Getting started with $50k / no debt?
Member since 2023 · 12 posts · 14 votes
Getting started with $50k / no debt?
Most Popular Reply
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2yQuote from @Holly Ross:
Hey all. I want to get started in real estate and am hoping to get some insights on the approach... I have $50k cash and don't really want to take on debt (or do creative financing). Is this a do-able starting place financially, or a pipe dream?
Do markets still exist where you can buy nearly turnkey rental property for $50k?
I've been taking in so much info that I'm in the analysis paralysis phase but I'm curious how someone more seasoned would get the ball rolling with just $50k cash today.
Thanks so much for any insights you could share. I'm learning as much as I can and currently in the "i'll never be able to do this" phase (but giving myself a pep talk out of it!)
50k all in not a chance unless in the middle of BFE,
36 Replies
- 2yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
can you buy a turnkey property for 50K? no. it's also very difficult to invest in real estate without using debt in some way.
can you start with a house hack?
- Real Estate Agent · Memphis, TN · Member since 2019 · 365 posts · 264 votes2y
@Holly Ross If you're comfortable holding rentals in that price range Memphis would provide opportunities for you. That said, I personally wouldn't invest in that type of area, in my opinion (for whatever that's worth) I'd advise taking on some debt and going a little higher in price to get a more consistent area that will provide a safer investment.
Feel free to reach out, I'd be happy to discuss with you in further detail. Best of luck investing!
- Colorado Springs, CO · Member since 2020 · 9 posts · 4 votes2y
Holly- It would be very hard to find a turnkey property at 50k especially the market we are currently in depending on the state. Typically if you are wanting to acquire more properties you will need to take on some debt.
Personally I have bought duplexes lived in one side and rented the other to either pay my mortgage or at least most of the mortgage. Currently, I live in house with a adu (accessory dwelling unit). This helps with more privacy rather than sharing a wall in a duplex. This
Hope this answers your question or if you want more insight please let me know.
- Member since 2023 · 12 posts · 14 votes2y
Thanks everyone!
I'm not sure if I truly mean "turnkey" or what the word would be for the state of home I envision –– I'm thinking more like a mini flip... exterior paint, a new fence, add a kitchen backsplash, that sort of thing. Cosmetic updates that make the place look significantly nicer without needing to sink a ton of time and expense. So sort of turnkey, but not expecting anything glamorous for $50k! Memphis has actually come up a few times in my research but I have done no research yet to understand the area.
I would LOVE to house hack but my situation is basically that I just bought my first home off market for a good price early December, but it's a SFH. Eventually I want to convert this into an MTR since it's in a great location for it (two lvl 1 trauma centers 10 min away), but I want to live here for a year or two first. That said, I don't want to take my foot off the gas with investing either. I'd really like to find or flip my first duplex this year and get it to pay for itself.
Taking on debt isn't off the table, I'm just really afraid of the risk since I'm not sure how it would impact my current mortgage, or what the worst case scenario would be if things failed. I'm not sure how to evaluate the risk of a second mortgage. Maybe that just means I should try to speak to an investor friendly lender first and see what they think.
- Realtor · Memphis, TN · Member since 2020 · 33 posts · 22 votes2y
@Holly Ross not knowing the risks can certainly make this more daunting. 1) 50k wouldn't be enough or a worthwhile venture because of the neighborhood class that would put you in. 2) borrowing money wouldn't have an impact on your current mortgage since that's already in place. 3) worst case scenario if you're doing the BRRRR would be that you're absolutely unable to refinance the property, at which point the lender would take the property and likely sell it to get their money back. There are risks and challenges with any investing strategy, so it's good you're looking to find those out on the front end but don't let that stop you because most of it can be avoided with following good advice and adhering to sound investing principles. If you're interested, send me a DM and I'll send you a free zip code guide we offer to help navigate the Memphis market or if you're interested in talking more! We've helped many clients navigate the very things you're talking about!
- 2yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
there's really no mini flipping right now. the market is such that the only way to make money is to find something distressed. everyone wants what you're describing - an easy cosmetic flip that generates cash for other purposes!
no such thing.
but there's a lot in your post... where are you located?
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Holly Ross:
Hey all. I want to get started in real estate and am hoping to get some insights on the approach... I have $50k cash and don't really want to take on debt (or do creative financing). Is this a do-able starting place financially, or a pipe dream?
Do markets still exist where you can buy nearly turnkey rental property for $50k?
I've been taking in so much info that I'm in the analysis paralysis phase but I'm curious how someone more seasoned would get the ball rolling with just $50k cash today.
Thanks so much for any insights you could share. I'm learning as much as I can and currently in the "i'll never be able to do this" phase (but giving myself a pep talk out of it!)
