30k in pocket. Where to start?

Question

Hello,

I have been saving up and and reading the basics for several months (Rich Dad Poor Dad, BRRR, most of bigger pockets books, ABCs of Real Estate Investing, etc.)

I have saved up over 30,000 and I’m wondering if I even have enough to make a dent. I live in Nashville and I’m considering house hacking but Nashville’s home prices are outrageous and their duplex prices drive me mad.

I’m curious out long distance or flipping, both of which are intriguing but also seem like a large hurdle.

I’m just curious if anyone has any advice for early investors and how you started. Should I start moving or keep stacking?

Thanks, Elijah

Account Closed · Answer

@Elijah Radford long distance and flipping are two very different things. Flipping is probably a bigger hurdle. OOS investing is pretty straightforward these days once a management company is selected. Every other step in the purchase process is going to mirror purchasing a rental locally.

I think both are valid choices. The one you choose is going to depend on what you want. Starting off as a flipper is going to require you to be a pretty active investor compared to buying a rental. If you want to do something a little more hands off while you gain experience take the rental route. If you want to put in the work and generate revenue, flip stuff.

That 30k w/ commercial financing would get me a 150k 3plex in a midwestern secondary market that generates a 10 or 11 cap, which is pretty easy.

Alex Smith · Answer

People on here will tell you that you're some-amount-of-years too late to be investing in Nashville. It's not the end of the world though. If you're looking to invest, but don't necessarily have the stomach to do out of state investing, there are plenty of people on here that invest in Memphis and/or Chattanooga and are cashflowing.

With you being in Nashville, you're not that far from either place, especially Chattanooga. Chattanooga is growing quickly thanks to EPB and Volkswagen investing heavily in the city. Amazon has a decent size presence here, and there's also Unum which is a large corporation that has an office here too.

Account Closed · Answer

@Elijah Radford what are your worries with long distance? Management is the biggest thing to get right, IMO.

Michael Tyler · Answer

@Elliott Elkhoury

How does 30k get to 150k commercial financing? I’ve been told to expect 30% down payment for commercial.

Ian Walsh · Answer

Pretend you don't have that cash.  Learn your market and learn to market.

Jake T. · Answer

@Michael Tyler pretty much yeah, 25% cash plus various costs of financing.

Ryan Huynh · Answer

I think house hacking would work with an FHA loan. You would only need to put 3.5% down, but there is an extra mortgage insurance premium that you need to pay. House hacking would be much cheaper than trying to buy a rental property on its own. You would have to live in the property for a year though, so keep that in mind.

Account Closed · Answer

@Michael Tyler 30% sounds like local bank financing terms. I've got a institutional lender that will gladly do 20% for you. Check your DM!

Brian Levredge · Answer

Depends on the lender.  As an out of market investor you might be looking at a larger down payment due to perceived risk from the lender.  As an in market investor I've rarely been over 20% on a commercial loan, but that's mainly because I work with lenders who can due subject to loans based on stabilized value after construction is done.  I also agree with the sentiments above where someone stated to hang onto your money.  30k won't get you far on buy and holds using commercial financing without getting pretty creative.

Elijah Radford · Answer

@Ryan Huynh house hacking has been in the back of my mind since I moved to this city. Ideally I would want to have a separate unit from the renter and not do a by-the-room rent situation which is seeming like the most possible.

Thank you.

30k in pocket. Where to start?

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