Is 1500 enough to start in real estate?

New to Real Estate · Greensboro, NC · Member since 2020 · 14 posts · 30 votes

Hello everyone. I am 20 years old and am trying to start investing and learning about it now. I graduate from college next year and would like to live below my means and invest. I have 1500 saved up and don’t know what to do with it.

Any suggestions?

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Jonathan GreeneBusiness Member

Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes

A lot of people will tell you to go for it, jump in, take that step, but it's not realistic. If you have $1,500 saved and that is all of your savings you can not invest in anything with that, nor would it be worth it. I mean technically you can, but why? What is the rush and what are the risks? Say you buy a no-money down house to house hack and the furnace breaks. How are you paying for that? All real estate investing requires reserves to account for things that come up. 5-10k minimum for any property up front or when something happens, you can't fix it and then the problems get worse. Partnering with that little money won't bring you back enough income or experience to make it worth it. Just learn. Go to local REI events, listen to the BP podcasts with guests between 18-25 years old and see what their journey was. But $1,500 should just be the beginning of a bigger savings plan, by living below your means as you said, so you have more if something goes wrong.

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Will Fraser
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
6y
Hi @Travis Cannon! The answer is "absolutely". The secondary question would be "what can you do with $1,500 to grow it in real estate" to which I would say:
- Partner with other people on their flip projects (or BRRRR projects) as a pure money partner. You can grow your funds at between 6% and 15% a year.
- Invest in a REIT fund. You can grow your funds at whatever the REIT market allows.
- Pool your money with a few other people and take down a rental property. Buy another when you save up enough money to buy the next one.
30 Reply
Monica Morff
Investor · St. Cloud, MN · Member since 2016 · 42 posts · 40 votes
6y
I'm not sure what the market/financing options in North Carolina are like, but when I started, we qualified for a zero down first time homebuyer program and had the seller pay the majority of our closing costs which resulted in us only paying $1800 out of pocket for our first property. Do you know what you are trying to get into in terms of either flipping, rentals, etc.?
My best advice is that it cant hurt to reach out to a realtor and a lender if buying a property is what you're looking to do to see what you could qualify for.
8 Reply
Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
6y
A lot of people will tell you to go for it, jump in, take that step, but it's not realistic. If you have $1,500 saved and that is all of your savings you can not invest in anything with that, nor would it be worth it. I mean technically you can, but why? What is the rush and what are the risks? Say you buy a no-money down house to house hack and the furnace breaks. How are you paying for that? All real estate investing requires reserves to account for things that come up. 5-10k minimum for any property up front or when something happens, you can't fix it and then the problems get worse. Partnering with that little money won't bring you back enough income or experience to make it worth it. Just learn. Go to local REI events, listen to the BP podcasts with guests between 18-25 years old and see what their journey was. But $1,500 should just be the beginning of a bigger savings plan, by living below your means as you said, so you have more if something goes wrong.
[email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
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108 Reply
David Paul Westenberger
Member since 2019 · 62 posts · 23 votes
6y
well you have very little money to start investing in a house yet.
You have lots of options first figure out what type of investments in real estate you want to do.
to live below your means i would definitely start renting a room in a house to build up your cash to buy your first investment.
4 Reply
Scott Mac
Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
6y
Originally posted by @Travis Cannon:
Hello everyone. I am 20 years old and am trying to start investing and learning about it now. I graduate from college next year and would like to live below my means and invest. I have 1500 saved up and don’t know what to do with it.
Any suggestions?

HI Travis,
It might be smart to keep saving until you get to $30,000 Cash Money in the Bank, then re-asses your opportunities.
Save as much as you can as fast as you can, watch your credit score, and keep your debt to income ratio in line with whatever loan type you intend to use.
Until then read "Rich Dad Poor Dad" and study the material on the "Education" links at the top of the website.
Good Luck!

10 Reply
Travis Cannon
OP
New to Real Estate · Greensboro, NC · Member since 2020 · 14 posts · 30 votes
6y
@Monica Morff I’m looking to start wholesaling then get into flips then rentals.
4 Reply
Travis Cannon
OP
New to Real Estate · Greensboro, NC · Member since 2020 · 14 posts · 30 votes
6y
@Scott Mac thank you! I’m actually almost done with Rich dad Poor dad. Any other book suggestions? I bought $80 worth off of BP.
2 Reply
Kyle J.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
6y
@Travis Cannon Congrats on having $1,500 saved up at your age. Frankly, that's more than people a lot older than you have saved. However, I have to agree completely with @Jonathan Greene. When it comes to real estate investing, that's not near enough to realistically get started.

