Looking to Invest $30K into Real estate. (Arizona Area)

12 Replies

That depends. What areas in Arizona are you targeting? What price point? The question: "Is this a good time right now?" is extremely hard to answer. COVID-19 has created a lot of uncertainty. Knowing what price point, location, and strategy you are targeting will help me elaborate. If $30k is your total funding for a deal, I'd wait and stack up more cash to invest later...unless you have a partner. Even if you manage to find a good deal now with the $30k, you'll want to be prepared for an extended downturn (should one occur).

@Chaunti Griggs I would say unless you invest out of state, passively invest into a deal or partner up, prices are going to be still a bit high in the Phoenix market to be able to make anything work without additional capital. That being said, real estate is all about partnerships and there is great opportunity to buy when everyone is running. I would say in the next 60-90 days there is going to be quite a bit of opportunity.

@Chris Levarek What would you say the average working capital would be for the phoenix area for real estate market?  I am also actively looking to partner up with some other investors in real estate, Seeing I'm not into the stock market I'd rather use some money toward real estate a much more solid avenue. Do you think getting into a rental property  for time being would be a better move until the time comes for better opportunities?

$30k is good for down payment on an investment property, but it may not get you much further than that until you can tap into the equity to get cash to purchase more properties.

Don't think that $30k is sufficient for fix/flip, but it should be a good start for down payment on investment that you hold on to for the long run.

Phoenix is a hot, fast moving market and is expected to be so for quite a while. We only have 13,503 active properties for sale and we need about 25k to be more normal.

You may just break even on the cash flow of the investment property. So, it will be a good idea to have extra cash reserves for repairs, maintenance, vacancy, etc. 

@Paul Welden What if I used hard money lender for the funding the deal and my personal cash for renovations and repairs etc, for a flip? What about a method called Brrrr is anyone familiar with it, would this be a good method for someone getting started in real estate? I also have more than 30k but I was hoping not to have have to use all my personal cash to fund deals. I hear about using OPM all the time but not sure how it works

Hard Money would be good for purchase but $30k for rehab & holding costs may be a bit tight. 

For HM, I think you'll probably get 75% LTV, pay a few points, and then pay 10%+ for 6-12 months interest only.

During the rehab and selling process, you'll have to pay for rehab costs, utilities, property taxes, and insurance (in case it burns down, etc.). Rehab could take just a few weeks or a few months depending on the property. 

Once rehab is done, you'll sell it, get your cash out, and move on to the next property. 

$30k cash on hand may be doable but probably too tight. 

What strategy are you aiming for? Unfortunately $30k isn't going to get you very far in this market if you're BRRRRing. From your previous comment I would highly recommend reading up on the strategy more. It's a powerful one but you need to understand it before jumping in with a hard money lender. Keep in mind a hml will likely require 15% down. If you found a house for $150k out here (tough but not impossible) that's $22,500 down, then you have $4500ish in closing costs. That would leave you with practically no reno budget. If you're dead set on buying just to buy I'd recommend finding a great traditional mortgage broker who can get you into a house hack for 3.5% down. You could buy something that needs some work and learn as you go.

@Chaunti Griggs

I think finding a partner as others have said or multiple partners for a multi-family property would be your best option. Find somebody that’s experienced with owning and managing and take the opportunity to learn from them so that as you build your cash flow and portfolio, you can do those things yourself and increase your return.

Single family homes in Phoenix are difficult to cash flow positive on with 20-25% down, but not impossible. Small Multi-family properties can provide the cash flow but you won't see the same appreciation in value.

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