$20k saved & 810 Credit Score but I live in LA-what would you do?

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Hi everyone! I'm brand new to both the site and the concept of Real Estate Investing, so apologies if this is awkward in any way, but I wanted a little starting out advice for my specific situation, and everyone seems really nice and helpful on the forums, so I thought I'd give it a shot!

* My goals: I'd like to generate some supplemental passive income through investing in real estate rentals in cheaper markets, with the end goal being to assist me in saving to buy a home of my own here in Los Angeles (in the $750k range), and maybe eventually replace my current work.

* My job: I currently work from home running my own online fashion brand (it's an LLC). We grossed $275k last year, I kept around $50k -- I'm definitely not rich, but it's pretty chill and I like what I do.

* My living situation: I live in a 3 bedroom home (I rent) in a very trendy neighborhood in Los Angeles. One bedroom is my home office for the fashion brand, the other is mine, and the third I Air BNB, bringing in between $1000-$1500 of extra income per month, which goes straight into a savings account. 

* My budget: I have $10k currently set aside to use towards investing in real estate, and I have another $10k safety net available. I also have an 810 credit score, and my only current debt is around $13k of student loans. I save around $8,800/year from my current income, as well as the roughly $12k per year from my Air BNB room.

* My skills: I am pretty good at online marketing (my company's instagram has around 230,000 followers, my own has 65,000). I'm also pretty skilled at all areas of design (I have my BFA in fashion design, part of the draw of my current home for Air BNB is how it's decorated, and I worked as a graphic designer to pay part of my way through college). I'm also a bit of an overachiever (graduated from high school Valedictorian as a Junior) so I have a go-getter and highly social personality. I'm 2/3 of the way through getting my real estate license just for fun. I am a spreadsheet and math queen (youngest person in my school district to take Calculus in high school). I also grew up pretty poor in a town run by a major gang (shout out Fresno, California), so I have a strong functioning understanding of "rough" sides of town -- I know when a street is run by a gang, or when it's just a bunch of poor but wholesome families trying to get through their day, and how that can change from block to block.

*Here are my starting out questions: 

1) If you have great credit, is it better to finance your first rental purchase or pay with cash? 

2) Is the $10-$20k I currently have saved enough to get me started, or should I be looking to save more money before diving in, to purchase a higher-priced property?

3) Should my first buy be turn-key ready for renters, or should I be looking into fixer-uppers if I have a knack for design?

4) Are there higher maintenance costs associated with buying the midwest or south than, for example, Arizona due to the damage caused by snow and heavy rainfall/storms? 

5) Should I form an LLC just for real estate buys prior to purchasing my first rental?

6) I was originally thinking of purchasing an apartment to rent for my first buy, since I imagine there are lower maintenance fees associated with that than a whole building (even taking into account the HOA fees). Is it better to buy a single apartment, or something like a duplex that is a whole building on its own?

7) Any other advice anyone out there has? I don't know what I don't know at this point. 

[Caleb Heimsoth]

@Madeline Hansen congrats on getting started and finding BP.. I will tell you this site has changed my life since I joined almost 3 years ago. If you’re active and provide helpful comments, it’ll open all sorts of opportunities.

Now that aside, my first point of criticism, is I wouldn’t recommend mentioning accomplishments from HS, it’s not really relevant and most people won’t be impressed with that, just my opinion anyways.

I’ll take a crack at your questions:

1. Great credit only matters if you’re financing, so if you have an 800 plus credit score, you should finance. That being said, interest rates don’t change at all after you’re above a 740-760 score I believe (or somewhere in that range)

2. 10-20k is likely enough to get started but to be safe I would recommend saving more. Lots of stuff can and will go wrong. I got hit with a 4K unexpected turnover/rehab about 6 months in. So having reserves is important

3. I started with turnkey, it’s not perfect but it got me started. Having a knack for design is really only useful for flips. With 10-20k the types of rentals you’d be buying, tenants won’t really care much for a super specific interior design. They’ll just want functional and basic.

4. I’ve owned in the Midwest and the south. I prefer the south. Biggest reasons are 1. No snow and 2. No basements. Basements and snow cause a lot of issues. Of course where I invest now we have hurricanes, so it all sorts of boils down to preference.

5. There are a billion threads on if you need a LLC or not. You can search those if you want more information, but in my opinion, no you don't need an LLC for a while when starting out.

6. When you say purchase an apartment are you talking about a condo or something like that? I would advise against this as they tend to be harder to finance, harder to sell, first to get hit by a recession, and HOAs are a nightmare to deal with for landlords (or can be). Some have restrictions on having tenants and so forth

7. I read 3-5 books and listened to 200 plus podcasts on BP before I did anything. I recommend a similar level of education.

Tag me if you have any other questions