You can't (and shouldn't) flip a house with $1,500. Things can (and do) go wrong, and you need to have plenty of reserves for when they do so you don't run out of money mid-flip.

It's also not near enough money to get into rentals. Sure, you could find some no/low money down program and probably buy into a cheap rental. However, that won't help you when you have a big CapEx/repair bill come up. And it will. Just last year I had to re-pipe and put a new HVAC unit on one of my rentals at a combined cost of over $9,000. And that was just at one house.

Plus, have you been reading all the stories on here and in the news from other landlords who don't have any reserves and literally have no idea what to do now that their tenants aren't paying and they can't even evict because of the Coronavirus? Some are actually worried they'll lose their properties. That's what happens when you don't have proper reserves.

I understand people want to be positive/encouraging on here. However, no one should be suggesting you get into rentals/flipping with just $1,500. That's just setting you up for failure.
25 Reply
Derek Hamilton
New York, NY · Member since 2020 · 54 posts · 14 votes
6y
@Travis Cannon
Yes there’s creative ways to obtain a property like subject to deals, or wholesaling etc..
2 Reply
Travis Cannon
OP
New to Real Estate · Greensboro, NC · Member since 2020 · 14 posts · 30 votes
6y
@Derek Hamiltondo you personally wholesale?
0 Reply
Whitney HuttenPro Member
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Travis Cannon Love where you are headed and that you are thinking real estate! I echo that $1500 is just not enough to safely get started in real estate. Here is a guide to help you accelerate your savings. Trick is to live below your means right now and save.
Also, think about getting into a high income or commission driven job... something where you aren't being just paid by the hour, but can really accelerate your savings. And not a job that requires tons of schooling either. Tech jobs can be lucrative. Property management can be good if you can get into a commission structure. I'm sure others will help you think outside of the box here. Again, save.
Once you have your financial foundation built, and enough saved for a downpayment and reserves, I'd look into househacking as your first investment.
In the meantime, look for ways to network with other investors and add value to them. Watch, learn, and hustle. And continue your education. It may take a few years before you are ready to purchase your first property, but you will be soooo far ahead of the game!
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6 Reply
Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
6y
@Travis Cannon This is a capital intensive business. You should keep saving until you have enough for a down payment through an FHA program.
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Derek Hamilton
New York, NY · Member since 2020 · 54 posts · 14 votes
6y
@Travis Cannon I haven’t but I’m trying to get in touch with a home owner to wholesale their property. Right now I just have one property that’s a rental property but I’m interested in all areas of real estate investment
1 Reply
Morgan Klein
Rental Property Investor · Jefferson, GA · Member since 2017 · 95 posts · 145 votes
6y
I'll respectfully disagree with those that say you can't start in real estate with $1,500. You can start with $0. You can start with less than $0. What you do need is a JOB (to show income to buy or rent). Here are just a couple examples....You can rent a 3-bedroom property, and sublet the other two rooms to cover your rent (or more). Rent a property and sublet as an AirBnB (with the owner's permission, of course). Better yet, get a loan, find a 3 bedroom home with a detached garage w/ an apartment, and LTR the rooms in the house and Air BnB the apartment (and pay down your mortgage and build equity). A couple years down the road, cash out refi and buy another property. Then do it again, and again, and again. If you wait to save a bunch of money, you're going to be on the sidelines way too long. Time and hustle are your most valuable assets, not money.
13 Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
6y
Here's what I'd do if I had $1500:
I'd carefully map out a low cost lifestyle that I will live upon graduation. I'd get the best job I could, with a strong mix of income and long-term potential. I'd add as much as I could, every month, to that $1500. Within a year of graduation, with some hard work and discipline, there is no reason I could not have enough saved up for the down payment and strong reserves, a strong credit position, and a healthy monthly savings rate.
From there, a great first step is a house-hack.
So, what can you do with the $1500? Add it as the first small step towards your ultimate down payment and portfolio, and build it out $100 at a time, then $1,000 at a time, then $2,000 at a time.
We've got a podcast for folks who are working to build up that strong financial foundation, capable of supporting investing! BiggerPockets Money!

