$45k saved at 25! Should I buy multi?

51 Replies

@Laura Baugh Finley thanks for your experienced insight on the FHA loans. I came close to using one last year but I just had bad luck with Realtors seemed to think my budget wasn't worth any effort to negotiate for me. But I did hear from a few contractors about how much of a headache(reasons they didn't explain) it was to do work under the FHA rehab loans.

I'm pretty sure I must have been trying to use the streamlined one. I think if I go that route again I'll have even more reason to look for tenant occupied properties that need only simple cosmetic upgrades that can be done in 14 days or less and cost no more than $20k. Not just so I can use that particular loan but also because I don't want to "get my feet wet" with any properties that require months of rehab and 10's of thousands of dollars to get it done.

I plan to "chronicle" my journey and so I definitely will take you up on the offer to reach out with questions that I'll have.

Thanks very much Laura! 

Congratulations on saving up 45k this is enough money for a down payment. I would recommend you to house-hack and take action when the opportunity comes your way.

Congrats on your savings at such a young age! $45K is certainly enough to invest into a potential fix and flip or a fix and hold. It all depends on the location and the purchase price. Most lenders will require that you have at least 10-15% of the purchase price to do a Rehab Loan (depending on your credit and experience), or at least 20% down in order to obtain a 30 year mortgage. I would suggest that if you can find a lucrative deal, that requires minimal cost of improvements, and a good resale value, then do take advantage of it. Best of luck to you Michael!

Househack! Start with a nice little duplex for a couple of years and go from there. Congrats to you and the gf!

Originally posted by @Dave Poeppelmeier :

@Michael Cavitolo Yes, great to hear that you want to start investing.

But the other thing that concerns me is you and your girlfriend have $45k saved. Before you two buy anything, she needs to be The One and fully committed with you in this investment journey. The last thing you want to do is have the courts decide who has to pay out who if you guys split. If you insist on proceeding, I would set up an LLC that clearly outlines how you two would exit the partnership if things don't work out. Not trying to be Debbie Downer, but I've seen it happen before.

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I am glad someone else said the same thing I was going to say. And I would highly recommend NOT getting married and DO NOT have kids. Not only will you lose everything (including all of your real estate holdings) in divorce court, you will be responsible for alimony and child support for a very long time. It has happened to just about every guy I know. The wives financially ruined them. Prenups are useless, especially if kids are involved.

If you want to buy real estate, either buy it in your own name, or an LLC, but do not get married.

And Staten Island is way too expensive. Try Rockland County, Haverstraw, NY, Highland Falls, NY. Much more affordable up there.

Hey Mike! That's amazing that you are being so proactive at 25 and looking to invest. Definitely something I wish I would have done at 25. I can't speak to you about the New York market and what you can get for your money out there since I'm in Chicago but I do think $45K is a healthy amount saved up for your first multi-unit. With putting 3.5% down with FHA, I'd say you'd want to probably cap your amount at around $750-800K because you also have to take into consideration your other closing costs. Also, you'd want to stay at 4 units and under because once you get to 5 units, that's when the building is considered a commercial building which you then would have to get a commercial loan and that is minimum 25% down. Hope this helped a little!

Congrats and yes! Look into a 4 unit (these are my favorite for cashlfow) using FHA loan at low down. I wouldn't wait as you will be spending money on rent so buying a property typically lowers your expenses not increases them, maybe avoid doing a big rehab project though, etc. find something instead good shape.

I currently represent a couple where they bought a duplex and lived in it for a year and now they are looking to buy another one to live in for a year and continue this process.  They do this because they are able to get a better loan that works for them.  They have a good chunk of money to work from, similar to you, but they are making it last longer and buying more properties with it.  This is what I would suggest.  Your money will go much further.  If you are going to buy a rental and not live it, you may need 20-25% down, plus closing costs.  Your $45k will get eaten up pretty quickly.  

Also, they are doing this now before they have kids.  They plan on buying a place to settle down in eventually and then start a family.  

Hi! 

Congrats on the savings. 

you have a few different options, but be aware, i know you think that girlfriends stay but I would never jointly invest with my boyfriend. 

1. You could house hack, put a tad down and rehab the other units. 

2. You could use hard money, fund your first BRRRRRRR or flip and then either sell or cash out refi. 

I;d try to get as many properties as possible. I think it is more than doable with $45k. 

There is also a DSCR loan (the acronyms are escaping me ) where if you put a renter in that property and it cashflows, you're good to go.

Wishing you the best of luck. :)

Originally posted by @Judy Parker :
Originally posted by @Dave Poeppelmeier:

@Michael Cavitolo Yes, great to hear that you want to start investing.

But the other thing that concerns me is you and your girlfriend have $45k saved. Before you two buy anything, she needs to be The One and fully committed with you in this investment journey. The last thing you want to do is have the courts decide who has to pay out who if you guys split. If you insist on proceeding, I would set up an LLC that clearly outlines how you two would exit the partnership if things don't work out. Not trying to be Debbie Downer, but I've seen it happen before.

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I am glad someone else said the same thing I was going to say. And I would highly recommend NOT getting married and DO NOT have kids. Not only will you lose everything (including all of your real estate holdings) in divorce court, you will be responsible for alimony and child support for a very long time. It has happened to just about every guy I know. The wives financially ruined them. Prenups are useless, especially if kids are involved.

