$50,000... Where would you start?

54 Replies

Hello all! My wife and I are new to the Real Estate Investing world, and are excited about what could be! End goal for us is to be able to retire and drink mai tai's on the beach without a care in the world. Between now and then would like to build a portfolio that will allow us to retire by age 55 at the latest, while maybe even providing some cashflow into our pockets along the way. We will retire with two pension's that would allow us to live comfortably, but any and all extra funds to give us play money for our lives to travel and live in paradise really gets us excited.

By next February, we will have 50K cash to put into an investment. After much research and reading/listening to podcasts, I am particularly drawn to turnkey investments because of the passive nature of the investment that would allow us to focus on our current careers, however with 50K limits us in the amount of properties we can purchase. Below I have attached a spreadsheet of some numbers that I have put together showing the income from two investment properties with some money coming in from our own income to supplement saving for future investments. 

I keep listening to podcasts and reading about how people added 7 properties in their first two years and how awesome they are, but looking at realistic numbers this seems out of the question for us. I assume the people on these podcasts 1.) Take REI as a fulltime job to do this, and 2.) Start with more money than us. Is there something else that I am missing. Overall goal for starting is to maximize what our money can do for us. I have also read about the BRRRR strategy, however with zero experience in this industry thus far, the risk becomes much higher in not having a developed team yet.

Want to get any and all opinions/advice as to what you would do, or if there is something that I have overlooked, especially in the realm of turnkey and creating the ability to acquire more properties without years in between. I realize that this is a long term investment and we have 25 years until we are looking at being retired.

Thanks!

@Karl McGarvey ,

Lots of people start with $50k or less, and start investing part time. It's going to take late nights and early mornings, hate to break it to you. Even passive investors have to spend a lot of time building deal flow, reviewing deals, and turnkey investors still need to manage their property managers.

Be careful, you'll get addicted!

You're in a learning stage, which is great! I think you should add networking to your equation. Get out to local REIAs and go meet real people who have been successful! Their success should be an inspiration because you'll learn more of what's possible.

If I were in your shoes - I'd make a list of turnkey providers and have calls with every single one of them. Write up a list of questions before you call the first one, write down their answers, and as you learn, add more questions and adjust!

I would also track down turnkey investors here on BiggerPockets and set up phone calls with them to ask about their experiences. Just ask and say you're looking to learn about their experience. Not everyone will want to talk, but those that do will probably save you a lot of time and money down the road, just through their knowledge. Make a goal of having 3 calls a week.

@Taylor L.

Appreciate your response! We definitely are not scared of working hard for it, and I agree with your "addiction" comment. I am already finding myself searching properties constantly trying to practice running numbers to familiarize myself with what good and bad deals look like.

Do you happen to have a good source for locating REIAs? I have looked a little on Meetup but have not found much close to where we are in Houston, which could just be a lack of me knowing where to look.

Over in West Houston... almost to Katy.

Go hit some local REI meetups in your area. Also if you use hard money, what you have is plenty. I worked with a lender down your way, and I would use them again. @Austin Pool works for them now, so you could connect with him.

And go slow.  Don't get in a hurry to find that first deal (like I did). 

It is really easy to talk yourself into deals, especially on the borderline deals that look like they might just work if everything goes right.  It's like that fat ugly girl at the bar -- the one that starts looking better and better as you consume more adult beverages.

@Mark Sewell Haha. I hear you! I have already found myself looking at deals on roofstock saying "Well I mean I guess that would work" which is not the right attitude! Have actually been looking at multi units in Galveston too, want to learn about the rental market down there in terms of the medical school and the students passing through there.

@Karl McGarvey depends on your area. Meetup works well in my area.

I just googled "Houston REIA" and found a few. To be honest I would just start there.

I would also look up Ben Suttles of Disrupt Equity, I think he has a group or two in Houston. 

If you're looking at multis then definitely look up Ben.

You know when I started, I called some guy at Jet Lending and he sent me over their excel spreadsheet calculator. I added a few items and started using it as a simplified deal analyzer. If you can figure out ARV (running comps) and get a good handle on renovations/repairs (this was much harder for me) then you can get a good feel - at least for flips. For buy and hold guys, those guys will pay more for those houses, but that spreadsheet still works as a general indicator (the BP calculator is way better). If you connect with me, shoot me your email and I dig it up and send it over.

