What can $5,000 do?

15 Replies

Is there anyway that I can begin investing as a buy and hold real estate investor with a mere $5,000? My rent in the Bronx is really high and it aggravates me that I have to pay someone for my apartment! I want to be receiving money.

I think I might have to move out of the major metropolitan area to buy anything halfway decent.

With that some of money I would look at doing a direct mail campaign to get off market listings. I don't think you can find property up there for 25k (assuming you would need 20% down=5k). Find some deals, partner with some people, and build capital. 

Ryan Dossey, Real Estate Agent in IN (#RB15001099)

@Ryan Dossey undefined

Well I was also thinking of getting a FHA loan which may cost 3.5% which I would still have to get about 11K for a 300k home (but I'm worried about closing cost.)

I am going to have to find out about direct mail campaign.  This will be my one thing!

I would be looking for another seasond investor someone you could just give this $5,000 to and help him close his deal.  I have several people like that in my opperation.  If the investor is $5,000 short from putting a deal that makes him $40,000 your 5k is very valuable.  

Network with every group you can, make it a goal to attend 4 investment clubs a week and with in a month you will have your answer to "WHAT CAN $5,000 DO"

Closing costs on an FHA deal get EXPENSIVE. We just did a 3.5% down on a personal residence and closings costs were 4k. And it was a sub 100k home.

Ryan Dossey, Real Estate Agent in IN (#RB15001099)

@Joshua Dorkin @Jim Keller

 I like what you saying brother, I need to make more time to attend networking events.  I just want to make my money for me. Im going to an BP Meet up in NY with  

@Joshua Dorkinundefined this June 23, 2015 which will be my first event where I will begin sorrounding myself with the investors that I'd like to be like.  You are the average of the 5 people you spend time around and I'm looking to start building this circle in my local area.

@Ryan Dossey undefined Okay now I have to find a way to make some money.  I get paid overtime and am considering making myself busy to make some more money but is that ethical?

@Angel Rosado If you spend 5k in any sort of marketing, such as direct mail or buying list, you are taking a big risk with only money you have, if you can't find a deal, or you find a deal but can't wholesale it or any other reasons.

How about working extra jobs, working overtimes to put together another 5k-10k and get a 3.5% down for duplex? You will own it, you will collect rent and easy pay mortgage. You will get experience of doing a deal.

Save the rent by living in Duplex and start putting that together for next rental property (you will only need 20k). Real estate isn't easy to get into, but once you do, its a lot of fun.

@Mohit Madaan undefined I agree with you completely

I have a family but I think we may be contributing too much to the 401k? returns are nice I put 8% employer employers puts 6%. Should I stop this and save soome of that as well?

Originally posted by @Angel Rosado :

@Mohit Madaanundefined I agree with you completely

I have a family but I think we may be contributing too much to the 401k? returns are nice I put 8% employer employers puts 6%. Should I stop this and save some of that as well?

 I do not live in US of A, so i won't comment on 401k but i am good listener and follower of alot of financial educators and it doesn't sounds like 401k is the best place to put your money in. I am trying to find a book named 401 Kiosk that was recently mentioned on Rich Dad radio podcast. I am sure reading that book, will give you a very good insight of 401k.

Even from a layman's stand point, i think real estate investing beats 401k or any other investment anyday. I am sure, there are people who will support 401k here and i will agree with what i read, i am not big into debates, usually when i am not sure about my points but, i do like to control my own money. That is why, i do not own a single stock, mutual fund at all.

I'm 50 years old and in my younger years I used to think the same way about MY DEALS.... in hind sight I see now I never did a deal,  so take our advise.  Surround yourself with heavy hitting multimillionaires and just pick up the little stuff they drop on the floor.  Build your nest egg and be ready for when one of your NEW friends has a real deal and needs you're to help close it.  This I believe is how the real world works.  

I never spoke of marketing and spending your money marketing.  Unless you see marketing as taking the most successful real estate investor you have access to,  to lunch and market yourself to him.... money well spent.

@Angel Rosado The fact that you have a family, should motivate you even more to save up and try to buy FHA loan for a duplex. You will have a feeling of self pride when you drive to your home everyday, knowing you are on the way to own this place and provide stable shelter for your family.

Originally posted by @Angel Rosado:
I have a family but I think we may be contributing too much to the 401k? returns are nice I put 8% employer employers puts 6%. Should I stop this and save some of that as well?

Angel, if your employer provides matching then you should contribute up to the maximum amount they match. If they are matching dollar for dollar you are getting 100% return on your money even if it is not invested, but I'm assuming you are investing it in some equities so your total return would be higher. It would be very poor financial decision NOT to take advantage of the matching. There is no way you can make this kind of guaranteed return in real estate as a beginner. If there was no matching then it would be different question.

You should not contribute to your 401k anything beyond what your employer is matching. You can either contribute that to an IRA or just use those extra funds to build up funds for real estate investing.

Dmitriy Fomichenko, Broker
(949) 228-9393

@Angel Rosado

 There's a lot more to think about when investing your money. Are you looking for long term investing? or short term investing? How long can you have your money tied up? If you're just looking for a home to purchase I know there are some homes in the Bronx River area (10472 zipcode) that are selling for about 200K. If you're trying to buy a house I have a mortgage broker who will guide you step by step to help you figure out how to buy your house. PM me & I'll send you his info.

IF you do direct mail be sure to focus on the area you'd like to live because then you have a choice of either buying the house for your family or wholesaling it to another investor. Best wishes!

@Angel Rosado , I assume you and your wife have very good jobs in your major metropolitan area and that you are not very serious about moving to a more affordable location.  There's nothing wrong with wanting to stay in a major metro area, except the price.  If that's the case, my advice is to save, save, save.  Then get more serious about saving and cut out every unimportant thing in your spend list and save even more.

I would agree that at this point there is nothing you can do to earn as much as you are already benefiting from your employers matching program for your 401K. Its like you are already earning money guaranteed as long as you have your job that is. As long as you are working for your current employer or any employer that offers a matching contribution to a 401K you are already way ahead. Now about your $5K, yes I agree that a good way is to pool it with someone else that already has a deal they need to close. Do several of those kinds of deal and earn money risk free. I mean just make sure it is risk free. 

My general advise to people is if you have $100.00 never do anything that will demand you spend more than 40% of that and keep a reserve until you get back the $60.00 that you invested and repeat until you make your money grow. Do not be in a hurry and do not do a deal you can not survive if something should go wrong. You should go about investing is a systematic and methodical way. In the race of the tortoise and the hare you want to be the tortoise and win the race in the end. 

If you move outside of your area where you will be farther from your job I would calculate what that would mean as far a expenses and car maintenance if you do use and have a car and time involved in getting to and from work. Perhaps there is a way for you to find a cheaper place to live and be able to save more money every month. 

As far as risking and spending your money on a marketing campaign I would say do not do it. You are already ahead with $5K in your hand. At this point and always you want to take steps that will produce sure results. If someone else's deal will present an opportunity for you to contribute and make a little money for sure then that would be the way to go. 

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