Ok, so I know this topic has come up quite a few times. And I have read a lot of the responses. But every situation is different so I decided to ask your opinion based on my situation.
I'm looking to invest. I have roughly 25-30k to do so. I have a full time job that pays well, but I'd like to eventually become a full time investor.
I want to know what the best use of my money is? I'm not looking for the "get rich quick" plan. I understand it takes time. But I'd also like to use any income I do earn to reinvest. So the more money and the faster it comes, the better!
Should I be looking at buy and hold rentals (SFH or Multi-Fam), flips, auction homes, lease to owns, etc...I've read a lot of mixed reviews on wholesaling so I'd rather not get into that.
How would you use this money? What has the highest earning potential?
Any help would be greatly appreciated!!
Wholesaling in some markets may be hard but there is nothing wrong with that. Personally if I had that I would either find a partner to buy a home, join a reit or syndicate thatdoes not require a lot of money, buy a 2nd position mortgage note, buy tax lien, or go on these crowd funding sites and put the money in there. Flips give you the most money the fastest as long as you are in the right market, do proper research, and have a good team.
I'm a buy & hold investor and I would use the funds as down payment on property or two in good cash-flowing markets. It all depends on what type of investing you're looking to do though, buy & hold may not be your cup of tea!
Any additional cash flow could be added to what you're already saving on a monthly basis. Each property will help you snowball into saving more funds for future properties faster.
Work backwards, define where you want to be and work back until you find a step you can make with your current situation.
You have 25k and a full time job. You want to have enough cash flow to stop working. Sounds like you want to buy cash flowing rental properties, I would start with that.
Do you like your current job? If yes, just find out what you can afford to buy and see if there's any good rental deals out there you can buy with your income. If not, maybe try flipping or wholesaling. Both require lots of work but with 25k you could take a little risk and leave your job right away with hopes of making money doing something you actually like.
Thanks for the input!
Eventually I'd like to get into multi-family homes (apartment complexes / condo), commercial and land development. Obviously that's a ways away.
So it looks like my best bet is to get one or two rental properties to start, continue saving any cash from those properties and continue acquiring additional properties?
I figured that was the way to start.
It looks like your next step is getting ore-qualified........possibly on but and holds for cash flow?
I would save that cash for a rainy day or as your back up and try to find some "other people's money" for down payments on SFH. If you own a home with equity then take out a home equity line. Might as well put that equity to use. Or take out a 401k loan for the downpayment on a few rentals. And then pay it back asap with your cash flow. I have even heard of people taking out 0% for 1 year cash advances on credit cards and using that as a downpayment for a rental property. If you have no other option but to use your own money I would definitely set some aside as a safety net. Once you get the financing the trick would be to find the deals below market value with equity already in the home when you purchase them. Then down the road you can refinance and pull out that equity into hard cash to put down payments on more properties. And the cycle continues......
I wouldn't say this is the "best," but one possibility is using that 30k towards a down payment on an SFR that you well-analyzed to be a good deal, and then flipping it. Flipping is a great way to generate a quick burst of capital, especially for someone who already has capital to work with.
If you have a good job tat pays well, why is it that you only have $25,000 to invest - serious question?
It is important that income is judiciously allocated between present and future spends. For the future, we should save and invest wisely as per our risk appetite. For the current expenses, one should be well-budgeted to be able to meet all expenses.
In my opinion, buy and holds are only valuable if they are throwing off enough cashflow to matter. An apartment building or retail strip mall that throws off 25K per year or more.
To accomplish this you could do as others have suggested and do some flips to turn 25K into 250K or more. You can fix and flip any type of property. It does not need to be limited to single family homes.
I was thinking the same, which I why I asked this question. I know in the long run, this is the way to go and I'm sure after a few years, I will own a handful! But Im really looking to get the ball rolling now. It would pay off if i found the right property to hold though. Numbers would have to make a lot of sense.
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