New investor, $30k to invest, work full time, 24 yo please help!

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New investor, $30k to invest, work full time, 24 yo please help!

Aaron Mercado
Member since 2019 · 2 posts · 3 votes

This is my first time posting and am looking forward to all the knowledge here!

I am 24 years old and have been working as an accountant and have managed to save around $30k for investing (outside of retirement accounts). I live at home still and am also looking to move out / buy a condo or such in the next few years. I live in Southern California and prices are very high. 

I have two goals: 

1) to buy a personal residence / move out

2) to begin my real estate investing journey

I originally thought of throwing down 20% on a condo, moving out and calling it a day, but I’m so intrigued by investing and I want to eventually build enough wealth passively to leave my job. 

I’ve read the Book on Rental Properties from BP and am currently reading the Out of State investing book, as well as a couple others. I listen to the podcasts and watch a lot of investing videos as well. 

It seems like for cash flow and wealth building, out of state investing is one of the only reasonable options for me. House hacking doesn’t seem feasible in SoCal without moving way out into nowhere. I’m currently in LA County for reference. 

Even with reading books and podcasts and videos, I still feel overwhelmed and lost as to what I should really do in my case.

Between a personal residence and investing, with my $30k and how to utilize it wisely and efficiently without being a real estate agent or having a vast knowledge of real estate. I understand the concepts but don’t know what to do. I don’t want to become an agent and I’m skeptical about turnkey. 

Can I possibly accomplish both of my goals in some manner?


I’d love to hear some input and ideas on what I can do. Thank you for reading!



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Trent Stone
Real Estate Agent · Salt Lake City, UT · Member since 2015 · 183 posts · 159 votes
6y

Hey!! Welcome Aaron! I honestly wouldn't recommend turnkey, the returns are usually low. Also, just because you can't get your mortgage completely covered doesn't mean you can't "house hack". If you get a duplex and your mortgage is $3,000/mo maybe the other side rents for $2,500/mo. You would only be paying $500/mo to live in a nice place and your tenants would still be helping to pay down your mortgage, and hopefully you buy in an appreciating market.

Grant Cardone's philosophy is to rent where you live and buy where you rent. I personally agree, but I am not opposed to taking advantage of government sponsored loans either. They are just a tool in your belt so take them into account when weighing options. The price to rent ratios here in Utah are NOT great for investors so I invest out of state. If you are looking for pure cash flow, there are some markets in the midwest and the south that are great. A few markets in Florida, DFW, Ohio, and Indiana are offering a pretty good mix of appreciation and cash flow. 

My advice, know what your goals and criteria are, master a market then get to work. I would personally look more at price to rent ratios to determine where to put my money. Let me know if you need help tuning your criteria a little. Good luck!!

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  • Trent Stone
    Real Estate Agent · Salt Lake City, UT · Member since 2015 · 183 posts · 159 votes
    6y

    Hey!! Welcome Aaron! I honestly wouldn't recommend turnkey, the returns are usually low. Also, just because you can't get your mortgage completely covered doesn't mean you can't "house hack". If you get a duplex and your mortgage is $3,000/mo maybe the other side rents for $2,500/mo. You would only be paying $500/mo to live in a nice place and your tenants would still be helping to pay down your mortgage, and hopefully you buy in an appreciating market.

    Grant Cardone's philosophy is to rent where you live and buy where you rent. I personally agree, but I am not opposed to taking advantage of government sponsored loans either. They are just a tool in your belt so take them into account when weighing options. The price to rent ratios here in Utah are NOT great for investors so I invest out of state. If you are looking for pure cash flow, there are some markets in the midwest and the south that are great. A few markets in Florida, DFW, Ohio, and Indiana are offering a pretty good mix of appreciation and cash flow. 

    My advice, know what your goals and criteria are, master a market then get to work. I would personally look more at price to rent ratios to determine where to put my money. Let me know if you need help tuning your criteria a little. Good luck!!

    1Reply
  • Aaron Mercado
    OP
    Member since 2019 · 2 posts · 3 votes
    6y

    Trent,

    Thanks for the advice! I’m definitely still open to house hacking even if it’s only to subsidize and not fully cover the mortgage and I feel it’s a great idea - the issue I’m having is here in SoCal I don’t see many duplexes in LA / Orange / San Bernardo county unless you go far out into not so great neighborhoods. Renting rooms out is an idea, but I will be moving out with my SO and I don’t think we are wanting to have roommates at this point. So from my findings it’s been difficult to find viable house hacks. 

    I do agree maybe I just need to take the dive into OOS investing and find a market that works for me. 

    Do you think OOS investing while simultaneously purchasing a personal residence with an FHA is a decent option? I understand this will come with PMI and I higher monthly payment but at least I'd have a residence and a rental in that scenario.

    0Reply
  • Account Closed
    Real Estate Agent · Oklahoma City · Member since 2020 · 46 posts · 35 votes
    6y

    Hey @Aaron Mercado,

    It will depend on what you're wanting in life and when you want it. I'm not too familiar with Condo prices in California, but lenders typically prefer a good debt to income ratio, so you should talk with a financial advisor if you are interested in doing both at the same time.
    I'm assuming that you're most likely going to have to choose one or the other, and if you are looking to invest out of state, I would start by researching areas you think have potential.

    Look at DOM, price, job growth, population growth, rent, number of rentals, etc.

    Once you decided on a place, reach out to an agent or someone with knowledge of the area to give you an idea if the area matches your goals.

    Good luck!

    0Reply
  • Junior Jeune
    Ocoee, FL · Member since 2015 · 6 posts · 0 votes
    6y

    @Trent Stone

    Indiana is good place to invest?

