20k to invest in Real estate

6 Replies

@Ian Michael Thompson

I am a fan of a strategy that involves buy and hold as well as fix and flip. Essentially, find a property that can cashflow with a renter as well as have the opportunity for some value adding. This way you can go into the property with the idea of fixing it up and selling it, but if that doesn't work out as planned, you still have the option to hold and cashflow off of the rental income!

@Ian Michael Thompson  

Grab a 100k duplex out of state w/ 20% down through commercial financing :) 

I usually see these in certain midwestern secondary markets in C+ neighborhoods at around a 10 cap, you've just got to look where every other investor isn't.. avoid major cities like indy/kc/etc...

@Ian Michael Thompson

The midwest as a whole is not overlooked, but certain secondary and tertiary markets certainly are. The areas I mentioned were areas I looked into when I started purchasing property out of state back in early 2016, and they were very saturated then. I imagine that is the case to a greater extent now.

Someone from LA, like yourself, or even Sacramento like me sees a 200k duplex in the midwest that rents for $2000/mo as a great deal... but when you run the pro-forma you may find that the cash on cash returns are just barely above stock market yields (except less passive). Having done quite a few of these deals, I pretty strongly believe you'll want to target the 80-120k duplex in todays market to adequately cash flow after expenses and incidentals.