50k all in not a chance unless in the middle of BFE,
- 2yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Bob S.:
Quote from @Holly Ross:
Hey all. I want to get started in real estate and am hoping to get some insights on the approach... I have $50k cash and don't really want to take on debt (or do creative financing). Is this a do-able starting place financially, or a pipe dream?
Do markets still exist where you can buy nearly turnkey rental property for $50k?
I've been taking in so much info that I'm in the analysis paralysis phase but I'm curious how someone more seasoned would get the ball rolling with just $50k cash today.
Thanks so much for any insights you could share. I'm learning as much as I can and currently in the "i'll never be able to do this" phase (but giving myself a pep talk out of it!)
50k all in not a chance unless in the middle of BFE,
What Bob said^^^
And why do you not want any debt? Debt can be your friend if managed properly (write-offs, etc)
I would find a market with $100k homes and buy two of them with 20% down each ($40k). That leaves you $10k for repairs.
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes2y
Quote from @Bruce Woodruff:
Quote from @Bob S.:
Quote from @Holly Ross:
Hey all. I want to get started in real estate and am hoping to get some insights on the approach... I have $50k cash and don't really want to take on debt (or do creative financing). Is this a do-able starting place financially, or a pipe dream?
Do markets still exist where you can buy nearly turnkey rental property for $50k?
I've been taking in so much info that I'm in the analysis paralysis phase but I'm curious how someone more seasoned would get the ball rolling with just $50k cash today.
Thanks so much for any insights you could share. I'm learning as much as I can and currently in the "i'll never be able to do this" phase (but giving myself a pep talk out of it!)
50k all in not a chance unless in the middle of BFE,
What Bob said^^^
And why do you not want any debt? Debt can be your friend if managed properly (write-offs, etc)
I would find a market with $100k homes and buy two of them with 20% down each ($40k). That leaves you $10k for repairs.
Heck all in 100k, with 1200 -1400 in rent. I picked up a 7 unit, all in 150k, with about 30k YES 30K net income on about 53k gross. Now THATS a deal, I may keep this one for a while,
All the Best Bruce
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Holly Ross:
Thanks everyone!
I'm not sure if I truly mean "turnkey" or what the word would be for the state of home I envision –– I'm thinking more like a mini flip... exterior paint, a new fence, add a kitchen backsplash, that sort of thing. Cosmetic updates that make the place look significantly nicer without needing to sink a ton of time and expense. So sort of turnkey, but not expecting anything glamorous for $50k! Memphis has actually come up a few times in my research but I have done no research yet to understand the area.
I would LOVE to house hack but my situation is basically that I just bought my first home off market for a good price early December, but it's a SFH. Eventually I want to convert this into an MTR since it's in a great location for it (two lvl 1 trauma centers 10 min away), but I want to live here for a year or two first. That said, I don't want to take my foot off the gas with investing either. I'd really like to find or flip my first duplex this year and get it to pay for itself.
Taking on debt isn't off the table, I'm just really afraid of the risk since I'm not sure how it would impact my current mortgage, or what the worst case scenario would be if things failed. I'm not sure how to evaluate the risk of a second mortgage. Maybe that just means I should try to speak to an investor friendly lender first and see what they think.
I am not going to talk to you into debt. However, if you're making your current a MTR then that'll be debt as you move into a new place. There's a place of no debt and too much debt. Most of BP is on the latter, most of Dave Ramsey followers are the former. I wouldn't recommend in between, if that's not your cup of tea.
I would just not recommend real estate "investing" the most intimate way. I would look at alternative investments if you want RE exposure-- REITs, Mortgage Notes, etc. Or if you want just capital growth-- then equities, buying debt, etc. I know this is BP, but real estate isn't the only way to grow your money.
- 2yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votesYeah, but it's the most fun!
Quote from @V.G Jason:
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Bruce Woodruff:
Yeah, but it's the most fun!Quote from @V.G Jason:
It really is. As I keeping getting deep into it, I dig it. With that said, the further I go the more I realize you can't invest like the yester-years. So I try to be careful instructing and encouraging debt to folks; this isn't sub 4% debt this is 6% + debt it's going to cripple some people. The cost to play has gotten exponentially higher, the barrier to entry is only going to get harder.
- 2yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Bob S.:
All the Best Bruce
Perfect example - you da man Bob.....
@Holly Ross Take note.....I'm also not trying to talk you into debt as @V.G Jason said....but realize that debt is not a bad thing. It is a tool, nothing more.With that $50 k, you could leverage $200k worth of debt on a rental property. So a big monthly payment you're thinking? Yes, maybe ~$2000 PITI at 6%. But what if that bought you 4 units, each renting for $1500 mo? Sure you have expenses and income tax, but still.......?
