I am in my mid 20's, married, a homeowner and a business owner. I have about 40k in the bank and my bills are 4000-4500 a month. Am I in a good position to start investing, or should I wait until I have more in the bank? I really want to get my money to start working for me. Forgive me for the very generalized questions but I am just starting considering the idea of investing my money.
You are in a very good position to start investing. Being a business owner and having some cash will put you light years ahead of other new investors. As with your current business, just learn as much as you can about your new business before you buy anything.
I'd start looking for an apartment building. It doesn't necessarily have to be in your city/town. It can be anywhere in your state or anywhere in the country for that matter. I'm in western canada and I buy apartments in eastern canada all the time. So don't limit yourself if property values are too expensive where you are now.
What you're looking for is a situation where you could use that $40k as a small downpayment. The rest of the money to buy will come in the form of a first mortgage and a second.
So you need to find a seller who is willing to carry a second mortgage. Just propose that they carry like 25% of the purchase for five years, interest only with a balloon payment at the end. Then you get a conventional first at 75%. There's your 100% right there. Your $40k will come in handy to cover any closing costs and downpayments.
Finding just one small apartment say with 30 units would set you up for life with good cash flow each month even with a first and a second. Trust me it's the safest and most solid way to invest in realestate there is.
r2d wow that sounds crazy - i couldn't imagine buying an apartment complex! Seriously though - I definitely could not do $40k because that is literally all we have :/ We have 10k in mutual funds but I am relying upon that to help us retire. Anyway, quite interesting - I'll def. have to look into that more!
How can you retire on 40k? That's impossible. But if you get an apartment you'd have several thousand in liquid spendable cash each month after all expense and debt servicing, to do whatever you wish with. Buying a building isn't much different than buying a house. Same steps involved basically. It's easy.
Oh, no I wouldn't plan on retiring on 40k - I'm just saying if we spent that, then we would have $0 to live on is all :) I am going to the book store today and find some books on REI. Thanks so much for your input - this has been a great help!!!
I would suggest hanging onto your money. Keep it as a reserve and earn some interest on it. You can start investing in real estate without using your money.
I agree with r2d2 and would recommend the Carleton Sheets course as an excellent basic education in real estate investing. Most of the popular books are long on motivation and short on techniques that will actually help you do something. If you get the Carleton Sheets course, be sure to get all the bonus videos. They are excellent.
I would also strongly suggest that you should start with single family houses. Learn the business and then move on to multi-family properties. Single family houses are MUCH more forgiving than multis, generally have better tenants, and will allow you to learn the business at a slower pace.