What can I do with $3,500?

Georgia Real Estate Q&A Discussion Forum

What can I do with $3,500?

Real Estate Agent · Powder Springs, GA · Member since 2016 · 15 posts · 19 votes

I have a real estate photography business, and I save for taxes , and I was thinking about my small amount of savings and possibly putting it to work in the investment arena. I know it's a very small amount, but I was wondering if I could somehow use it as private money, I don't think it's enough to actually use for my own deal. I am planning to go into real estate investing next year, right now I am self-educating. Can anyone recommend a proactive move I can make with $3,500?

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Dustin Rose

Investor · El Dorado Hills, CA · Member since 2014 · 447 posts · 62 votes

Hi Kate. I saw your post about your $3,500 and thought we could connect. One thing you could do is offer your $3,500 to help fund a down payment on a property and receive a Deed of trust recorded against the property. You could ask for $500 in 120 days. Do that 2-3 times over the course of a year and you could earn $1,000 to $1,500 on your $3,500 over the course of a year. I've done that with investors who have small amounts they are looking to invest and they always seem to love the return.

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Derrick Wilson
Investor · Bronx, NY · Member since 2014 · 66 posts · 25 votes
9y
If the money is burning in your pocket then you can invest in some decent tax liens for $3500 if your educated in that niche.
1 Reply
Ronny Tiburcio
New York City, NY · Member since 2017 · 247 posts · 123 votes
9y
I would invest in the stock market. You can download the robinhood app which doesn't charge per transaction and since you are just trying to invest your money instead of keeping it in your savings you can just invest in some safe slow growing stocks. It beats keeping your money in a savings account.
2 Reply
Carlos Gonzalez
Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes
9y
You can be a partner with other people to acquire an investment property to either flip it or rent it.
1 Reply
Phil Raia
Real Estate Agent · East Petersburg, PA · Member since 2017 · 2 posts · 0 votes
9y
I agree, $3500.00 is not a lot to work with, find someone you trust and see if you can invest your share with them. Keep chipping away, you'll get there.
0 Reply
Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
9y
@Kate Kratochvil, There's really nothing wrong with any of the investments being thrown at you. But it feels to me that almost all have forgotten the purpose you stated - you're simply trying to build a better tax cushion. That means your money has to be available April 15. So anything that isn't absolutely liquid by April 15 is a non-starter. Anything that is speculative should be a non-starter. Anything with a floating maturity date should be a non-starter.
I think you absolutely get it. You're a savvy business person already with an established job, no credit debit, and unlike 90% of small business America you've actually put aside money for taxes (just not enough by your account).
So while it would be very tempting to bet on Red or split the 8s in some real estate oriented fashion so you can feel more comfortable with your tax situation, the kinds of investments I'm hearing here are probably not going to work for you.
Find a 6 month CD for a meager return but a return nonetheless. Take out a cash back credit card and pay monthly bills only on it (and pay it off monthly). Try some modest advertising for your business. These are the sure ways you can mitigate some of the tax deficiency. It won't get you all the way. But it will ensure that you don't lose and that's the absolute bottom line key - Don't screw with the IRS. Make sure the king is taken care of and then put together a war chest to pillage with for yourself..
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Alexcia White
Rosedale, NY · Member since 2016 · 120 posts · 24 votes
9y
Kate Kratochvil I will find investors to partner up with $3500 is not a lot but I’m sure any newbie starting out would be happy for you to invest then you can negotiate the % on return keep doing it to bring up your cash flow to start your own.
1 Reply
Ian Voakes
Contractor · Fort Myers, FL · Member since 2017 · 19 posts · 6 votes
9y
I would send it to the IRS in quarterly payments, I know you will not gain interest but at least you won't run the risk of losing it to a bad investment.
1 Reply
Don SpaffordPro Member
Investor · Idaho Falls, ID · Member since 2016 · 935 posts · 629 votes
9y
@Kate Kratochvil I would first use some of it to buy some books for your education. Invest in yourself. The BP books are really good and maybe a few others that get suggested often in the podcasts.
You may have some other options you haven't considered. If you have a sizable 401k or IRA, you can check your plan details on what you are able to borrow, if you are able to borrow. You could use that toward a down payment on a rental property if you find one that makes sense and provides a great enough return to cover your payback amounts and something extra. Just a thought as something to consider as an alternative. My plan allows up to 2 loans at a time for up to 50% of the total acct value at a current interest rate of 5%. I think it is worth it when it makes sense. It is basically an interest free loan since the interest is paid back to yourself. The only thing you lose out on is any possible increase in the time it takes to pay it back. Or it could also save you from a loss if there is a big down turn.
