What to do with $20k

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What to do with $20k

Braeden Henry
Rental Property Investor · Columbus, OH · Member since 2019 · 50 posts · 32 votes

I have $20k, how should I throw that money into real estate to make more than $20k in a short amount of time?

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Karl B.
Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
6y

What I did with my first multi-family deal was buy a 4-unit for $79,000. 

I put 25% down (roughly $20,000) and got a loan for the rest. 

The place was half-vacant and needed some work, much of which I performed myself to keep the rehab cost low.

It's fully-occupied now - I've owned it for 3.5 years and I'm getting almost $2,000 in combined rent per month and my 10 year mortgage (property taxes and insurance baked in) is $874-something per month and so I'm cash flowing well after paying the minor expenses such as the water/sewer bill and the lawn care.

Look for a similar deal (where you buy a property at around $80,000) that has good cash flow. 

I'm cash flowing roughly 20K on the property in two year's time which I consider a short amount of time. Plus the loan only has another 6.5 years until it's paid off and I'm cash flowing even more. 

You're in a good area - find a good cash flowing property!

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  • Karl B.
    Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
    6y

    What I did with my first multi-family deal was buy a 4-unit for $79,000. 

    I put 25% down (roughly $20,000) and got a loan for the rest. 

    The place was half-vacant and needed some work, much of which I performed myself to keep the rehab cost low.

    It's fully-occupied now - I've owned it for 3.5 years and I'm getting almost $2,000 in combined rent per month and my 10 year mortgage (property taxes and insurance baked in) is $874-something per month and so I'm cash flowing well after paying the minor expenses such as the water/sewer bill and the lawn care.

    Look for a similar deal (where you buy a property at around $80,000) that has good cash flow. 

    I'm cash flowing roughly 20K on the property in two year's time which I consider a short amount of time. Plus the loan only has another 6.5 years until it's paid off and I'm cash flowing even more. 

    You're in a good area - find a good cash flowing property!

    20Reply
  • Account Closed
    Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
    6y

    @Braeden Henry

    I would find a value-add multi-family property I could buy for roughly $10,000 down, and then save the rest of my money for reserves/rehab. Then, raise rents, refinance the property in 6-12 months and pull $ out from the equity.

    6Reply
  • Bala V.
    New to Real Estate · Dallas, TX · Member since 2019 · 7 posts · 1 vote
    6y

    @Karl B. Just curious which location was your first property at?

    1Reply
  • Lavonn Warren
    Port St. Lucie, FL · Member since 2020 · 9 posts · 6 votes
    6y

    @Braeden Henry I am in a very similar situation. Very interested in learning what others have to say. I am currently analyzing multifamily properties but, it seems I will need a little more cash or outside funding to make any of these deals work. @Karl B. mentioned that he was able to find a multi deal for 80k... That is my dream!

    1Reply
  • Karl B.
    Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
    6y
    Originally posted by @Balaji Venkatachalapathy:

    @Karl B. Just curious which location was your first property at?

    Hi. Erie, Pennsylvania. 

    Originally posted by @Lavonn Warren:

    @Braeden Henry I am in a very similar situation. Very interested in learning what others have to say. I am currently analyzing multifamily properties but, it seems I will need a little more cash or outside funding to make any of these deals work. @Karl B. mentioned that he was able to find a multi deal for 80k... That is my dream!

    Be patient, keep looking every day and run the numbers. Also consider getting a FHA loan and living in one of the units for a year. FHA loans are only a 3.5% down payment (so you could buy a 4-unit for 100K with only $3,500 down though there would be some additional closing costs as well).

    After a year you can move out, rent the vacant unit and likely enjoy cash flow.

    2Reply
  • Account Closed
    San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    6y

    I don't think that's enough money to do anything with.  I don't see it leaving you with enough reserves.  Not in today's world.

    I bought a 2 acre property way back in around 1992ish for $16,000 with about $6,000 down.  I then cut down enough trees (make sure you don't have a timber clause) to pay for a well and gravel road, then a year later or so, had saved enough for a septic tank and electrical.  Lived on the property in an Airstream trailer during this time with a horse and dog and put in a couple fences and then raised a couple pigs.

    I was very young at the time and didn't make squat while living in the mountains and canned my own food, etc.

    You might be able to do something similar in today's world, but I'm here to tell you it was rough.  I highly advise you always have plenty of reserves.  What's happening today is a perfect example of why.  You just never know what might hit you.  

    So, I'd advise you to keep saving, unless you're between a rock and a hard place and the best thing you can do is go buy a little land and go live on it in a trailer with that amount of money.

    Good luck.

