get rich'? 

@raeshelle cooke

Hi! It does sound like you've done a lot of research.  However with $10k it might be hard to do a house hack.  Have your seen any 2 or 3 family properties within your price range?  

I agree with others on gaining real estate knowledge and house hacking.  Why do you plan on getting a property manager from the start?  Do you already have a good handle on material and labor prices for repairs?  Do you have a property manager lined up?  I would be worried you would end up spending a lot more hiring others than if you did the work yourself.  

@Raeshelle C.   I'm actually not sure, that was one of my mistakes by wanting to jump into a deal so bad... I didn't get an inspection although EVERYTHING I had studied (incl seminars etc) said otherwise.  It was dumb and I knew I was being dumb lol.  But actually the issues that I had were not operational issues, it was more administrative/red tape and I don't think an inspection would have caught it...

@David Boroughes   When I read it, I was assuming she felt a 1031 would be a path to wealth in that once you have equity in a property(ies), you could "trade up" using the equity as a deposit on a larger building and not have to lose some of that deposit to paying taxes immediately..... is that not how it works?

Originally posted by @Jennifer Cheu :

@raeshelle cooke

Hi! It does sound like you've done a lot of research.  However with $10k it might be hard to do a house hack.  Have your seen any 2 or 3 family properties within your price range?  

I agree with others on gaining real estate knowledge and house hacking.  Why do you plan on getting a property manager from the start?  Do you already have a good handle on material and labor prices for repairs?  Do you have a property manager lined up?  I would be worried you would end up spending a lot more hiring others than if you did the work yourself.  

I do not want to deal with tenants. I don't see why I would deal with them if there is an option to get someone else to deal with them. I have a picture for my future and that is, not dealing with tenants especially since I do not need to. As far as having a good handle on repairs, I would work with others to figure that out. If I was alone, I'd imagine it'd be even harder to know anything about that stuff. There are others that have knowledge about those types of things, so I will work with those people. I do not know how to fix anything anyway. 

I have definitely spent enough time gaining real estate knowledge lol. The repairs, I do not have much knowledge on, because I am not a repair-woman. I have been gaining real estate knowledge for 4 years now. I always get confused when people tell me to wait more and gain more real estate knowledge. It makes me think they just want to keep new investors out of the game to get all the good deals. It is a business after all. 

Originally posted by @Nicole Dunlap :

@Raeshelle Cooke  I'm actually not sure, that was one of my mistakes by wanting to jump into a deal so bad... I didn't get an inspection although EVERYTHING I had studied (incl seminars etc) said otherwise.  It was dumb and I knew I was being dumb lol.  But actually the issues that I had were not operational issues, it was more administrative/red tape and I don't think an inspection would have caught it...

@David Boroughes   When I read it, I was assuming she felt a 1031 would be a path to wealth in that once you have equity in a property(ies), you could "trade up" using the equity as a deposit on a larger building and not have to lose some of that deposit to paying taxes immediately..... is that not how it works?

 That's exactly how it works. So I don't get what his issue is. I just moved along from that comment.

and to @Jennifer Cheu 's point, you won't need a property manager if you are house hacking because you are living there.  I have def learned a TON by managing my house while living here and that way you can learn HOW you want your property managed for when you are ready to hire a PM.  But just know that no one is ever going to treat your property the way you would, so you have to be ok with letting go of the little things which is very hard to do when you live there and see it day-to-day.

Im always the kill joy...............lol.  Listen to Dave Ramsey- he says broke people shouldnt buy RE.    Borrowing $10,000 and thinking you going to get rich is ludicrous.

Originally posted by @Jody Newman :

Im always the kill joy...............lol.  Listen to Dave Ramsey- he says broke people shouldnt buy RE.    Borrowing $10,000 and thinking you going to get rich is ludicrous.

 Oh really? You want to bet on ME? Everything I have ever set my mind to accomplish, I have accomplished. Everything in my life. You have no idea about the kind of network I am apart of, the strategies and many different options I have. Oh, and I am not broke. And second, I will get rich off real estate. Watch me. In fact, once I get my cash flow from investing $10K, I will create a new thread discussion and tag you, and you better not ignore the post when I do. 

This post has been removed.

People that come in trying to be negative are hilarious. There have been people that have invested $7K on their first property and 10 years later were wealthy. You can get rich starting out with nothing, ha! It's about being creative and financially intelligent. Clearly certain people are very narrow-minded and closed-minded, and probably failed themselves and that's why they're wishing I will fail. I will NOT fail. I have already decided that I will achieve wealth through real estate. Once I've already made a decision to do something, I do it. Your negativity and smartass comments is no match. Sorry. I'm already there.

What’s the interest rate on that personal loan going to be? Is a lender going to approve a mortgage based a down payment coming from a loan?

Originally posted by @Jody Newman :
Originally posted by @Raeshelle Cooke:
Originally posted by @Jody Newman:

Im always the kill joy...............lol.  Listen to Dave Ramsey- he says broke people shouldnt buy RE.    Borrowing $10,000 and thinking you going to get rich is ludicrous.

 Oh really? You want to bet on ME? Everything I have ever set my mind to accomplish, I have accomplished. Everything in my life. You have no idea about the kind of network I am apart of, the strategies and many different options I have. Oh, and I am not broke. And second, I will get rich off real estate. Watch me. In fact, once I get my cash flow from investing $10K, I will create a new thread discussion and tag you, and you better not ignore the post when I do. 

 If you had options up the ying yang you wouldnt be asking about personal loan of $10,000 for RE.  One thing you are on to is its not the best to live next to your tenanyts....................lol.

 And you're clearly a troll. Blocking you now. Bloop.

You can do a lot with $10K starting in real estate. This person is a troll, and clearly, not a very creative or financially intelligent one. I feel sorry for you. Maybe if you fix your nasty attitude, I can share what some of those alternative ways are. 

Won't be anytime soon. Keep failing. Buh bye.

This post has been removed.

@Raeshelle C.

Not sure how much properties are in your area but with $10k, you're best bet it to house hack with a FHA like others have mentioned.

Another option is to find motivated sellers who will do seller-financing.  less money out of your pocket.

Honestly, you should try to save up some more money so that you have more options and can get in a good property/deal.  With more money, you have more leverage.

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