[All figures are rough estimates]
- 2yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @V.G Jason:
Quote from @Bruce Woodruff:
Yeah, but it's the most fun!Quote from @V.G Jason:
It really is. As I keeping getting deep into it, I dig it. With that said, the further I go the more I realize you can't invest like the yester-years. So I try to be careful instructing and encouraging debt to folks; this isn't sub 4% debt this is 6% + debt it's going to cripple some people. The cost to play has gotten exponentially higher, the barrier to entry is only going to get harder.
100% agree! Still fun though, but it never was for the faint of heart....
I think we will see a 'redistribution-of-wealth' (geographically, and in a manner of speaking) as people take their investment dollars and put them into markets they can afford......?
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Bruce Woodruff:
Quote from @V.G Jason:
Quote from @Bruce Woodruff:
Yeah, but it's the most fun!Quote from @V.G Jason:
It really is. As I keeping getting deep into it, I dig it. With that said, the further I go the more I realize you can't invest like the yester-years. So I try to be careful instructing and encouraging debt to folks; this isn't sub 4% debt this is 6% + debt it's going to cripple some people. The cost to play has gotten exponentially higher, the barrier to entry is only going to get harder.
100% agree! Still fun though, but it never was for the faint of heart....
I think we will see a 'redistribution-of-wealth' (geographically, and in a manner of speaking) as people take their investment dollars and put them into markets they can afford......?
For sure. REI wise-- they will turn to Columbus, Cleveland, Detroit, as we are already seeing. Other lower barrier markets like Grand Rapids, Cheyenne, Rochester, maybe some other midwest markets. The problem with going where REI goes is everyone is now long the same asset. That inherently defeats the objective of this if you're trying to get that "above average" appreciation via speculation.
I digress from this thread. But back to the point, if debt isn't your thing that's perfectly fine. So many other avenues.
- Member since 2023 · 12 posts · 14 votes2y
I'm actually not against debt, I was just curious if I could get a start without it since I'm so new to my first mortgage. I appreciate all of the input!
Generally speaking, my primary interest is in BRRRR or fix and flip, and I verrry much want to be in the trenches on reno and commit my time to the process fully. But since I have no current experience with distressed properties I'm finding it really hard to assess which distressed properties are good deals or which are too far gone. The blind spot adds another layer of uncertainty with debt because I want to feel confident in my purchase if I'm taking on debt.
My dream for a first step would be to buy a 2 unit with a 2.5k mortgage and have both units renting at $1500! I just feel like I can't figure out how to get there with my renovation blind spot.
For example there's a property that I know is in a GREAT area here in Buffalo, huge 2 unit house with potential for a 3rd unit listed at ~150k. It's been on the market a while. I toured it but found that it would almost need to be an actual rebuild since the foundation is cracked, the roof has a tree growing out of it, and just about every surface in between is painted or ruined by former tenants. I know without a doubt that the ARV would be high (well kept houses go for 500k or so in the area) but my realtor thought that unless they were selling it for 20k, the reno costs would be too much to possibly break even.
I reached out to an investor-friendly realtor locally to see if they can help guide my thinking here. It's hard feeling like I need a mentor but also wanting to be respectful of peoples' time and not ask too much of them to teach me, so I'm trying to do as much as I can on my own first.
TLDR: If I can feel confident in the deal itself, I have no problem taking on additional debt. I just lack the confidence in the deal and the process which makes debt much scarier.
- 2yMarc RiceBusiness MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
Quote from @Holly Ross:
Hey all. I want to get started in real estate and am hoping to get some insights on the approach... I have $50k cash and don't really want to take on debt (or do creative financing). Is this a do-able starting place financially, or a pipe dream?
Do markets still exist where you can buy nearly turnkey rental property for $50k?
I've been taking in so much info that I'm in the analysis paralysis phase but I'm curious how someone more seasoned would get the ball rolling with just $50k cash today.
Thanks so much for any insights you could share. I'm learning as much as I can and currently in the "i'll never be able to do this" phase (but giving myself a pep talk out of it!)
The midwest markets like Cleveland, Dayton, and Columbus have a lot of opportunity. If you're firm on that price all in then your only hope is Cleveland or Dayton. For Columbus, you will need to use debt. Overall for debt you can expect 20% down for single family and 25% down for 2-4 units.
Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews - 2yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
@Holly Ross
I just bought 6 SFR in nowhere Arkansas for an average price of 24.5k each from a few tired landlords. They all came with tenants paying on average $500-$600/month. The downside of buying cheap houses is the lack of appreciation they have and having to pay for the same cap ex issues over 10-15 years. If you want to become wealthy in RE then learn to leverage with putting only 20% down but getting 100% of the appreciation gains. If you want to do it as a hobby or only make a few bucks on the side, then pay cash.