But if you consider the long term earnings of the rental property (rents, depreciation, loan pay down, appreciation, etc) the money is usually better utilized for the rental property. I did this recently myself to acquire a 4 plex that provides $1k of monthly cash flow. Removing what I pay back to my 401k still leaves me with a net gain of a little over $600/month. My 401k actually does get good returns, but the overall benefit of the 4 plex was worth it to me, especially since after I get the 401k loan paid back, the rents will continue to come in and get the appreciation value, etc. I have a local lender that can use 10% down payments, so it is a bit easier to get the higher priced properties so a $20k loan from my 401k can go a long way. If you are in a position that you have everything else set and ready to go in your life, then for me, I don't want to sit and wait around until I can save up a ton of money if I can find a great deal now. I'm not a tax expert but the depreciation from a rental could possibly help offset any other earnings from your other income.
Anyway, best of luck, I'm sure you'll figure out what is best for you.
1 Reply
Dustin Frank
Real Estate Agent · KS · Member since 2017 · 157 posts · 71 votes
9y
Real Estate photography? ....if you don't use a drone yet , 3500 would get you a pretty nice rig.
0 Reply
Melvin Noriega
Rental Property Investor · New Bern, NC · Member since 2015 · 43 posts · 22 votes
9y
Hi Kate!
Although I agree with many of the responses that have already been brought up (IRA, self educate, marketing) I do have a very different direction you can go that might make sense depending on your income. Have you considered making a charitable contribution that could later be written off in your taxes? It wouldn't be the best option for me but you mentioned earlier that your husband is IT and you guys make good income together, so it could work in your favor. Good luck.
1 Reply
Megan Hirlehey
Pittsburgh, PA · Member since 2016 · 140 posts · 119 votes
9y
While a lot of these posts are good investment advice in general, it seems they are missing the point.. it sounds like you just want a very short-term (less than 6 month) investment option because you will need all of this money (and more) in April when you pay taxes. If that is the case then that money should be put in a very liquid and somewhat conservative investment, which most of the time isn't a flip/househack property/etc. Yes, real estate is among the best ways to grow wealth but I don't think it's smart to invest money that will be needed in roughly 6 months in a physical property unless you know for sure you'll be able to refi and pull that money out when you need it (which you probably can, but interest rates are rising so you may end up losing money in the long run). If it were me, I'd look at a REIT or something similar like Roofstock (I haven't done much research on Roofstock but from what I've heard it seems pretty liquid). I may be completely misunderstanding what you're trying to do though..
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Maugno M.
Flipper / Landlord · Tyler, TX · Member since 2016 · 255 posts · 126 votes
9y
Here in Texas you could almost by a property with that and flip it for sure. Idk what all these other folks are talking about here with ROTH and IRA's but id say put that money to work. I bought a lot for 1700 and sold it for 5k.
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JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
9y
OK, I totally misunderstood the point of your post - this is money you are putting aside to pay taxes. So a couple of thoughts:
1. If you have not funded a traditional IRA, and you are in a taxable bracket, I stand by my post - putting that 3500 into an IRA will reduce your taxes owed by about $1k. There's nothing you are going to do, that's safe, that is going to produce that much income on that money between now and tax day. Of course, you are going to be limited in accessing that money, but if you put it into a self-directed IRA that allows for real estate investment, you've still got access to the money for investment purposes.
2. Anything else you do is unlikely to produce much if any income. So if investing the money and coming up with $2500 somewhere else isn't an option (I understood your post that you wanted to be able to invest that $3500 in real estate, but maybe I'm wrong), then you might just as well stick it in a 6 month CD. Anything that has to be liquid in 6 months can't realistically be invested in anything worthwhile today.
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1 Reply
Jarrod Kohl
Boston, MA · Member since 2017 · 209 posts · 126 votes
9y
If you are already looking to become an investor and have some money to spend on it... I would say you need to go find some deals. Rather than wholesaling (which you could also do) maybe you start using the cash to fund some direct mail advertising and find a few good off-market deals. From their, you find an investor partner (or a GC) and use your real estate and photography skills to bring something to the table with the deal and make some money.
I assume that people are confused because they think you only have $3500 in your bank account. I am assuming that you have $3,500 that you want to spend and you have other reserves should you need them.
1 Reply
George Smith
Investor · Latham, NY · Member since 2014 · 217 posts · 65 votes
9y
I think Matt has a great point. I would network at your local rei and try to find investors that could you're photography skills. It's amazing the terrible quality of photos people use when selling a home. I'd build that up before I did anything else.
0 Reply
George Zapata
Santa Clarita, CA · Member since 2012 · 1 post · 0 votes
9y
To be an entrepreneur, we need to starting thinking like one.
That means, various things must be done : financial education like reading Rich Dad Poor Dad, have a reserve and set goals.
Even though it feel we are in rush, the question we should ask ourselves is "what's the number one problem area am I face right now?
0 Reply
Andrew Parker
Austin, TX · Member since 2017 · 20 posts · 4 votes
9y
@Kate Kratochvil There are real estate crowdfunding sites that you can invest with as little as $1000. Looks like decent returns possible (8-20%)
0 Reply
Wade Rustici
Investor · Lee's Summit, MO · Member since 2017 · 31 posts · 7 votes
9y
Marketing, and learning,

