Where to begin with 20k?

4 Replies

@Brent Miller well welcome to the game. I would say what is your end goal. Once you know your end goal then you can pick a discipline. Since you have a pool of money I would say do a BRRRR deal since there are so many people with their hands in the mix. If you are not familiar with the BRRRR method check out David Greene's book. You can find it on the bigger pockets book store. Or if you really want other suggestions just PM me ill assist. I am in no way an expert just a guy trying to find his way just like you.

Q: I like the concept of MFH investing, where should I start?

Short Response:

1. Eliminate your rent/mortgage payment
2. Bring all deals to the BP community (and be humble when doing so)
3. Stick to the returns you want

Long Response:
Learn everything you can about multi family investing. Every day you should answer a few questions and write down several new ones.

The general theory is that you need to drive costs out of your life and/or add new revenue. If you live with your parents, and they don't charge you rent, good. I'd then start forcing yourself to put $500-700 away each month as a "rental" payment towards some real estate.

If you pay rent of any kind, to your folks or to another landlord, find a way to eliminate it from your life. My suggestion is to find a 3 or 4 family property that you can purchase. FHA loans are a good way to go, but be wary of the additional percentage points you have to pay each month as PMI. Homepath loans are great as they have no PMI. VA loans are even better, but require you to have served in the US military.

Run every deal you find through the BP community. Some of the responses are harsh, but they are eye opening. There are people on this site that have been buying and selling 4x as long as I have. When I find answers to my daily questions, I can almost always find the answers here at BP.

Last one for the moment: stick to your numbers. It bears repeating: stick to your numbers. If you want $200/month and a 12% Cash on Cash return for your investment, stick to that number. If you pick 12%, 9% is not good enough, nor is 11.7%. Make your offers accordingly.

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Originally posted by @Brent Miller :

Brand new! Zero properties aside from my own house. I have 20k I can safely invest. I have a few friends that could all do 20k (80k total) as well if needed. Where would you start?

I would continue to save and invest your money into the S&P500 ETF (Vanguard). Build up to 3 months of emergency funds and approx. $50K-$100K in liquidity before venturing into real estate investing to provide a cushion. 

I know this isn't the usual "don't wait to buy real estate, buy real estate and wait" advice peddled by most folks here. But you will be better in the long run when you have a nice cushion and your back is not against the wall. 

@Brent Miller I started with 20k in 2009. Bought a 95k condo, fixed it up and sold it for 129k. Then bought a 97k condo and did the same thing and sold it for even more a gain, then bought a 185k home and sold for 250k and on and on it went until I had enough net worth to start passive investing in multifamily apartment syndications for cash flow. Best of luck!