What to do with my $55,000?

6 Replies

Hello all!

We are currently on the market looking at deals in Tennessee, Georgia and some in Minnesota. How long is normal to make initial investment back? The deals I am looking at are 5-7 years to get that initial deposit back. We are looking to replace my income with income from rental investment properties. With "only" $55k to invest right now the cash flows are around $300-500/mo. Its going to take us a while to reach our goal of $10,000 in cash flow per month but I feel like we need to start somewhere. I am looking for advice on a first property, for something that is cash flowing. I have read 10-12% return is ideal, thats still a small number in the big picture of things. Looking to build confidence, and seeking advice on our first purchase. 

Stop looking at percentages...they tell you nothing of value. Look only at dollars. What you need to do is layout a financial plan aiming at your ultimate financial goals (in dollars), with specific financial steps along the way, making sure that each step leads directly to the next, and so on...much like a college curriculum. Each class being a prerequisite for the next, until you graduate. With REI, graduation is achieving your financial (specific...not, "I want to be financially independent) goals.

Next, you need to forget about collecting income properties at the start.  It will take you forever, and every property will cost you money.  Instead, focus on flipping your cash over and over, so you use your cash multiple times, and in the end never actually spend it.  This will allow you to receive exponential gains rather than linear.  Notice I said flipping your "cash"...not properties.

It depends on what you are doing and Joe is right, look at the actual numbers. Are you buying a fixer and plan to refinance after the renos?  I do long term rentals and look at what the return is on my investment (down payment). 

Promotion
Apartments.com
List, Screen, Lease, Get Paid, Manage.
No Better Place to Lease Your Place
Owners rely on the #1 rental site to get the best results from their rental properties.
Get Started Now
Originally posted by @Joe Villeneuve :

Stop looking at percentages...they tell you nothing of value. Look only at dollars. What you need to do is layout a financial plan aiming at your ultimate financial goals (in dollars), with specific financial steps along the way, making sure that each step leads directly to the next, and so on...much like a college curriculum. Each class being a prerequisite for the next, until you graduate. With REI, graduation is achieving your financial (specific...not, "I want to be financially independent) goals.

Next, you need to forget about collecting income properties at the start.  It will take you forever, and every property will cost you money.  Instead, focus on flipping your cash over and over, so you use your cash multiple times, and in the end never actually spend it.  This will allow you to receive exponential gains rather than linear.  Notice I said flipping your "cash"...not properties.

 I myself am also looking at a similar goal and trajectory for my wife and I. We currently live in Minnesota, and this is an interesting way of looking at building income quickly I have not heard a lot of other people talk about. I would be curious to know what exactly Joe mean by flipping cash and not properties? 

Originally posted by @Matthew Plasencia :
Originally posted by @Joe Villeneuve:

Stop looking at percentages...they tell you nothing of value. Look only at dollars. What you need to do is layout a financial plan aiming at your ultimate financial goals (in dollars), with specific financial steps along the way, making sure that each step leads directly to the next, and so on...much like a college curriculum. Each class being a prerequisite for the next, until you graduate. With REI, graduation is achieving your financial (specific...not, "I want to be financially independent) goals.

Next, you need to forget about collecting income properties at the start.  It will take you forever, and every property will cost you money.  Instead, focus on flipping your cash over and over, so you use your cash multiple times, and in the end never actually spend it.  This will allow you to receive exponential gains rather than linear.  Notice I said flipping your "cash"...not properties.

 I myself am also looking at a similar goal and trajectory for my wife and I. We currently live in Minnesota, and this is an interesting way of looking at building income quickly I have not heard a lot of other people talk about. I would be curious to know what exactly Joe mean by flipping cash and not properties? 

 PM me

There are several different ways to make your money work for you. Joe's advice is a good one. I work several investors in MN from here and out of state with different requirements from 1% rule, 1031-exchange, flips, etc. BRRRR is a good way to get your money back and still keep the property, but you need to have a good ARV and lenders.

I try to focus on short-term goals. The long-term (10k/mo passive) can be pretty overwhelming and seem unrealistic as your sit and contemplate where to spend your 55k. REI is a get rich slow process. The best return in the biz IMO is househacking multifamily in your own market (not sure if this is possible) with Airbnb units. You can recycle and reuse FHA loans, although it takes some serious sacrifice! If you have under 3 children I believe it can be done, lol! Best of luck.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you