What Would You Do With $15K-Starting Out

19 Replies

Thanks to a family friend I have $15K  to use towards my first real estate deal.  I was thinking about using the money to fund a house flip to hopefully bring in a large enough profit to pay back what I borrowed and have enough to fund my next deal.

I could buy and hold a property, only draw back is it will take a little longer to pay back the funds. In taking the FHA route and with me searching for SFH I would have to live in the home for a year before selling ( I think?). I may need to look into some creative alternative options. Curious to see what you would do.

So in perspective to your area, what would you do in my position? 

Any and all insight is appreciated Thanks!

Dennis.

Depends on what your goals are and what your needs are right now. 

If $200/mo would be perfect for you right now then buy a turn key single family home.

If you're looking to turn your $15k into $30k then of course you're going to have to flip a property, which might be very difficult with only $15k. 

Your only real option would be to house hack a multi unit assuming 15K is sufficient for the required DP. Your biggest issue will be having a reserve fund sufficient enough to get you through unexpected expenses during the first year.

Best advice would be for you to not invest until you have saved up more money. You will know how much you need once you begin researching investing in your chosen area and getting pre financing approval.

Is this 15k a loan or a gift? You mention you have to pay it back, which makes me think it’s a loan. If that’s the case that will make it much harder to do FHA or turnkey.

If it’s a gift I’d buy a single family rental, either turnkey or otherwise.

I bought my first rental (turnkey) for about 20k all in, and my second (non turnkey) for about 12k all in. So it’s very doable if it’s a gift.

Originally posted by @Caleb Heimsoth :

Is this 15k a loan or a gift? You mention you have to pay it back, which makes me think it's a loan. If that's the case that will make it much harder to do FHA or turnkey.

If it’s a gift I’d buy a single family rental, either turnkey or otherwise.

I bought my first rental (turnkey) for about 20k all in, and my second (non turnkey) for about 12k all in. So it’s very doable if it’s a gift.

No not a gift, guess I should have clarified  that a little better. To rephrase what I said earlier, he is more like a partner. He is puts up the funds and I come up with the best deal, where we both can make a profit (Jensen why I'm leaning towards house flipping). Although he has the funds in cash, I believe he will be pulling out a loan. 

Originally posted by @Thomas S. :

Your only real option would be to house hack a multi unit assuming 15K is sufficient for the required DP. Your biggest issue will be having a reserve fund sufficient enough to get you through unexpected expenses during the first year.

Best advice would be for you to not invest until you have saved up more money. You will know how much you need once you begin researching investing in your chosen area and getting pre financing approval.

Thanks, solid advice. In analyzing things it seems that $15k might not be enough. Once I get with my agent and break down properties in my area I'll get a better feel. Just curious to what route other people would do.

Originally posted by @Antoine Martel :

Dennis.

Depends on what your goals are and what your needs are right now. 

If $200/mo would be perfect for you right now then buy a turn key single family home.

If you're looking to turn your $15k into $30k then of course you're going to have to flip a property, which might be very difficult with only $15k. 

 Thanks ,Right now my main goal is to build up more money. 

@Dennis L Lewis Jr

What kind of return is your partner requiring? 

If you can buy some cash-flowing units, BRRRR would be your best strategy in my opinion. Build long-term wealth and still be able to pay your partner back.

Mark Gallagher, Real Estate Agent in New Jersey (#1221341) and Pennsylvania (#RS314542)
215-490-4851

suggest you go in with a like investor.

House hack. 100%. Buy a place that is livable but could use a little bit of work, live in it while you fix it up. Rent it out, repeat.

I've told several people they should do this while they can, and then they have blown it on trying to become a wholesaler or flipper and are done in 1 year with nothing to show for it.

Hi @Dennis L Lewis Jr

Congratulations for starting your real estate business, what I suggest is that you do not focus on looking for a deal worth $ 15k. I would look for a good property to do a flip, then I would look for a hard money lender and I would use the $ 15k as a down payment. It would be very difficult that with only $ 15k you do the flip and pay for the remodeling.

Good Luck

Camilo Rey

@Mark Gallagher

Honestly he hasn't specified how of a return he is looking to get back. Doing the BRRRR strategy is a good idea. I have heard many people gain success through this.

@Sam Shueh

When you say go in with a like investor. How would you go about doing so? Right now where I live i don't have any close friends that are into real estate like myself.

@Steven Loveless

Have you had a lot of success with house hacking?

@Camilo Rey

Thanks, its an exciting journey thus far, seeing all the success/horror stories that real estate can bring. Whats your experience and success with hard money lenders? I need to shape up my knowledge on that.