    6Reply
  • Adam Blachnio
    Rental Property Investor · North East US · Member since 2019 · 114 posts · 31 votes
    6y

    @Braeden Henry

    I would use it as EMD for buying right turnkey 10-20units, to secure transaction, then find investor who will pay the rest and split the income but major focus after refinancing you can gain tax free even 100k from this, while still keeping the asset ;)

    0Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    6y

    @Karl B. Good move putting a 10-year note on the property if it is one that you plan on keeping long term and the numbers still make sense. Having properties paid off in short order is a beautiful thing if you do not have to sacrifice all of your cash flow. 

    3Reply
  • Deniz Eker
    Philadelphia, PA · Member since 2019 · 102 posts · 48 votes
    6y
    Originally posted by @Karl B.:

    What I did with my first multi-family deal was buy a 4-unit for $79,000. 

    I put 25% down (roughly $20,000) and got a loan for the rest. 

    The place was half-vacant and needed some work, much of which I performed myself to keep the rehab cost low.

    It's fully-occupied now - I've owned it for 3.5 years and I'm getting almost $2,000 in combined rent per month and my 10 year mortgage (property taxes and insurance baked in) is $874-something per month and so I'm cash flowing well after paying the minor expenses such as the water/sewer bill and the lawn care.

    Look for a similar deal (where you buy a property at around $80,000) that has good cash flow. 

    I'm cash flowing roughly 20K on the property in two year's time which I consider a short amount of time. Plus the loan only has another 6.5 years until it's paid off and I'm cash flowing even more. 

    You're in a good area - find a good cash flowing property!

    was your property rented when you bought it?Did it require minor repairs, how much did you put roughly for repairs etc ?is it a good idea to look for properties that require minor repairs compared to big makeovers?

    0Reply
  • Brian G.
    Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes
    6y

    @Braeden Henry house hacking. Search the forums for the concept if you are unfamiliar with the idea. It’s a great first step imo.

    1Reply
  • Derrick F.
    Rental Property Investor · Washington, DC · Member since 2020 · 17 posts · 4 votes
    6y

    @Braeden Henry

    Buy and hold in cities and connected towns down south: Memphis, Nashville, Atlanta come to mind.

    1Reply
  • Karl B.
    Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
    6y
    Originally posted by @Deniz Eker:
    Originally posted by @Karl B.:

    What I did with my first multi-family deal was buy a 4-unit for $79,000. 

    I put 25% down (roughly $20,000) and got a loan for the rest. 

    The place was half-vacant and needed some work, much of which I performed myself to keep the rehab cost low.

    It's fully-occupied now - I've owned it for 3.5 years and I'm getting almost $2,000 in combined rent per month and my 10 year mortgage (property taxes and insurance baked in) is $874-something per month and so I'm cash flowing well after paying the minor expenses such as the water/sewer bill and the lawn care.

    Look for a similar deal (where you buy a property at around $80,000) that has good cash flow. 

    I'm cash flowing roughly 20K on the property in two year's time which I consider a short amount of time. Plus the loan only has another 6.5 years until it's paid off and I'm cash flowing even more. 

    You're in a good area - find a good cash flowing property!

    was your property rented when you bought it?Did it require minor repairs, how much did you put roughly for repairs etc ?is it a good idea to look for properties that require minor repairs compared to big makeovers?


    It was half vacant when I bought it. The property management company the seller had running the place was inept. In the smaller of the vacant units there were mouse droppings on the floor but aside from that the unit wasn't bad - yet noone is going to want to rent a unit when they walk in and see vermin turds on the floor.

    In the larger unit there was a hole in the wall and a window was broken. It was dingy in there.

    Noone was going to rent either unit out which was good for me as the seller was only getting the first floor rent and he wanted to sell as he lived a state away and as mentioned the property management company stunk. 

    I didn't put that much in repairs. Under $1000 (I had hired a handyman to repair a few things, I spent $200 on electrician work and I paid for paint and painted the units myself). 

    Of course, from then to now there have been expenses and upgrades. After a tenant died I renovated the first floor one bedroom and last fall and winter had to replace two water heaters that went bad. 

    I also replaced the windows in both of the one bedrooms. I didn't have to do it but knew I'd get more in rent with nice windows, plus it's good to invest in a property and make it nicer so people want to stay - though improvements can be made gradually. 

    If you can buy a property that has cosmetic damage (needs painted, gross carpet, etc.) but doesn't have major problematic plumbing, electric, foundational issues and the roof is still solid then yeah - look for those. 

    Prior to closing I had hired an inspector and he told me what needed fixed - a lot of the more serious things on the inspection report were repaired and paid for by the seller (including a bad stack pipe in the basement that was replaced) so those repairs saved me a few grand. 