If you want to buy real estate, either buy it in your own name, or an LLC, but do not get married.

And Staten Island is way too expensive. Try Rockland County, Haverstraw, NY, Highland Falls, NY. Much more affordable up there.

Michael, I am very happily married, and my wife is completely on board with our RE Investment strategy. We have 3 fantastic kids, and are still investing. If your goal is to take over the RE world, then maybe a family isn't the best move right now. But if your goal is to get some passive income rolling that can progress to Financial Independence, then the extra income that 2 earners can bring in will help you get started much easier. Yes, kids are "expensive", but what do you and your fiancé have in mind regarding a family? These are absolutely conversations you need to have now. Hit RE hard for 5 years, work hard at your jobs to get a house per year with your FHA loan as well as saving the money in fixing up houses yourself, finding other houses to get with conventional financing, and THEN have kids? That sounds like a plan to me.

@Steven Harris I did pretty much exactly what you did but back in 2019 (and from Hawaii)..My "nest egg" also proved to be a lot less effective than I'd planned. Upon realizing this, my mindset changed from "find that first investment asap" to "take it slow and learn everything you can about the market." I also decided to focus on income and these new focuses led me to get my license. Eventually, (1 year after I moved out here) I snagged my first property - a house hack. To some, this may look like a year of piddling around but it taught me so much about real estate and the Atlanta market since I was completely surrounded by it 24/7. 

My point is that it does take time to invest effectively, especially when you come to a new market. Don't worry about this time but instead enjoy it and learn as much as you can. Also, great plan to get a job soon - income is a big piece of the puzzle that many gloss over. Unless you want to be full-time in the world of RE, having solid income is key. And the powerful strategy of house hacking is most accessible with w-2 income. 

Lastly, be prepared to get creative and do things others aren't. This isn't to say make bad investment decisions or reinvent the wheel. However, in a competitive market, you will want to find a way to go around the competition, rather than through it. Work smarter, not harder. 

Remember, I'm always happy to help in any way I can. Reach out anytime!

Originally posted by @Michael Cavitolo :

Hello All! Looking for some advice!! 

My girlfriend and I are both 25 years old, we have a little over $45k saved up together, It’s been a dream of mine to invest into Real Estate. We want to get engaged and get married In 2 years then buy a house. If it was up to me, I’d really like to find a duplex or 4+ multi family unit and start our portfolio now.. But we’re not sure if we should start it now or wait till the big events happen first. I just don’t wanna keep pushing real estate off, I want to dive In already..

Also, is $45k even enough to invest? Thanks y’all!

When I got started investing my sophomore year of college, I had $500 to my name, My grandmother lent me $12k for the downpayment on a duplex on OSU campus in Columbus. Over the course of a year my wife and I fixed it up, rented to friends, ate peanut butter and jelly, did everything we could. We then refinanced the property and it has given us $140k in cash back and continually produces $1,800/month in cash flow.

Get started and it will be only good things for your future!

Originally posted by @Michael Cavitolo :

Hello All! Looking for some advice!! 

My girlfriend and I are both 25 years old, we have a little over $45k saved up together, It’s been a dream of mine to invest into Real Estate. We want to get engaged and get married In 2 years then buy a house. If it was up to me, I’d really like to find a duplex or 4+ multi family unit and start our portfolio now.. But we’re not sure if we should start it now or wait till the big events happen first. I just don’t wanna keep pushing real estate off, I want to dive In already..

Also, is $45k even enough to invest? Thanks y’all!

I don't think you should wait. Best way to get started is to start to gather data to answer your question: "Is $45K enough to invest".  Looks like you're in the NYC market. Very expensive but while I have family there I don't really know the market. First thing I'd do is talk to some lenders to find out how much and what kind of loan you would qualify for. Look at owner occupied and non owner occupied loans. The hire realtor(s); maybe one for each boro; and get an idea how much you'll really need to do business in that area.  Finally start finding some investment clubs with wholesalers who may have some deals.  Use the time between now and 2 years from now (your marriage) to either get smarter on your market or to pull the trigger on a deal.

More doors per property is where the cash flow is at. Best of luck on the investing!

@Steve Miklashevskiy , Mainly because I want a rental income generating property, not just a SFR. With my price point of no more than $280k, I've noticed a few quads for sale for less than $300k with tenants already in place. I'd buy it using an FHA 203k (most likely)with plans to update anything that's "quick & easy" to do, like new cabinets & counter tops or new washers/dryers without using up every cent of my cash on hand.

Paying 3-3.5% down on a duplex, tri or quad that could already have tenants in place while I live in one of the units, for me, is the best and smartest move for a first time home buyer and REI newbie🤷🏻‍♂️

@Steve Miklashevskiy , Mainly because I want a rental income generating property, not just a SFR. With my price point of no more than $280k, I've noticed a few quads for sale for less than $300k with tenants already in place. I'd buy it using an FHA 203k (most likely)with plans to update anything that's "quick & easy" to do, like new cabinets & counter tops or new washers/dryers without using up every cent of my cash on hand.

Paying 3-3.5% down on a duplex, tri or quad that could already have tenants in place while I live in one of the units, for me, is the best and smartest move for a first time home buyer and REI newbie🤷🏻‍♂️