Market your photography business for example, and find some highly recommended courses of funnels to learn from and invest in.
0 Reply
Wade Rustici
Investor · Lee's Summit, MO · Member since 2017 · 31 posts · 7 votes
9y
The more you learn the more you earn, I know it sounds cheesy but its so true!
1 Reply
Greg GaudetPro Member
Investor · Pukalani, HI · Member since 2017 · 414 posts · 291 votes
9y
Originally posted by @Kate Kratochvil:

The IRA is a good idea, thank you. Yes I am trying to figure out how I can use my 10 years as a real estate photographer, and 15 years as a licensed real estate agent, to my advantage as I start to plan my next career as a real estate investor.
I was also going to say IRA, or for short term, an investment account. I have an account with Charles Schwabb Intelligent Portfolio (minimum to open account is 5k though) but I have been very happy with it (but the stock market also isn't always good and can be risky) one of the things I like about Schwabb is you set your own risk tolerance. Anyway, I put my money there while I'm saving for down payments on investment homes. I also have my IRA with Schwabb. I also have an account with Fidelity, but I personally like the interface and the tools that Schwabb offers. Just need to get to the 5k minimum to open an account with them!
Hope this helps!
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Niki C.
Aurora, CO · Member since 2017 · 52 posts · 19 votes
9y
When I bought my second condo, I used the only $3000 to put as earned money to buy it :) that was all my saving at that time, the rest come from equity line from my first condo to be able to buy my second condo. just playing around with number.
1 Reply
Robert E BoginoPro Member
Real Estate Agent · Alpharetta, GA · Member since 2017 · 151 posts · 76 votes
9y
@Kate Kratochvil I'm guess you are asking about RE specific investments for your savings. It sounds like you have some other saving and your life together.
$3500 isn't a ton to start. Probably not enough to loan out on a deal. Personally I would keep saving up for a down payment on a buy and hold for yourself. Even a house hack situation on a duplex where you live in one unit with and FHA loan (very little down payment required). Keep in mind you will need a reserve fund as well for unexpected repairs.
You could use it to start a mailing campaign and whole sale some deals. Of course its not guaranteed you would get a deal so maybe "investment" isn't the best word for that. That would be a little risky in my opinion.
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Shawn AckermanPro Member
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Kate Kratochvil if you have good credit 720+ use that money to open a REI LLC and apply for BC using a PG. This is a way to get some starter capital to invest. Otherwise if your in a market where you can put yourself in front of a motivated seller who will take $2K down on a cash flowing property(seller finance/land contract), then there's an option. Or find a partner who may be able to identify such a deal and use part of the cash in the transaction. I don't suggest going at this all alone, so partnering on a "low down payment" deal, I'd say go with that. All the best. Always remember to persist and you will WIN!!!
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