What can I do with $5,000 Dollars?

Buying & Selling Real Estate
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What can I do with $5,000 Dollars?

Makala Lee-Norwood
Property Manager · Novato, CA · Member since 2018 · 29 posts · 5 votes

Hello All,

My name is Makala and I am very eager to buy my first property. I have spent months trying to gather as much information as possible, but it seems as though the learning for Real Estate is never ending, which is wonderful. I currently have $5,000 to work with as a start and was wondering if it is even possible to do anything with such a low number? Investing the the Bay Area is so expensive, should I consider looking out of state?

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Most Popular Reply

Frank Wong
Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
7y

Hi Makala,

$5k is not enough to invest in the Bay or in another state. Don't put it into an IRA. You don't want the only amount of money you have trapped into a retirement account. Just do the math. If you took the $5k and had a 12% return for 10yrs straight compounded it would be $15,529 which doesn't change your life.

Keep saving the money don't bother investing it into anything because the honest truth is that it won't be enough to make an impactful dent into your life.  Just keeping it completely honest here and showing you the best route.  Instead, keep saving away and find a side hustle and stack cash that way.   

Number 1 thing you need is to increase your income. 2nd decrease your expenses.

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  • Makala Lee-Norwood
    OP
    Property Manager · Novato, CA · Member since 2018 · 29 posts · 5 votes
    7y
    Hi @Nick, thank you I will look into that. I do plan on doing the owner occupancy option with an FHA loan.
    0Reply
  • Makala Lee-Norwood
    OP
    Property Manager · Novato, CA · Member since 2018 · 29 posts · 5 votes
    7y
    Hi @Wilson, do you mind sending me a message and walking me through the process you took briefly?
    0Reply
  • Makala Lee-Norwood
    OP
    Property Manager · Novato, CA · Member since 2018 · 29 posts · 5 votes
    7y
    Hi everyone, Thank you all so much for your opinions, feedback, and encouragement. Although I can't get back to everyone I have read everyones responses and and I will get back to saving and research as everyone has suggested.
    0Reply
  • Cory K Bente
    Lender · Everett, WA · Member since 2019 · 55 posts · 25 votes
    7y
    @Arlen Chou great advice!
    1Reply
  • Cory K Bente
    Lender · Everett, WA · Member since 2019 · 55 posts · 25 votes
    7y
    @Makala Lee-Norwood https://www.investopedia.com/terms/r/rothira.asp
    0Reply
  • Eric Schultz
    Investor · San Diego, CA · Member since 2016 · 265 posts · 305 votes
    7y
    Makala Lee-Norwood One option would be to invest in AHP Servicing (debt fund that is paying 10% preferred return in 2019). You can collect the monthly interest or have it automatically reinvested while saving up more funds to buy your first property. It’s basically a high interest savings account, and is fairly liquid. Initial investments can be returned within 30 - 60 days upon request.
    0Reply
  • Makala Lee-Norwood
    OP
    Property Manager · Novato, CA · Member since 2018 · 29 posts · 5 votes
    7y

    Hi Eric,

    Thank you for taking the time to respond go my post . I will take some time and research AHP. Would you recommend this over a Roth IRA ?

    0Reply
  • Makala Lee-Norwood
    OP
    Property Manager · Novato, CA · Member since 2018 · 29 posts · 5 votes
    7y

    Thank you Corey for that link. Super helpful!

    0Reply
  • Arlanzie Combs
    Flipper/Rehabber · St. Louis, MO · Member since 2019 · 13 posts · 0 votes
    7y
    @Makala Lee-Norwood what are you look for
    0Reply
  • Arlanzie Combs
    Flipper/Rehabber · St. Louis, MO · Member since 2019 · 13 posts · 0 votes
    7y
    @Makala Lee-Norwood I think you're on the right track do your homework. You dont want to waste money on a bad deal
    0Reply
  • Makala Lee-Norwood
    OP
    Property Manager · Novato, CA · Member since 2018 · 29 posts · 5 votes
    7y

    Hi @Arlanzie Combs,

    I am looking for anything really . Ideally I would love a duplex or fourplex, use an FHA loan and occupy one unit myself ! I live in a very expensive market in California, so I was thinking of Kansas City. But for the mean time I am back to hitting the books.