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19 Reply
Kirby Nichols
Investor · St. Louis, MO · Member since 2019 · 6 posts · 3 votes
6y
It's not enough, but you don't need $30k either. Once you get to $10k, you can put $3,500 down on a $100k 3/2 house and get 2 roommates to pay the mortgage/maintenance. (Plus some cash on hand for repairs as needed) This will jumpstart your savings and give you some experience as a landlord. Issuing leases, collecting rents, maintaining a property, etc.
Bonus if you can find roomies to help you fix it up with your savings and some sweat equity. Then sell and do it again.
That's just one path to add some jet fuel to your $ engine. Either way, it usually starts with your first home purchase and househacking.
Are there any gov't sponsored deals in Greensboro where you can get a barely livable place for 0% down and fix it up while you live there? We had a ton of those in STL, but we were too fancy to live in a dump while we fixed it up. Lol!
0 Reply
Twana RasoulBusiness Member
Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Travis Cannon Hi There. I wouldn’t suggest purchasing a property until you have more saved up. Even if you can get something with no money down, I would stay away from it until you have more saved.
No money down is a little overhyped in my opinion. I like little to no money down but not if it means you have little to no money left in your savings after a purchase. You want to have money left over for reserves.
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Mark Sewell
Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
6y
Not a fan of wholesaling. If you are talented enough at marketing and acquisitions to be a good wholesaler, then you might find you can make as much or more money simply doing 'wholetail' deals and/or partnering up with local investors. Way less monkey motion with 'cash buyers' and disclosures, etc. You'll learn what I mean when you get further down the path.
3 Reply
Mark Sewell
Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
6y
And while you are doing what Scott Trench advises (definately order his book) you should be working on getting some credit lines open. Do this in parallel while saving. $10K cash might not be enough reserves to do a flip/rehab, even using hard money, but $10k cash AND $10-20k in credit lines (credit cards plus bank lines) very well might be adequate to do a deal in NC.
1 Reply
Karen Schimpf
Lender · Nat'l Commercial Mtg Lender - Round Rock, TX · Member since 2014 · 916 posts · 235 votes
6y
@Travis Cannon If you do not want to participate with partners, $1,500 is not enough yet to start investing in RE. If you are wanting to own the property on your own, you will need to save enough for the down payment, closing cost and reserves, to leverage your money with a loan. If you are wanting to put down as little as possible like 20%, you will need to show you have enough income to cover the monthly payments on the loan if you can not get the property rented out. You will also need to establish good credit. You might have to use $1,500.00 as collateral for 3 to 12 months to establish your credit.
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Chris Kirkbride
Member since 2020 · 7 posts · 3 votes
6y
Originally posted by @Travis Cannon:
@Scott Mac thank you! I’m actually almost done with Rich dad Poor dad. Any other book suggestions? I bought $80 worth off of BP.

I finished Rich Dad earlier this week and just finished the BP published "How to Invest in Real Estate: The Ultimate Beginner's Guide"..... That one is a great one to see all the many aspects of this venture..... Very last chapter gives you some action items you can start doing now so that when you have the funds, you can already have some knowledge on how to proceed.
I will say for me though, each chapter in that book built me up, tore me down, then enticed me enough to continue reading.... I love it when a book draws you in like that!

1 Reply
Account Closed
Real Estate Agent · North Providence, RI · Member since 2018 · 40 posts · 25 votes
6y
@Travis Cannon something Robert Kiyosaki would say, use that $1500 to invest in financial education.
Everyone is so eager and impatient to state investing, but spend little to no time learning and educating themselves properly. This is why costly mistakes happen.. There’s no such thing as getting rich quick in real estate. Patience, learn, execute.
Good luck!
4 Reply
Account Closed
Real Estate Agent · North Providence, RI · Member since 2018 · 40 posts · 25 votes
6y
*start
0 Reply
Travis Cannon
OP
New to Real Estate · Greensboro, NC · Member since 2020 · 14 posts · 30 votes
6y
@Account Closed What financial education books would you recommend reading? I am reading "Rich Dad Poor Dad" right now along with some of Brandon Turners books.
0 Reply
Anthony Rosa
Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
6y
@Travis Cannon - To answer your question as to start RE with $1500 I would say No. $1500 is not enough in any market. You can't even close with $1500 or barely paint a home . What about expenses, emergencies, taxes or repairs?? I'm just being realistic. Save up at least 20% for downpayment and have more cash aside for expenses. The more you put down the easier life will be on yourself especially when people don't pay the rent or when you have an emergency or vacancy.
This Coronavirus should be a wake up call for everyone that is overleverged with loans.
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