23 Out of College with 100k?

Member since 2019 · 16 posts · 4 votes

Hello Bigger Pockets Forum,

I am located in Los Angeles, CA and have just graduated college. I am liquid 100k cash. My best bud from childhood is in the same boat with 100k cash. Together we are looking to start our real estate empire with 200k working capital.

I really love the Brrrr strategy and maximizing cash flow. Although a flip is also appetizing for the short term profit.

The market is pretty high in Los Angeles although we are extremely connected and have access to lot of off market deals for when we have more money and are smarter.

The next market where I am most connected is Dallas, Texas and it appears the price for property is much cheaper and in our range.

What type of advice would you give a young entrepreneur in these shoes ?

And what type of real estate strategy would you start with first to initiate the empire?

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James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes

Originally posted by @Ryan Verbist:

Hello Bigger Pockets Forum,

I really love the Brrrr strategy and maximizing cash flow. Although a flip is also appetizing for the short term profit.

The market is pretty high in Los Angeles although we are extremely connected and have access to lot of off market deals for when we have more money and are smarter.

The next market where I am most connected is Dallas, Texas and it appears the price for property is much cheaper and in our range.

What type of advice would you give a young entrepreneur in these shoes ?

And what type of real estate strategy would you start with first to initiate the empire?

Welcome to the site Ryan. BRRRR is a great strategy but best done locally. That may not be in the cards for you given the cost of your market. Good news is that you aren't alone. There are tons of investors who live in expensive markets who invest out of state. The majority flock to the turnkey markets. There are tons of turnkey markets out there. Many of these markets are very well represented by sellers & turnkey operators here on BiggerPockets. In no particular order I have listed some of the most popular markets for out of state investors

Cleveland, Ohio
Dayton, Ohio
Toledo, Ohio
Youngstown, Ohio
Cincinnati, Ohio
Memphis, Tennessee
Birmingham, Alabama
Huntsville, Alabama
Kansas City, Missouri
Saint Louis, Missouri
Indianapolis, Indiana
Detroit, Michigan
Erie, Pennsylvania
Louisville, Kentucky
Milwaukee, Wisconsin
Jackson, Mississippi

Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
Make sure your property manager is a licensed real estate brokerage.
Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

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Brittany Burfict
Flipper/Rehabber · New Orleans, LA · Member since 2019 · 16 posts · 0 votes
6y
@Lamont Marable I will do that. Thank you Lamont!
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Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
6y
@Ryan Verbist - think as if you were (almost) broke! Having cash in the bank can keep you from becomming a smart investor. You can fix almost everything with more money. If you have a hammer everything looks like a nail.
A lot of people reach out to me about investing in Milwaukee and once in a while I have someone who just inherited a bunch of money and now they want to get into real estate investing. While I totally agree it is a much better idea than bringing it to Wallstreet, I can typically sense that they are in it for the ROI and not for their passion for real estate. That usually does not go well - they get into a deal too fast and with too much money and then they get cold feet and want to cancel the deal. I have learned to not take people with windfall money on as new clients.
The other piece of advice I would like to leave you with is be careful who you partner with - things chnage and most peratnerships I have seen will end up in "divorce" and sometimes expensive. So while it may be a good idea to have a running mate, always keep in mind that one day you will probably have to un-tangle what you have created. So maybe a good idea that you work together, but don't take ownership of the same property together. One for him, one for you etc.. - easy to move on and no hard feelings to burden your friendship.
Good luck to both of you!
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Jonathan W.
Los Angeles, CA · Member since 2019 · 512 posts · 301 votes
6y
If you are all business, it sounds like you just need to find a market.
Find the market you are in, swing for base hits not home runs, the score will follow, don't lose focus. The worst way to learn how much 100k really is, is to spend or go through it all. You have ideas and supplies to make it happen. Do you want buy a multi home? Buy one you guys can afford and save cash for side investments as well as other future expenditures and make that lot of yours cash flow! Location, location and well managed location!

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John FortesPro Member
Multi-Family Syndicator · Abington, MA · Member since 2017 · 603 posts · 347 votes
6y
@Ryan Verbist congrats! Excited and happy for you and your friend.
You are young so everything that comes your way may be appealing or attractive. The hardest part for you right now is determine your main focus and keep on that track. Don't get sidetracked.
Reverse engineer your financial and end goals. For instance, where do you see yourself 5-10 years from now. Now break that down in steps from then to now.
Good luck and happy investing!
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Kyle Smith
Rental Property Investor · San Diego · Member since 2019 · 109 posts · 87 votes
6y
Hi @Ryan Verbist and welcome to BP. I read your post and thought it was going to say something like you ‘just graduated college and have $100k in DEBT but want to get started in real estate’. When I saw that instead you have $100k in CASH, I was really impressed. That’s no easy feat, so well done.
Assuming your pile of cash wasn’t an inheritance or gift or something similar, it sounds like you’re savvy with your money and have made good choices thus far.
With that said, I’d consider investing some more time learning the industry before investing your money. Lean on your network there in LA to have them break things down for you. And of course, spend time on the forums here on BP reading and asking questions. I only wish I had gotten my start as young as you are. Good job
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Brock Mogensen
Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
6y
Before even thinking about doing a deal I suggest defining what REI you want to specialize in (flips, sfr, small multifamily, large multifamily, etc.). Then figure out which market you want to invest in. Proceed with building connections in that market. Meanwhile consume as much educational content and attend as many meetups as possible. Once you find the right deal, pull the trigger.
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