    0Reply
  • Twana RasoulBusiness Member
    Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
    6y

    Hi @Aaron Mercado definitely start house hacking here in Socal before even thinking about going out of state, its not as easy as most make it out to be.  It is worth considering but best thing to do is to start right at home.  use an fha loan to house hack a duplex, there are plenty of decent areas in LA to house hack a 2 unit property.  I house hack as well with my Wife and our little one so you'll want to go with a duplex vs renting out rooms.  

    There's actually a program out right now that will give you the 3.5% down payment as a grant so you can save your money as reserves.  You will get the most bang for your buck investing locally with a low down option house hack than you will putting 20% down in a random out of state market just because it is cheaper.  Work with an agent in your area that is also an investor and can give you an idea of areas to consider and what kind of deals you can expect.

    Best of luck!

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  • Zeke Liston
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    6y

    If you live there you only need 5% down, if it's an investment property and you're not living there it's likely going to be 25% down. Have you looked at Columbus, OH as an option for OOS @Aaron Mercado?

    0Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y
    Originally posted by @Aaron Mercado:

    This is my first time posting and am looking forward to all the knowledge here!

    I am 24 years old and have been working as an accountant and have managed to save around $30k for investing (outside of retirement accounts). I live at home still and am also looking to move out / buy a condo or such in the next few years. I live in Southern California and prices are very high. 

    I have two goals: 

    1) to buy a personal residence / move out

    2) to begin my real estate investing journey

    I originally thought of throwing down 20% on a condo, moving out and calling it a day, but I’m so intrigued by investing and I want to eventually build enough wealth passively to leave my job. 

    I’ve read the Book on Rental Properties from BP and am currently reading the Out of State investing book, as well as a couple others. I listen to the podcasts and watch a lot of investing videos as well. 

    It seems like for cash flow and wealth building, out of state investing is one of the only reasonable options for me. House hacking doesn’t seem feasible in SoCal without moving way out into nowhere. I’m currently in LA County for reference. 

    Even with reading books and podcasts and videos, I still feel overwhelmed and lost as to what I should really do in my case.

    Between a personal residence and investing, with my $30k and how to utilize it wisely and efficiently without being a real estate agent or having a vast knowledge of real estate. I understand the concepts but don’t know what to do. I don’t want to become an agent and I’m skeptical about turnkey. 

    Can I possibly accomplish both of my goals in some manner?


    I’d love to hear some input and ideas on what I can do. Thank you for reading!



    I would recommend looking into out of state investing in a midwest market. I personally invest in Columbus, Ohio. I am about to find good cash flow and great appreciation.

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  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    6y
    Originally posted by @Aaron Mercado:

    This is my first time posting and am looking forward to all the knowledge here!

    I am 24 years old and have been working as an accountant and have managed to save around $30k for investing (outside of retirement accounts). I live at home still and am also looking to move out / buy a condo or such in the next few years. I live in Southern California and prices are very high. 

    I have two goals: 

    1) to buy a personal residence / move out

    2) to begin my real estate investing journey

    I originally thought of throwing down 20% on a condo, moving out and calling it a day, but I’m so intrigued by investing and I want to eventually build enough wealth passively to leave my job. 

    I’ve read the Book on Rental Properties from BP and am currently reading the Out of State investing book, as well as a couple others. I listen to the podcasts and watch a lot of investing videos as well. 

    It seems like for cash flow and wealth building, out of state investing is one of the only reasonable options for me. House hacking doesn’t seem feasible in SoCal without moving way out into nowhere. I’m currently in LA County for reference. 

    Even with reading books and podcasts and videos, I still feel overwhelmed and lost as to what I should really do in my case.

    Between a personal residence and investing, with my $30k and how to utilize it wisely and efficiently without being a real estate agent or having a vast knowledge of real estate. I understand the concepts but don’t know what to do. I don’t want to become an agent and I’m skeptical about turnkey. 

    Can I possibly accomplish both of my goals in some manner?


    I’d love to hear some input and ideas on what I can do. Thank you for reading!



     Welcome aboard Aaron.

    0Reply
  • Mikael Winkler
    Rental Property Investor · Columbus, OH · Member since 2015 · 344 posts · 258 votes
    6y
    Originally posted by @Twana Rasoul:

    Hi @Aaron Mercado definitely start house hacking here in Socal before even thinking about going out of state, its not as easy as most make it out to be.  It is worth considering but best thing to do is to start right at home.  use an fha loan to house hack a duplex, there are plenty of decent areas in LA to house hack a 2 unit property.  I house hack as well with my Wife and our little one so you'll want to go with a duplex vs renting out rooms.  

    There's actually a program out right now that will give you the 3.5% down payment as a grant so you can save your money as reserves.  You will get the most bang for your buck investing locally with a low down option house hack than you will putting 20% down in a random out of state market just because it is cheaper.  Work with an agent in your area that is also an investor and can give you an idea of areas to consider and what kind of deals you can expect.

    Best of luck!

    I really agree here. If you can utilize FHA, you may be able to get into a property for cheaper, single family or duplex. And, if you find a property that needs work, and is priced low enough, you can force that appreciation through rehab, then potentially have enough equity to take out a HELOC on it to use for more investing. Not sure if there are properties you can find like that in SoCal, but if so, I think that would be a great start.

    0Reply
  • Trent Stone
    Real Estate Agent · Salt Lake City, UT · Member since 2015 · 183 posts · 159 votes
    6y

    @Junior Jeune YES!! Lol....Indianapolis is great. It's got some good appreciation, good cashflow, and some great neighborhoods for flipping right now.  

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