Then go meet some wholesalers and get on their buyer lists.  Their deals will suck, I promise, but at least you can get good at running your numbers, so you can arrive at this same conclusion yourself.

@Mark Sewell that's exactly what I have been using roofstock for. And to see what is "realistic" in terms of returns on a turnkey type property. Right now the idea of flipping def makes us a little nervous because we have zero contacts in terms of contracting, but that is going to change over time as I meet more and more people.

Off Market , Off Market , Off Market , buy your own deals.  Find areas where the numbers work for a rental , tricker with prices that have gone up over the past few years. 

@Jack Baczek awesome! Any good recommendations on where I can do my homework on off market deals? Nice to see someone so close to me down here!

@Karl McGarvey The downside to turnkey properties is that someone else has already come in and created value, which is where most of the opportunity is if you're hoping to grow your money in the short term. With $50k to start out with, you can either put a downpayment on one or two turnkey properties and watch your equity and cash reserves build back up over the next 30 years, or you can buy a small distressed property to flip or BRRRR and really get your snowball rolling.

I know it’s intimidating going into a deal without a team in place, but I can say thru experience that you can get solid leads on contractors pretty easily through a few hours of networking, before you even buy your first deal. Pick a weekly meet up and start going to the same one consistently. You’ll find people who are not just happy but excited to help, especially when they see you coming back a few times and realize that you’re serious about getting plugged in.

Congrats on getting to this point and having a sizable amount of savings. I have to agree with @Jack Baczek and find your own deal to start if you can. Pull some lists in your area, drive around on the weekends, or just ask around. Get something that needs a little work. Find a trustworthy contractor to help you fix it up or build your own sweat equity into it. Follow the rest of the BRRRR strategy to get the momentum going. Then you can look into turnkey.

@Karl McGarvey if you use the BP search function you’ll find a million threads that ask “what should I do with *random amount of money*”.

@Chris Hunt Thanks! I can see the advantages, especially if we can find a deal that has minor issues, call it 10k in repairs, where we are getting our feet wet but not throwing it all out there on the first deal with anything too major.

Have you talked to your bank to see how much you can borrow?  How much are houses in the area you are looking?

@Theresa Harris I have not yet because my Debt to Income will change by next February when we are ready. Homes in Houston range anywhere from 50k to 5 million. Extremely diverse areas with alot of opportunity. It is just about finding the deal that makes sense. My ideal first property would keep me in the 100-135k range. But like you brought up, the bank gets to have a say as well

@Karl McGarvey   Find something in a good neighbourhood.  Ideally something that needs cosmetic work (e.g. paint).  From there it depends on who you want to rent to, single person/couple or a family.  Remember when you are buying, you also want to think about resale down the road.

@Karl McGarvey You can read here on BP, go to networking events. and don't forget, at the end of the day you have to pull the trigger or it was all for nothing once you feel you have adequate time and knowledge. Talk to people who are actually doing deals. Not marketing deals, not trying to sell you crap, people who have done it a handful of times... people who are still doing it today. Im not doing SFH. But before i tried to buy a house in Cedar Landing league city - 2013 i think . And our offers weren't high enough for on market. So we started mailing the list of all the houses there. Said we needed to buy a house to live in , and boom , we got one for about 15% off market. Numbers would have worked as a rental. Probably dont today. So scan some neighborhoods, that dont flood , have strong rents, your expenses are not out of line, and acquisition cost makes sense .

You can find deals all day long  with some leg work.  A house i previously owned, and sold last year. 

I think it would have worked as a rental, good numbers, needed fix up.  For me it was part of a package. But had to go through like 5 buyers , wholesalers , like 5 months of contracts.  Seriously , for people that complain about lack of deals..... Im sure the spread was there for generating a rental return. 

I dont know the city much but spend more time in galveston county ( not galveston) and also like brazoria county more towards the east.  See if you can find some way you can have a niche or special advantage, special neighborhood. etc. 

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