What would you do with 50k?

12 Replies

Hey All, I have $50k currently at the moment, and will have an additional $65k by January. ($115k if I decide not to spend that $50k right now) I would like to turn into passive income from buy and holds or possibly throw it into a property, rehab, and flip it for more capital.

I'm still trying to land my first deal, I think the nerves hold me back, I'm 22 at the moment and just wanna get my feet wet already. Should i use the 50k and put 25% down on a property and rent it out for cash flow? Or maybe 5% down for my first property?

I'm wondering how YOU guys would use that 50k or 115k to get started in earning passive income. I would love to hear all your strategies and tips!

Thanks! 

Flip first to grow your seed money.  Spend you profits (on cash flow), and re-invest your seed money (from flips).  Once your spend your seed money (the $50K you have now) on a rental, it's gone, and no longer working for you.

Depends on your market, your strategies, and what you can do with $50k. In my market, I could buy & rehab to generate $1500/month in rent. I don't know if you have a job, but in a year with income from my job and that rental income (skipping the detailed numbers for brevity), I'd have $20k to invest and and my $50k back from refi for $70k to do it again with and grow. It all depends on what your goals are and what speed you want to profit, but mine are buy and hold long term primarily.

Michael. You're 22 years old. Lease a flashy car, figure out how to pick up cheap women with it, and otherwise waste some of your youth properly. You go into real estate now,  by the time you're 35 you'll be divorced from the golddigger who snaps you up without a pre-nup and she'll be turning your children against you. So put the money into a Porsche. Think of the kids.

@Michael Cavitolo Don't take the cash flow route. It's impossible to double your money if you're doing buy and holds.. you have to look for solid fix and flip projects. I strongly recommend finding a cosmetic project if you haven't done any projects in the past. Also, get your RE license. It will save you a ton of money on the buy/sell side. 

Great work saving up 50K! (and soon to be 115)

If you have a W-2 job, you could use some of that to owner/occupy a cosmetic fixer- upper FHA - Fourplex - bonus points if you rent out rooms in the unit you occupy. you do this for 2 yrs and you can then sell the entire thing (as I understand) tax free (fed/state) IRS sec 121

you will LEARN (which is the most important part) about tenants, fixing up property.

OR!

with 115 you probably have enough to go to Trustee sales and start buying properties in rural areas of austin (45 mins out of the city?) for 70 cents on the dollar. fix em up on the weekends and target to make 20-30K a flip (do 2 of them a year and keep them as rentals if you want using the BRRR strategy)

again congrats on saving!   the first 100K is always the hardest as they say

Originally posted by @Jim K. :

Michael. You're 22 years old. Lease a flashy car, figure out how to pick up cheap women with it, and otherwise waste some of your youth properly. You go into real estate now,  by the time you're 35 you'll be divorced from the golddigger who snaps you up without a pre-nup and she'll be turning your children against you. So put the money into a Porsche. Think of the kids.

MVP. Most valuable post.

@Michael Cavitolo

Good morning, sir!

This is a rhetorical question, so please don't feel the need to answer publicly:

Is your current income currently coming in from a steady job that you foresee retaining for quite some time? Is that yearly amount expected to grow in the future?

If so, that seems like a substantial amount that you are able to earn and save. That is awesome, congratulations!

Honestly, if that's the case, start acquiring rentals for your real estate portfolio now. If you search the forums, you'll find that most investors agree that if you truly want to build long-term WEALTH, then rentals is the way to go, hands down, over flips. 

You'll want to find property that is in distressed condition, fix it up, and refi out so you can get most of your cash back to reinvest in even more properties. You'll need to "buy right", though. Make sure you're purchasing in areas that have steady growth, thriving businesses, low crime, and good schools. 

And remember, substantial passive income doesn't come from one rental unit. It comes from tens and hundreds of them, so you'll need to buy more than one. Imagine if you start buying 2-3 rental homes per year. By age 30, you'll have close to 16-20 properties that should all be cash flowing, and most likely appreciating. Your tenants will be paying down your mortgages (which means your equity is increasing), and the tax benefits you can use will keep money in your pocket as well. Eventually you can trade all your single family homes in for a massive multifamily unit, or several! Or just keep your single family's.

Either way, I'd highly recommend rentals over flips, especially at your age, if you're looking for long term wealth and you have an excellent paying job. Flips are great, but most of the millionaire RE investors I know attest all their success to the buy & hold game.

Hope this helps!

I would put it in a high yield savings account to keep it liquid while I study and learn different aspects of REI.

Then I would focus on whichever particular strategy excites me the most (Flips, Rentals, HML, Notes, BRRRR, etc)

At that point I would have a much better understanding of how to find the highest and best use for my $50k.

@Michael Cavitolo I would recommend to start by househacking. You won’t need more than 5% down to get started and will learn a lot of the skills you need to be successful.

Don’t flip or buy out of state rentals/out of town before you get the basics.

@Michael Cavitolo - you want to get in the RE game, but the nerves hold you back. I'd either invest with a syndicator and learn the business this way, or find a mentorship program and learn about RE investing. 

In any case I won't spend all the money in one investment. Try to invest $25-$50K in each investment, spread out the risk (don't invest all at the same time). Give yourself a chance to learn what you like and what you feel comfortable investing in.

Good luck!

At 22 you can afford to go the risky route, which will yield higher profits. I was in the same boat as you, fresh out of college. I chose to buy and hold because it was the only option during the recession. You are in Texas is a great buy and hold market now and even a better one for flipping. But only do if you are comfortable flipping. And only plan on using no more than 60% of your funds.  You give the impression of a financial discipline young man so you already know that $100k is not a lot of money