    0Reply
  • Joe Cassandra
    Rental Property Investor · Woodstock, GA · Member since 2017 · 517 posts · 772 votes
    6y

    Get a property sub2,use a little money for repairs, rent out.

    Put 3k in reserves.

    Repeat 2-3x

    0Reply
  • Account Closed
    Los Angeles, CA · Member since 2015 · 28 posts · 6 votes
    6y

    @Karl B. Wheres your property located?

    0Reply
  • Marlen Weber
    Specialist · Plano, TX · Member since 2020 · 2k+ posts · 861 votes
    6y

    @Karl B. great job on your first multifamily investment. Thanks for sharing your experience with us.

    1Reply
  • Mike BartuseckBusiness Member
    Realtor · Saint Petersburg, FL · Member since 2015 · 4 posts · 1 vote
    6y

    @Braeden Henry

    Use the money as a down payment with an fha loan and get a multi family... live in one of the units... preferably purchase a value add property and force the value of the property up and the rents. Could even use a fha 203k as part of your reno cost... I know the Columbus market well those deals are available I have a property by OSU. That’s what I did to obtain that property which now is a very profitable rental! Good luck !

    0Reply
  • Account Closed
    Rental Property Investor · Saint Louis, MO · Member since 2020 · 38 posts · 8 votes
    6y

    @Karl B. What area is your duplex?

    0Reply
  • Account Closed
    Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
    6y

    @Braeden Henry flip that money and make it bigger before you worry about passive income.


    Unless you're really looking for something hands off. 20k down gets you a 100k-ish property. That's a small C+ neighborhood duplex in the right midwestern market. Thing is, banks want to see reserves beyond the 20k. And right now with Covid, banks are irrationally tight on lending until they have built their own "crash reserves" and feel confident ini their debt performing.


    Either way, I think you should stack a little more cash up before you think about real estate. I'm not a fan of "no and low money down" methods- they're too much of an uphill battle in most cases.

    2Reply
  • Kanwar Sodhi
    Real Estate Agent · Chantilly, VA · Member since 2016 · 245 posts · 61 votes
    6y

    You've worked hard for it. Don't spend it without seeing a return of it.

    I think it's smarter to put it towards a purchase where in 6 months to a year, you'll be able to refinance the money and get it right back.

    1Reply
  • Satyam Mistry
    Investor · Omaha, NE · Member since 2019 · 130 posts · 139 votes
    6y

    @Braeden Henry Lot of great ideas in above posts, but I would strongly recommend not using all that money to put into 1 property as just a down payment as mentioned you will need reserves! FHA or "house hacking" is a great way to put low money down and get great experience learning about real estate & managing a property. Start connecting with local agents & talk to banks to see what price point you would get pre approval up to for a property. If you are in Columbus, Ohio there should be properties that come up around that 100k range in decent areas just depends exactly which strategy you take. If you want to do conventional financing save up some more so you have about 6 months of reserve expenses handy in addition to your 20% down payment.

    1Reply
  • Matthew PorcaroBusiness Member
    Lender · Long Island, NY · Member since 2016 · 456 posts · 336 votes
    6y

    $20k should be enough to capture a live-in flip scenario with an FHA loan or Homestyle loan. Find a fixer upper, build in some equity with the renovation loan, and you only need 3.5% which 20k should cover that in OH.

    The 203k Way
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  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y
    Originally posted by @Braeden Henry:

    I have $20k, how should I throw that money into real estate to make more than $20k in a short amount of time?

     I would start you real estate salesperson classes. I believe you said you were interested in starting that. Then when you can, house hack.

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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  • Zeke Liston
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    6y

    Hi @Braeden Henry, I would go after an owner-occupant loan that requires some cosmetic rehab and is under market value, depending on the bank, you should be able to refinance after 6 months of owning the property and if it's a good deal, you should be able to pull some cash out. 

    3Reply
  • Christopher Winkler
    Specialist · Dallas, TX · Member since 2014 · 900 posts · 392 votes
    6y

    Some great ideas here.

    That's about enough to put some lipstick on a pig. If I were you I would keep my powder dry and find an equity partner for a good deal to cover the difference of what the lender will pay, split profits with him, and use that $20k for appraisals & closing costs. ANY lender will look at your bank account & they will be thrilled to see $20k.

    Just my 2 cents....

    0Reply
  • Robert EllisBusiness Member
    Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
    6y
    Originally posted by @Braeden Henry:

    I have $20k, how should I throw that money into real estate to make more than $20k in a short amount of time?

    Welcome! owner occupy a prop with low downpayment or house hack is easiest start, or do a duplex under 80k. easy use to it. you can find doubles in decent shape with that amount, 20% down. i can refer you to a lender if you need one in columbus 

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