Don't start investing until you have $100,000.

Van Nuys, CA · Member since 2016 · 89 posts · 23 votes

Once of my favorite entrepreneurs would have to be the one and only Grant Cardone. So naturally I listen to his podcast and follow a lot of his material. One number that he continuously brings up is $100,000 and once you have that kind of money in the bank, its time to start to invest. Which in some aspect I do agree. A 10%on $5000 is just $500 where the same on $100,000 is $10,000, which is much more interesting.

This ideal comes up quite a bit with other motivators and entrepreneurs, to get first things first and make the money before you invest it.
This website clearly breaks that mold so the question is, what do you think is the best route? To make all the money and then figure it out or to make some small amounts and work with that? What experiences can you provide with both ends?

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Michaela G.

Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes

I would have never started investing, if I had followed that rule. huh!

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Mike Huang
Rental Property Investor · Astoria, NY · Member since 2014 · 87 posts · 18 votes
9y
It depends really on your own situation. To me, having 100k in the bank before even doing any investing means you were able to get your financial situation together, usually with some stable income and paying off any debts. I think having that financial status is the point of the 100k.
But if there are ways that work with your current financial situation, then why wait? The time value of money goes down over time so that is the cost of waiting.
For example, I'm using all my savings for another business of mine and my partners' funds for investing. I built up that relationship, which got me the funds to invest. That was my own way of getting the funds.
This site is great for giving you resources. You just have to really understand what you can do and what you're willing to do at this very moment.
4 Reply
Michaela G.
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
9y
I would have never started investing, if I had followed that rule. huh!
53 Reply
John Mathewson
Developer · Hobart, IN · Member since 2014 · 773 posts · 225 votes
9y
@Daniel Cuevas I am a huge Grant follower and his stuff has changed my life. I believe the point he was making here is for large multi family units. That as i'm sure you know is all of his real estate investments. So I think that was his starting point. I think each and everyone's starting point can be different. Grant will also tell you that he invested in himself before he ever had that first 100K so I think it depends on what you are going after or where you are currently.
4 Reply
Account Closed
Philly PA · Member since 2015 · 37 posts · 39 votes
9y
Hmmm, it would take me 10 years to save that much.
The way I see it- I want my money to work FOR me. If I'm paying rent at $450 a month- that's $5400 a year x10 years = $54,000 just to have a roof over my head, not including utilities, etc. Right now I'm in the middle of buying my first multifamily property with an FHA loan- I won't be making a huge profit on it but the rent I collect will cover my mortgage + a little extra and I can live for free so the money I would have spent on rent I can now save towards the next property. Yes there will be periods of vacancy where I will have to pay the mortgage out of pocket but even if I end up paying the entire mortgage for a year that's money that goes towards equity so I don't consider it a loss.
24 Reply
Andrew Johnson
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
I think it mostly has to do with your personality, risk tolerance, etc. Having $100K likely means you have enough for both a purchase as well as reserves. You could opt to buy a newer property (less maintenance), put more down (enhancing cash-flow), etc. I know I paid all-cash for my first deal because if it didn't work out as expected I would only "make less money" rather than "lose money". In the end that deal turned out better than I had planned so maybe I should have leveraged. The benefit of having a first property cash-flow well is that it really accelerates what you can do with the second property. Assuming you're still building reserves from your day job and you now have cash-flow from a property (and the tax benefits of depreciation, etc.) you can reload quickly for the second investment.
3 Reply
Mike ReynoldsPro Member
construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
9y
10% of 5000 dollars is 500 more toward your 100,000 dollar goal. Plus whatever else you can save up that year.
13 Reply
Michaela G.
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
9y
@Account Closed , actually, if you are going to live there, then you'd have to look at your unit as if you were renting it out and if you have positive cashflow (since you wrote that you'll be living there for free), then you will have profit. Evaluate your MF as if you were renting out every unit.
4 Reply
Sri Voodi
Investor · Woodland Hills · Member since 2016 · 82 posts · 33 votes
9y
In Los Angeles market having 100k will get you just started. So I think its wise to have that kind of money before you try to get your feet wet in markets like LA.
2 Reply
Account Closed
Philly PA · Member since 2015 · 37 posts · 39 votes
9y
@Michaela G. Yes, you are correct! Instead of paying rent to someone else I'm "paying rent" to myself and that puts me in the green!
3 Reply
Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
9y
Originally posted by @Daniel Cuevas:

Once of my favorite entrepreneurs would have to be the one and only Grant Cardone. So naturally I listen to his podcast and follow a lot of his material. One number that he continuously brings up is $100,000 and once you have that kind of money in the bank, its time to start to invest. Which in some aspect I do agree. A 10%on $5000 is just $500 where the same on $100,000 is $10,000, which is much more interesting.
This ideal comes up quite a bit with other motivators and entrepreneurs, to get first things first and make the money before you invest it.
This website clearly breaks that mold so the question is, what do you think is the best route? To make all the money and then figure it out or to make some small amounts and work with that? What experiences can you provide with both ends?
********! I started investing by buying condos in the San Francisco Bay Area with $10K. I now own and manage properties full-time across 5 cities. Start where you are, develop a specific investment goal, then making it happen!
If you REALLY want it, you will do it.
I know people that started with just $5K. This guy now owns 5 four-plexes in Oakland.
Don't let others project their goals or fears on you. Once you start achieving your goals, it's amazing how quickly these people become your biggest fans OR they disappear!
The important question is: What do you want to achieve? Stop wasting time on anything else, if you haven't yet formulated a specific goal. ALL investor activities should further this goal. Otherwise, you are wasting your time and my time with this post.
The goal should be specific. It should include short-term and long-term goals, specific dollars per month figures or to acquire something specific or a lifestyle with your investment proceeds. It should include a reason WHY you want to achieve this goal (your purpose).
Once you decide that, formulate a plan and start working to achieve it. That is all!
26 Reply
Kristopher HanksPro Member
Rental Property Investor · Davenport, FL · Member since 2016 · 593 posts · 382 votes
9y
@Daniel Cuevas This was discussed in another thread a while back and I would never call myself an expert or a guru, but that statement would leave out about 99% of the population of this country. I wouldn't wait to invest in other investment vehicles until I had 100k. When I bought my first house I did not even put $5,000 down. I put cash into a PIMCO bond fund while I am waiting for the next deal to come along. I earn 13% on a monthly dividend. I would not wait to invest in that kind of return until I had 100k. Find a deal that works with the money you have now and go earn a 100k. I prefer that plan.
6 Reply
Daniel Cuevas
OP
Van Nuys, CA · Member since 2016 · 89 posts · 23 votes
9y
So many awesome responses!
@Mike Huang That's great that you have that relationship! I agree that the financial status is the point that these people are going towards as well, if you are able to produce that kind of money then it will be easier for you to obtain again
@John Mathewson Right, he is talking about multifamily units and I agree with that concept because If you pour your money into a single unit then when you're vacant, you're 100% vacant where everything falls on you.
0 Reply
Luke Weber
Investor · Las Vegas, NV · Member since 2015 · 44 posts · 33 votes
9y
You should always be investing, no matter your current financial situation. If you don't change the path you are on, you will stay on that path.
9 Reply
Daniel Cuevas
OP
Van Nuys, CA · Member since 2016 · 89 posts · 23 votes
9y
@Account Closed Was that first deal a flip? Why would it have been better if you leveraged?
0 Reply
Daniel Cuevas
OP
Van Nuys, CA · Member since 2016 · 89 posts · 23 votes
9y
@Mike Reynolds Haha nice, I like the way you think
1 Reply
Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
9y
Originally posted by @Kristopher Hanks:

@Daniel Cuevas This was discussed in another thread a while back and I would never call myself an expert or a guru, but that statement would leave out about 99% of the population of this country. I wouldn't wait to invest in other investment vehicles until I had 100k. When I bought my first house I did not even put $5,000 down. I put cash into a PIMCO bond fund while I am waiting for the next deal to come along. I earn 13% on a monthly dividend. I would not wait to invest in that kind of return until I had 100k. Find a deal that works with the money you have now and go earn a 100k. I prefer that plan.
Yes, the best time to get started is NOW!
You can efficiently use what you have now to put yourself into a better position in the future. Cut waste out of your life, especially never waste your time nor money.
Consider this quote:
"In short, the way to wealth, if you desire it, is as plain as the way to market. It depends chiefly on tow words: industry and frugality. Waste neither time or money, but make the best use of both. He that gets all he can honestly, and saves all he can, will certainly become rich".
-Ben Franklin
2 Reply
Daniel Cuevas
OP
Van Nuys, CA · Member since 2016 · 89 posts · 23 votes
9y
@Sri Voodi I hear you but at the same time there are ways to get a decent property out in L.A. with little to no money down.
0 Reply
Juan Reyes
Jericho, NY · Member since 2016 · 143 posts · 49 votes
9y
I personally would never follow that suggestion. I have seen many people make money and make sound investments with alot less.
0 Reply
Daniel Cuevas
OP
Van Nuys, CA · Member since 2016 · 89 posts · 23 votes
9y
@Jon Q. I love it! Very inspiring, thank you very much I really appreciate it. My goals are clear to me, all I have to do it figure out how to get there!
@Kristopher Hanks I agree, his stance I believe comes from people who's life profession is exclusively sales, sales that can potentially earn people that much money. PIMCO?
1 Reply
Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
9y
Originally posted by @Daniel Cuevas:

