What would you do with $30,000

Question

I am sure this question has been asked before, I am doing some research and survey, and would appreciate any suggestions, thoughts, and advice.

The scenario:

"I have been a casual real estate investor for some time, but am looking to ramp up and create a full scale business. I have $30,000 saved away for whenever I should want to start a new business. What is the best way to allocate that money - is it (1) networking events (2) marketing programs (3) business development - software and hardware necessary to build out the business (4) buy a property"

For the sake of keywords - let's say this real estate investor was in Cincinnati, Ohio - or anywhere in the Midwest, and was looking to buy and hold multi-family properties.

Thanks in advance!

Nicole Heasley Beitenman · Answer

Why would you waste $30k on networking events when you have BP (free) and meetup.com (also free)?

My PM software costs $4 a month. If I really wanted to be stingy, I could do it all on Excel for free.

I can see spending a few hundred bucks--maybe a grand or 2 a year--on marketing. But not $30k.

You could get a property AND rehab it for $30k, and you'd have equity to buy another deal after that.

Remington Lyman · Answer

@Heshel Mangel If I were in your shoes I would owner occupy a $200,000-$300,000 4 unit

Ryan Evans · Answer

If you're simply trying to grow a portfolio then you don't really need to spend much if anything on the first three. There is so much good free software out there already so unless you're up in the league of needing something like Appfolio, you should be able to get by just fine. If you're systemizing a PM business or something then that might all differ. You could BRRRR a SFR or duplex with 30 and then go from there. If that's not fast enough then partnering up is probably your next best bet.

Account Closed · Answer

Buy something that will generate more money--not take it from you. There are so many great resources that you don't need to pay for. Jump in with your cash and put it to work!

Heshel Mangel · Answer

@Simcha Davidman that is great advice, thank you!

Seems you are going for mix of networking (the personal one-on-one type), and marketing (building some type of brand awareness).

As for all the other expenses, the deal will take care of it.

Money should be spent to build connections, connections bring and fund the deal, the deal brings the money.

Love it.

Simcha Davidman · Answer

@Heshel Mangel can you give more details about the type of "business?"

I say use the money for meeting potential investors and partners (coffee, lunch, etc,),  property managers and brokers (you could take them out too, I've heard they love that (who doesn't?!)).

Also, print some business cards. Maybe spend a little money on a logo or something. People like seeing that because it looks like your official.

If this person is in Cincinnati, is he looking to buy properties there? You could use the money to travel to properties, spend some time there and learn the local markets, if you want to go outside of your local market.

When you find a deal from your broker and/or property manager connections, you then go back to your investors and get the money. And you're in business. Almost all real estate people I know got started this way. All except one run their firms very leanly, and that one is in SERIOUS trouble.

You might want to spend some money talking to your accountant and lawyer about how to do these things the best way, but once you're in a deal, hopefully the deal will then takeover paying those expenses.

For all those other things (big events, software, etc) I think you can wait until you get a deal. Deals should pay for the software, or at least a portion of it.

Unless you're trying to build a different type of business.

Good luck!!

Remington Lyman · Answer

I guess any of your options will work then. $30,000 is not enough to purchase a property in a C or better neighborhood where I live unless you house hack.

Frank Geiger · Answer

If you want a business focused on the real estate industry, I would probably start with getting my license or buying a rental property and worry about marketing and stuff later. You need to get started before investing tons of money in a business.

Heshel Mangel · Answer

@Remington Lyman Thank you for your input!

This person is not in the position to live in such a unit, they have family and schooling obligations that put them in the suburbs where those type of houses don't exist and are not family friendly anyway.

The main point though, is that they are trying to build a business not just slowly grow their own portfolio.

If you were to open a business tomorrow and someone gave you a 30k gift to get it off the ground - how would you use that money?

Heshel Mangel · Answer

@Nicole Heasley Thank you for your input! The big networking events and summits throughout the year do cost a pretty penny - I am not saying 30k worth but a few large networking events could be a few thousand dollars.

If one was trying to build a full scale business, they would probably need more than just a simple PM software - they would need access to market data, property information, buyers, sellers, accounting, CRM.

Have you ever been all in on a property for under 30k? I'm coming to visit your area ;)

What would you do with $30,000

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