What can $5,000 do?

Question

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.

Dmitriy Fomichenko · Answer

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.

Ryan Dossey · Answer

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.

Jim Keller · Answer

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.

Mohit Madaan · Answer

@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.

Jim Keller · Answer

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"

Angel Rosado · Answer

Ryan Dosseyundefined 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 · Answer

Ryan Dosseyundefined

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!

Gilbert Dominguez · Answer

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.

Randy E. · Answer

@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.

Natasha M. · Answer

@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!

What can $5,000 do?

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