    1Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    7y

    @Makala Lee-Norwood you’ll need more money because $5000 isn’t enough to put 25% down in almost any market

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
    WebsiteView Page
    0Reply
  • Arlanzie Combs
    Flipper/Rehabber · St. Louis, MO · Member since 2019 · 13 posts · 0 votes
    7y
    @Makala Lee-Norwood ok thats what's us yeah a four plex would be ideal live rent free and have income coming in you can keep an eye on your investment without the tenants knowing your the owner. I love that way of thinking.
    0Reply
  • Arlanzie Combs
    Flipper/Rehabber · St. Louis, MO · Member since 2019 · 13 posts · 0 votes
    7y
    @Makala Lee-Norwood may i ask why you're relocating to Kansas city
    0Reply
  • Account Closed
    Rental Property Investor · Jacksonville, Florida Area · Member since 2016 · 106 posts · 48 votes
    7y
    @Makala Lee-Norwood Keep saving your money Makala, and double down on reading real estate books, listening to podcasts, and attend as many real estate meetings as you possibly can in your area. You just might come across an owner finance deal, or someone that would be willing to partner with you on a deal. The more that you learn, the more options you will create for yourself as you increase your savings. When the right deal comes along, you will be ready Makala!
    0Reply
  • Tim Pritchett
    Member since 2018 · 17 posts · 4 votes
    7y

    @Wilson Lee how is that going with the 4 plex? How long did it take u to find that property?

    0Reply
  • Wilson Lee
    Birmingham, AL · Member since 2014 · 178 posts · 75 votes
    7y
    Originally posted by @Tim Pritchett:

    @Wilson Lee how is that going with the 4 plex? How long did it take u to find that property?

     Months,  6 or 8.   It was our first deal, so we could not mess it up.  

    2Reply
  • Makala Lee-Norwood
    OP
    Property Manager · Novato, CA · Member since 2018 · 29 posts · 5 votes
    7y

    Thank you @Jordan Moorhead

    0Reply
  • Makala Lee-Norwood
    OP
    Property Manager · Novato, CA · Member since 2018 · 29 posts · 5 votes
    7y

    Hi @Arlanzie Combs, I am not relocating to Kansas City , I was just thinking about buying property there because my grandmother and her husband live there and could look after the place for me . Just an idea 

    0Reply
  • Makala Lee-Norwood
    OP
    Property Manager · Novato, CA · Member since 2018 · 29 posts · 5 votes
    7y

    Thank you @Account Closed, I will continue to do that .

    0Reply
  • Jad Boudiab
    Real Estate Broker · Cleveland, OH · Member since 2015 · 255 posts · 248 votes
    7y
    Originally posted by @Makala Lee-Norwood:

    Hello All,

    My name is Makala and I am very eager to buy my first property. I have spent months trying to gather as much information as possible, but it seems as though the learning for Real Estate is never ending, which is wonderful. I currently have $5,000 to work with as a start and was wondering if it is even possible to do anything with such a low number? Investing the the Bay Area is so expensive, should I consider looking out of state?

    Invest the 5k in yourself, find a way to increase your savings first. Education, sales training, professional development, anything that will help you increase your income, then think of investing it. $5k won't go anywhere as an out of state investor in a market like Cleveland, or other lower priced markets. You can go the REIT route, possible househack with an FHA mortgage on a duplex, but I'm not sure you can do that in your market.

    Real estate investing is a long-term, get rich slow process. Increase your income at your day job or business, bring in cash, and park it in real estate.

    0Reply
  • Arlanzie Combs
    Flipper/Rehabber · St. Louis, MO · Member since 2019 · 13 posts · 0 votes
    7y
    @Makala Lee-Norwood ok because st louis has great investment property really cheap. And 5k could buy you an fourplex. But it would need a total upgrade.
    0Reply
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