I have 85k to invest and am new to real estate. I intend to spend a while educating myself before I jump in. I have been watching a lot of Grant Cardone's videos and he always says to go big and avoid single family/smaller multifamily.
For my first deal- would you guys go for a smaller duplex to get experience/learn or go big right off the bat and try to get as many units (4-6?) as a 85k down payment will get me?
I've done both. I started big and got crushed. Then I reset and started small again. Mr. Cardone's content is wonderful and I love his philosophies, but the bigger you go, I highly recommend having a larger cash reserve fund.
Also, I would NOT invest the entire 85k if I were in your shoes. If I were buying a $150k house, I'd keep at least 5-6k in cash on the side for example. If it were $300k asset, I'd keep at least $12,000 in a reserve fund. That's just me.
I'm extra conservative like that because I learned the hard way that on my first deal or two or three, I didn't even know what I didn't know. My philosophy is I'll gladly give up some "upside" in the beginning, to preserve more capital and learn.
Going big once you know what you're doing is smart. Going big too soon can pay off big, or crush you in a hurry.
It's a risk tolerance thing really and the ability to withstand unforseen financial setbacks that will keep you in the game.
Lastly, single family vs multi family is another discussion. I think you can still start small(ER) with a duplex, and reap the benefits of having 2 tenants under one asset roof, but also not get in over your head.
Good luck and happy investing!
Hey Hunter! Well, the answer can vary. A lot of it depends on how smart you are buying. There are a lot of people who have solid heads on their shoulders and get the right amount of education before diving in, and may even have a slight natural knack for it, and they can do fine starting with bigger properties. You might be in that category. Understanding numbers, risk factors, logistics, etc. is key to starting. If you are legitimately up all of those things, you can do okay.
Keep in mind though, a 5- or 6-unit property will put you into the category of a commercial property rather than a residential. That's different financing, different exit strategies, etc. The returns aren't necessarily higher on those than they are smaller units. The numbers will vary between markets and such.
I don't know who grant Cardon is but yeah. Go as big as you can. $85k is going to buy you a ~$400k property at most with leverage unless you're creative with seller carry or other alternative financing.
I'd always advise going as big as you can arrange to go.
Hello @Hunter H. Welcome to BP and the community!
You might get some sticker shock in our area here. There are some deals out there.
With the 85k you might consider house hacking. There are some area's with great duplexes. If you live in 1 unit you will save most of that 85k for another deal.