If you had to start over with only 30k, what would you do now?

Question

For all successful out of state investors. If you had to start over, knowing what you know now, how would you do it with only 30k?

I am trying to figure out my starting strategy for out of state investing. I am in California and need to start else where. I am so close to jumping in, Just thought I would ask a curious question. What would you do if you had only had 30-50k to spend?

Thanks all! Looking forward to your responses!

James Wise · Answer

$30k would best work as a down payment on a Midwestern duplex. You can pick up a really nice asset for the $80k-$120k price point. Below are some out of state best practices to follow so you can keep your money safe out there.

• 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.

Brandon McLendon · Answer

@Theo Hicks I appreciate this Theo, I'm trying to find the best solution for finding capital for down plus rehab.

Jon Crosby · Answer

@Brandon McLendon  Good question!

If you are set on out of state, you could always go the turnkey route I suppose for that amount.  Personally I like to be able to 'kick the tires' on my investments so that I can see the REI magic unfold a little more up close.  Since California is so expensive (for both of us), I would probably create a small value add syndication with that money, come in as the principal and take 20% off the top for managing the deal.   I'm in a deal now as an LP and would like to be the primary on one in the future I think.

Best of luck!

Joey Allison · Answer

@Brandon McLendon I just completed an auction where they needed "proof of funds", but I didn't end up using the funds. I have a line of credit for my business so I moved enough money over just long enough to take a screenshot of the funds in the account. The transaction didn't close for 30 days so that gave me time to find a hard money lender. The hard money lender ended up funding 75% of the purchase price. At closing, I paid the 25% with a cashiers check. The lender is also providing funds for 100% of the cost of the rehab.

So I just completed this deal with $22,000 of my own money which will be returned after I flip the house and/or refinance the property. Hope that helps. If you cannot move money around to show proof of funds, you may need to find cheaper auctioned properties around $30k or maybe find a private money lender that will work around that with you.

Taylor L. · Answer

The two big follow up questions are:

- How much time do you have to dedicate to the business?

- What are your goals?

If your goal is to be financially independent in 2 years, then your time commitment has to be massive. If your goal is more long term and time is short, then starting with a distance investment single family or duplex can be a good move, as others have identified.

Brandon McLendon · Answer

@James Wise Thank you for the fast response James. Thats very interesting. I was always set on finding somthing to "Brrrr" but you are saying skip that and get something in good enough shape thats already rented preferably.

Thanks again

Brandon McLendon · Answer

@Theresa Harris Thank you Theresa! All my data shows the midwest (which I dont Know) But you may be right. I may think about joining a syndication.

James Wise · Answer

You don't need to buy a property that requires a rehab. $30,000 as a down payment is more than enough to get yourself a fully occupied or rent ready duplex in the Midwest.

Brandon McLendon · Answer

@James Wise Thank you for this advice. I will contemplate all of these talking points How would you suggest juggling the down-payment and finding the capital for rehab cost?

Brandon McLendon · Answer

@Joey Allison So you suggest finding action properties but wouldnt I need all cash for those? I havent considered those places even though I travel for my job and know them well.  Also you think I should use the 30k as a down payment and the hard money lender will let me finance the rehab?

If you had to start over with only 30k, what would you do now?

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