I paid cash for my first two rentals 9 years ago because I was a Dave Ramsey guy and thought that's what you're supposed to do. Dumbest financial decision I've ever made. Since then I took the equity from those two SFR and scaled up to 25 SFR without any $ out of pocket. I learned to leverage my way up to create generational wealth with no out of pocket $. I went from $1500/month profit with those two paid off houses to 17k/month profit by scaling up by recycling equity to buy more and more properties without any out of pocket $ by leveraging. But you may have reached your financial goals and don't want or need much cashflow. If so, buy some crack shacks with tenants in place like I just did in the last two months for 25k a pop and call it good. lol
- Investor · Detroit, MI · Member since 2020 · 19 posts · 6 votes2y
@Holly Ross First, best of luck to you. Second, it's possible to start with $50k, even nowadays but it's really up to your comfort level. As others mentioned, a turn-key property for that budget might take you to some challenging areas.
For that budget, I'll suggest looking into Detroit and trailers. Detroit still has some good opportunities but it could be a big overtake for a new investor. Used trailers typically go for much less than a traditional house and could be rented for a slightly lower profit margin.
- 2yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Holly Ross:
Generally speaking, my primary interest is in BRRRR or fix and flip, and I verrry much want to be in the trenches on reno and commit my time to the process fully. But since I have no current experience with distressed properties I'm finding it really hard to assess which distressed properties are good deals or which are too far gone.
No you do not want to be 'in the trenches on reno'...You say in the very next sentence that you have no experience with distressed properties. You are going to cost yourself so much money, and time (time = more money).......
I'd strongly suggest that you get over your aversion to loans and take one on for a small, medium distressed flip and get a good GC to help you put lipstick on it, then sell it for a little bit of profit.
Now you will have some experience and a much larger comfort level with the whole deal. Do another one, and another.... very safe, small flips...then after 5 years maybe take on a serious flip and get your hands dirty.
Sorry to be so blunt, but you are going about this all wrong and will be another one of those 'investors' who just goes 'one and done' and flames out....
- Member since 2023 · 12 posts · 14 votes2y
Quote from @Bruce Woodruff:
Quote from @Holly Ross:
Generally speaking, my primary interest is in BRRRR or fix and flip, and I verrry much want to be in the trenches on reno and commit my time to the process fully. But since I have no current experience with distressed properties I'm finding it really hard to assess which distressed properties are good deals or which are too far gone.
No you do not want to be 'in the trenches on reno'...You say in the very next sentence that you have no experience with distressed properties. You are going to cost yourself so much money, and time (time = more money).......
I'd strongly suggest that you get over your aversion to loans and take one on for a small, medium distressed flip and get a good GC to help you put lipstick on it, then sell it for a little bit of profit.
Now you will have some experience and a much larger comfort level with the whole deal. Do another one, and another.... very safe, small flips...then after 5 years maybe take on a serious flip and get your hands dirty.
Sorry to be so blunt, but you are going about this all wrong and will be another one of those 'investors' who just goes 'one and done' and flames out....
I've said a few times now that I have no aversion to loans, just a lack of confidence in the deal! What you've described is exactly what I mentioned I was looking for – a "mini flip", since I'm aware I'm not ready to take on a complete gut reno.
Appreciate the input.
- 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
@Holly Ross the only areas that may support these numbers are Class D.
We've only seen DIY landlords that have the time to driveby their properties several times each week, make Class D rentals profitable. Have seen many investors try and FAIL.
Logical Property Management4.9445 Reviews - 2yJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
@Holly Ross "I toured it but found that it would almost need to be an actual rebuild since the foundation is cracked, the roof has a tree growing out of it" - That property is dead in the water so great judgement on your part to no offer on it!
I recently walked an off market deal in a location I'm very familiar with. We own a rental down the street. It was a complete disaster and didn't fit our buy [box]. No one teaches this stuff. It's learned though market research, walking properties, creating a buy [box], and managing rentals.
If you're new to REI it's more more about limiting mistakes vs. maximizing the numbers. Anything that close to your numbers could work if you negotiate to a better price. Long DOM are a great sign. ON/OFF market is another. Look for those clues and keep digging. That's why investor look at numerous properties and make calculated offers. Eventually something sticks. Cheers.
- 2yAndrew StringfieldPro MemberMember since 2022 · 9 posts · 4 votes
Quote from @Taz Zettergren:
@Holly Ross If you're comfortable holding rentals in that price range Memphis would provide opportunities for you. That said, I personally wouldn't invest in that type of area, in my opinion (for whatever that's worth) I'd advise taking on some debt and going a little higher in price to get a more consistent area that will provide a safer investment.
Feel free to reach out, I'd be happy to discuss with you in further detail. Best of luck investing!
Do not go outside without a Kevlar vest in Memphis.
- Real Estate Agent · Memphis, TN · Member since 2019 · 365 posts · 264 votes2y
@Andrew Stringfield it's not like that in the whole market, but most areas with purchase prices under 80k it is
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