Once of my favorite entrepreneurs would have to be the one and only Grant Cardone. So naturally I listen to his podcast and follow a lot of his material. One number that he continuously brings up is $100,000 and once you have that kind of money in the bank, its time to start to invest. Which in some aspect I do agree. A 10%on $5000 is just $500 where the same on $100,000 is $10,000, which is much more interesting.
This ideal comes up quite a bit with other motivators and entrepreneurs, to get first things first and make the money before you invest it.
This website clearly breaks that mold so the question is, what do you think is the best route? To make all the money and then figure it out or to make some small amounts and work with that? What experiences can you provide with both ends?
Daniel,
Here's another good quote for you:
"He that waits upon Fortune, is never sure of a Dinner."
-Ben Franklin
Now is the time to go make things happen. There's no future. Go get your dinner!
2 Reply
Justin Fox
Software Developer · Vidor, TX · Member since 2015 · 922 posts · 639 votes
9y
I don't think it needs to be 100k. However, I didn't start investing until after I paid off my primary residence. At that point I had ~130,000 in equity but I didn't mean to follow that rule. Just like I didn't mean to follow Dave Ramsey when I snowballed paying down debt from student loan -> car -> house.
Do what you can with what you've got while having a healthy savings.
1 Reply
Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
9y
Originally posted by @Daniel Cuevas:

@Jon Q. I love it! Very inspiring, thank you very much I really appreciate it. My goals are clear to me, all I have to do it figure out how to get there!
@Kristopher Hanks I agree, his stance I believe comes from people who's life profession is exclusively sales, sales that can potentially earn people that much money. PIMCO?
If your goals are clear, formulate an air-tight strategy to go achieve it! If you need advice on a strategy, post your specific goals and ask for help. Take info posted on here with a grain of salt though...Lots of info is simply opinion and may or may not apply to you and your specific goals.
Do it now man! The future never happens. The NOW is all you've got.
0 Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
9y
I think Grant Cardone is partially right. I think that you SHOULD have around that much before buying a real estate investment, IF you are doing this part-time, and IF you are investing in some place that is not convenient for you.
I started with $20K and bought a $240K duplex. Why was this ok for me? Because I house-hacked it and lived in it. Today, I'm preparing to put down a significant amount of money with a partner, doing it in the manner the OP suggests.
I would NEVER invest in something large, with creative financing, in a half-baked manner, while working a full-time job. To me, that would be particularly stupid, as I'd be leveraged to the hilt, facing potentially disastrous consequences, while unable to devote my best efforts to MAKING the investment work.
But, I will MAKE my home work. I will MAKE my job work. And, if I didn't have a job or a home, I'd MAKE an investment with no money work. I would certainly not try to borrow six figures, put down less than $5K, and try to make an investment work in between emails at my day job. That would be foolishly risky, in my opinion.
It's a bit harder to lose everything when you have tens of thousands of dollars in cash to back up your financing costs and cover large unexpected repairs.
So, I'd EITHER keep my ay job and house-hack OR keep my day job and save my pennies OR or find a way to make way more money with a better paying career OR if I REALLY needed to leverage using OPM, quit and manage that business with my full-time best efforts.
I certainly wouldn't put my own and other's capital at risk in an investment that I had failed to prepare myself for financially, and wasn't willing to put my full-time best efforts into..
Podcast Guest on Show #223
2 Reply
Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
9y
Originally posted by @Luke Weber:
You should always be investing, no matter your current financial situation. If you don't change the path you are on, you will stay on that path.
Yes, I concur. The ABB rule...always be buying.
It doesn't mean that in high priced markets you become desperate, stray from your investment criteria and buy junk. It means you should be always executing your specific investment strategy strictly. If you are, you will naturally buy less when prices in the markets you're focused on are peaking. Most markets across the U.S. peaked in late 2015 and most will be flattening over the next 9-12 months.
2 Reply
Kristopher HanksPro Member
Rental Property Investor · Davenport, FL · Member since 2016 · 593 posts · 382 votes
9y
@Daniel Cuevas Yeah man, PIMCO. If you get a good entry point on some of there bond funds you can get a decent return.
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