@Dennis L Lewis Jr I missed my opportunity to do it - and that is why I preach it so much now. I contemplated it 5-6 years ago, but couldn't get over the analysis paralysis and just take action. Instead we bought an emotional personal residence with the capital we had and went about our lives.

Now that I am in a different place in my career with young kids, I think I'd be divorced if I tried to do it right now. Now that I have some years on my personal residence, I realize the opportunity that I lost. I would have gained more than half a million in equity, and have several houses cash flowing like crazy right now had I just done it 6 years ago.

If you have a flexible home life, a small amount of capital to deploy, a decent job that is bankable for an FHA loan (3.5-5% down!!!), and the willingness to improve the property it is perfect for you. The risk is mitigated because you live there, so worst case scenario it just stays a personal residence. You get into a property for almost nothing vs the 20-25% down, with the best financing terms possible. You can repeat once a year, which is probably a good speed for a beginner. You build value-add equity. You can learn a little bit about everything - the purchase side, rehab, renting, and even sell it down the road if you want.

@Dennis L Lewis Jr I agree with @Steven Loveless 100%

Here's exactly what I would do if I was single, a couple years younger, with 15k.

1. Get my RE license as fast as possible. (~2k)

2. Go to every REIA I can. (~100)

3. Buy the top 5-10 investors at the REIA lunch, and find out how I can work for them in my spare time (nights and weekends). I wouldn't ask for ANYTHING in return. You'll get everything you need just by being around them. ($80)

4. Once I got my license, I'd be my own first client. Buy a 3-4 bed house or condo in a hip area where I could get roommates. Or, if the multifamily market was good in my area, find a small multi. Put the minimum down. Or even nothing down if I could.(~3k)

5. At this point I''ve spent about 5k and probably 3-4 months. My housing is paid for by roommates, I'm a licensed real estate professional, I have mentors to guide me, and I've still got about 10k.

6. With the rest of my money I'd weigh my options. By now, I would know what I like doing, who I like working with, and a good bit more about RE in general. This could take you a lot of directions.

-You could put a down payment on another rental. 

-You could market for wholesale deals. 

-You could market for listings as an agent. 

-In Birmingham, you could even pay cash for a house with 10k.

That 15k can take you a LONG way relatively fast, if you're willing to hustle.

Rob Drum, Real Estate Agent in AL (#112849)
205-253-8756

@Dennis L Lewis Jr ,

If I were in your shoes, I'd find a duplex and buy it through a FHA loan for 3% down. Instantly become a landlord and live for free, and then keep saving for your next one! In a few years, move to the next duplex and do it again! IMO this would be the fastest and easiest way!

Why not this one?

215 Arnold Dr,Smyrna, TN 37167?

I agree with @Rob Drum and @Steven Loveless

15k is PLENTY to get started with.

If anything, spend half on educating yourself and the other half on marketing.. I promise good things will happen if you can learn how to stretch that money and think creatively. You're going to fail a lot in this business, but just remember that's part of the process. Fail Forward. 

(I say that so you don't spend an eternity trying to make the perfect first decision, because that's not realistic) 

Do. Fail. Adjust. Repeat.

Originally posted by @Dennis L Lewis Jr :

@Mark Gallagher

Honestly he hasn't specified how of a return he is looking to get back. Doing the BRRRR strategy is a good idea. I have heard many people gain success through this.

@Sam Shueh

When you say go in with a like investor. How would you go about doing so? Right now where I live i don't have any close friends that are into real estate like myself.

@Steven Loveless

Have you had a lot of success with house hacking?

@Camilo Rey

Thanks, its an exciting journey thus far, seeing all the success/horror stories that real estate can bring. Whats your experience and success with hard money lenders? I need to shape up my knowledge on that.

 @Dennis L Lewis Jr:

Hard lenders work as long as you do things fast and pay the debt.

They know the business, so they will not have any problem making the loan if it is a good deal.

I recommend the following link where they explain a little more about this topic.

 https://www.biggerpockets.com/renewsblog/2013/03/1...

@Dennis L Lewis Jr   I got my first deal with O down,  but I use OPM,  you can use your money to partner with a rehabber and make some money  while you are learning in the same time 

(786)-529-4075

@Steven Loveless   @Rob Drum Very enticing and informative information. In taking that route though, it leaves my family friend (the person providing the funds) out on making a profit from the money hes invested in me. Thus leaving me with  a lot less to work with, using my own money. Which means I need to save more.Awesome ideas though, ill be taking these into consideration in the future.

@Linda D.

Thanks for the response

That property is actually 5 mins away from where i currently live. Looked like a great opportunity to house hack, but it has actually sold already.

@Camilo Rey

I defiantly will be looking more into and getting familiarized

Thanks for the link!

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