$50,000 to invest, 22 years old

Los Angeles, CA · Member since 2015 · 3 posts · 5 votes

Hello Everyone!

I am a 22 year old living in Los Angeles and will be getting my degree in Finance in the next 3 weeks.

I have been selling fine art and antiques while in college and have been fortunate enough to save $50,000 from doing so.

Upon graduating I plan on staying in the fine art and antiques business, but would also like to enter the real estate market.

When looking at what is available in my market, whether to purchase and rent out or buy and flip, $50,000 doesn't seem like enough.

Any advice on how to enter the market with $50,000 would be greatly appreciated.

Thank you.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

If you doh't own a home to live in House hack to the extent you can.. get in on the very low interest rates today.. and get one home under your belt locally

Podcast Guest on Show #222

JLH Capital Partners51 Review

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Kevin Siedlecki
Investor · Madison, CT · Member since 2014 · 710 posts · 458 votes
9y
There are a lot of ways to invest out of your local market. A turnkey company selling places in growing midwest markets might work for you. There are a few guys on BP with great reputations doing that right now.
If you want to be more hands-on, consider partnering with someone in a different market. Do you have friends/family in better markets who are interested in investing, too? My business invests with friends and family's money because we have a market that makes more sense than the bigger cities. Shoot me a message if you want to know how that works in our model.
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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
9y
You already seem to have a lucrative business that you can easily invest in and make considerable profits so why would you want to be tied down to the hassles of owning real estate. The liquidity of your investment seems far superior.
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Manolo D.
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
9y
@Hagop Sandaldjian RE is nasty, and you could lose that 50k slowly or easily. If I were you, I would pour it back to your business and grow it, or be a money lender. @Steve S. might be able to place that somewhere. Any rental or flip type of business without FHA loan or solid employment (which I don't think you have or will have), is hard, and 50k is not enough, if you invest out of state, that's another story for another post. I'd say for passive income, be a gap funder/lender, or if you believe a lot in your business, pour it back there. As I do my first residential, and counting all my resources (no employment/self-employed), I found out that it is much more harder to get a loan without a w2, even if your business income statement/balance sheet is strong.
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Hagop Sandaldjian
OP
Los Angeles, CA · Member since 2015 · 3 posts · 5 votes
9y
@Kevin Siedlecki Thank you for your response. I don't have family member who work in a different market, and I would like my investments to be in or near my market.
@Thomas S. Thank you for sharing your experience. I will do more research on gap lending as I see there are plenty of posts regarding it on here. I will also send Steve Snyder a message and see what he can offer! Thanks again.
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
If you doh't own a home to live in House hack to the extent you can.. get in on the very low interest rates today.. and get one home under your belt locally
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
2 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
9y
Welcome to BP @Hagop Sandaldjian
0 Reply
Tom Wilson
Investor · Saratoga, CA · Member since 2016 · 75 posts · 11 votes
9y
@Kevin Siedlecki I am actually a turnkey single family rental provider for over a decade. Although it is almost entirely hands off, even with the best property management in place, the risk is having only one tenant. That's why the the location is so important to selecting an investment property. I picked the Dallas/Fort Worth market for the strong job economy and high cash flow. I have also been providing multifamily and commercial syndications starting at $50k per share and they are much safer and more predictable investments.
@Hagop Sandaldjian congrats on taking this step on building your future wealth. It's uncommon to see young people as financially farsighted as you. If SFR rentals or syndications interest you at all, I'd love to chat more. I am also an educator and chair at my local REIA, and I love helping new investors.
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P.J. Bremner
Rental Property Investor · Claremont, CA · Member since 2015 · 292 posts · 374 votes
9y
@Hagop Sandaldjian
@Jay Hinrichs brings up my favorite option here, especially living in SoCal. I started my real estate adventures by house hacking an FHA property that had 5 rooms. Since you are studying finance, I assume you can get a decent job with a salary? Obviously the higher the salary the better because you will qualify for more mortgage. You generally get about 1/3 of your monthly salary to cover a mortgage (eg. if you make $9k per month, you can get up to $3,000 per month in PITI mortgage - Principal, interest, tax, insurance and if it's FHA then you have to account for PMI as well). It's not an exact ratio without actually looking at your whole situation, but it's a good starting point. Get a great job with high salary, get that first house done with FHA, preferably get a dump that you can use the $50k to fix up while living in it and forced equity. Rent the spare rooms while living there and keep the train chugging along! I house-hacked my way through 4 homes in SoCal, it's possible and you don't have to go out-of-state for it.
Best of luck, hit me up on a PM sometime, I'll be more than happy to show you what I've done, tour a house or two and give advice on getting you setup as well!
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Tom Ott
Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
9y
Originally posted by @Hagop Sandaldjian:

Hello Everyone!
I am a 22 year old living in Los Angeles and will be getting my degree in Finance in the next 3 weeks.
I have been selling fine art and antiques while in college and have been fortunate enough to save $50,000 from doing so.
Upon graduating I plan on staying in the fine art and antiques business, but would also like to enter the real estate market.
When looking at what is available in my market, whether to purchase and rent out or buy and flip, $50,000 doesn't seem like enough.
Any advice on how to enter the market with $50,000 would be greatly appreciated.
Thank you.
Yes, you could use this as a down payment on a turnkey move in a market that will give you a great ROI! Just make sure it is in a market you know will earn you some good passive income. Do some research on the market, and make sure to also do research on the turnkey provider.
Let me know if you have any questions.
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Account Closed
Real Estate Investor · Kansas City, MO · Member since 2015 · 222 posts · 121 votes
9y
Turnkey real estate could be the way to go! Lock in a good rate as Jay said and put 20% down on cash flowing properties.
1 Reply
Lee Davis
Los Angeles, CA · Member since 2014 · 39 posts · 25 votes
9y
@Tom Wilson Do your syndication offer investors the tax incentives of owning income properties? Are you considered a partner of said properties, or are you just lending money?
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Tom Wilson
Investor · Saratoga, CA · Member since 2016 · 75 posts · 11 votes
9y
@Lee Davis We own all the properties we syndicate and offer to our investors. Each investor invests in a share of the property.
Some comparisons of tax advantages of SFRs vs syndications:
On taxes, they both take advantage of depreciation.
Syndications limit liability - it's strictly limited to the amount invested.
Syndications are 100% passive, where as a property, even with a property manager involves some activity
Typically SFRs are more volatile, which can be good or bad, whereas a syndication gives smaller investors access to larger properties with the same attractive returns but a lower risk profile.
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Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
Hey Hagop! $50k would be really hard to do much with in or around LA (or even SoCal in general). Most Californians I know, myself included, have ended up buying out-of-state.
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David Dye
Real Estate Investor · Torrance, CA · Member since 2015 · 186 posts · 45 votes
9y
@Hagop Sandaldjian
You are in LA, I see. My advice, look out in AV area. You can pick up some nice cash flowing properties in the $150-200k range. With $50k, you have plenty to put 20% down and have reserves. The area is growing and you are within an hour drive.
If you would like some suggestions on financing, feel free to shoot me a PM. Would love to share my experience in the area with you!
-David
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Aaron Pfeffer
Lender · Los Angeles, CA · Member since 2015 · 127 posts · 82 votes
9y
@Hagop Sandaldjian
Partner with someone. I'm an HML who has lent quite a few gap position 2nd liens, but I couldn't recommend that's a good idea at the moment. For starters you're green to real estate, and you really need to be comfortable with being prepared to take over the project and debt service the first lien if something were to go wrong. Secondly, most deals that currently demand only $50K gap are not good at the moment. The market is not ascending like that any more, and the flip deals are marginalized. So if you were to involve yourself in one, you are better off partnering with someone else as a principle who can control the project, get your hands dirty, and learn what's involved in a rehab project. In other words, don't lend that money and hope for the best...be a borrower yourself (with another partner) and earn the profit that way. Where are you going to find a partner? Either on here or at a local real estate club. Where are you going to find your own deal? Somewhere below the 10 freeway or into the Inland Empire for the price points we're talking about. And please don't just buy retail off the MLS...work a deal for a decent buy! Also, I do like what @David Dye advocates. I mean, let's say you bought a rental in Lancaster for $120,000, put in $15,000 for rehab and rented it for $1250/month. Close enough to the 1% rule. But are you managing it or will you hire a manager for 10% a month? And you should do an HML from Lending Home to do that deal by the way. 12 month term, no pre-pay, and they'll give you 80% purchase price + 100% rehab money. Then let's say the house appraises for $150,000 six months from now, you can cash out refinance it at 75% LTV after that amount of seasoning. So then you're into the deal $12,500 plus another $7,500 or so in holding costs, plus $3-5K in closing costs. So call it $25,000 you're all in on something that cash flows $300/month, you got yourself $25,000 in equity, some tax sheltered passive income, not to mention what it accrues in equity over the coming decades as you pay the principal loan done. Go forth my man!
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David Dye
Real Estate Investor · Torrance, CA · Member since 2015 · 186 posts · 45 votes
9y
@Hagop Sandaldjian
@Aaron Pfeffer Has makes some very good points. One thing I would like to add, if I may, is regarding the cashing out. Keep in mind that in order to cash anything out after rehab with a conventional loan, you MUST be on title for 6 months. If not, you can only take out your purchase price. Just something to consider when penciling out your numbers. Make sure you have enough reserves to hold for at least 6 months.
Hope this helps!
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