Gloucester, VA · Member since 2018 · 25 posts · 5 votes
Hello all!
We are new investors looking to start our real estate journey in the next year or so. We will only be starting with about 20k-30k and we had originally planned to start flipping houses to build capital quickly, then build our rental portfolio to create stable passive income, and then build other tiers.
However.
I am now thinking, after hearing a few podcasts, that maybe flipping isn’t the best option for fresh investors who both have full time jobs. What would be another great way to build capital quickly, with only 20-30k to start with?
Or will it be a slow and steady pace, and best if we start with BRRR deals?
Gloucester, VA · Member since 2018 · 25 posts · 5 votes
7y
@Brian Garrett
Gotcha, understandable We haven’t ruled out flips just yet, just trying to see what other ways may be out there, or if 20-30k would be sufficient depending on the market for a flip. Or maybe tips a newbie for a flip/BRRR
Investor · Kirkland, WA · Member since 2017 · 310 posts · 271 votes
7y
@Melanie Heiges How about buy a house in a nice area with good schools, not the nicest house nor the worst in the neighborhood? Whatever style and bed bath count is the most popular in your area, within commute distance of central area, having a good grocery store nearby helps your value. Live in it for 2-5 years while you fix it up & improve it. Keep your end buyer in mind with your improvements, don't over improve for the area/demand. This gives you debt pay down, hopefully market appreciation, forced appreciation via improvements and tax benefits, lots of tail winds. After 2-5 years either sell and buy something else and do it again or cash out refi, keep it for rental and go buy something else and start over. It's a slow live in flip or BRRR and many people do it with no explicit plan or knowledge of BP, it's just how they normally live.
We thought about house hacking, or doing something similar to what you had said, but it will be a while before we can. My husband and I bought our first home in 2016 before we got married, and it doesn’t have enough equity to sell, and the main reason the guy decided to sell was because he couldn’t get any renters in it. The house is in a very rural part of the area, a bit of land, and it’s not too close to anything. Our families have dubbed it the “retire home” because that’s what’s they all envision when they think of retiring haha
But the area is building up, so it may be more renter appealing by the end of the decade, but we want to start soon
Real Estate Broker · Windsor, CT · Member since 2015 · 1k+ posts · 268 votes
7y
@Melanie Heiges why dont you consider partnering with someone in your area on a flip and split everything 50/50. This will give you the knowledge experience and tools to getting started. You will also be able to decide if flipping is what you really want to do without putting all your eggs... well in this case all of your money into one basket. Find a mentor on Biggerpockets who is willing to partner with you.
Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
7y
I think its too tough for any of us to tell you what is going to work best. It depends on your market, what you are good at, and how much time/effort you are willing to put into this. The two deals i have under my belt all involved a lot sweat equity, and i did it working a demanding full time job. Im still doing it. So essentially i think anything could work if you make it work. But youd need to figure out your market and what is going to get you the best returns. Good luck!!!!
Rental Property Investor · Irvine, CA · Member since 2017 · 36 posts · 27 votes
7y
I might be coming off more conservative than others, but this is still investing. You typically don't want to invest money that would cause a major impact to your financial life. I say this because with 20k your options are fairly limited and you need adequate cash reserves to properly do REI.
With 20k, you could potentially put 20% down on a 80-100k home, but then your equity would be tied in that deal, you would cash flow around 200-500 a month and thats it. If something happened where you need a new roof, how would you cover that cost?
If you ask me, I would save up more before starting. You can always invest in the stock market and work on saving more until you have more cash reserves. Once you have enough cash to buy a home cash + rehab + capital expenditures, you can BRRRR/flip over and over.
If you have a high risk tolerance, you could also consider a hard money loan. With this approach, you could BRRRR or flip now but I would probably partner with someone with experience if taking this route.