How to get started in real estate with 150k cash

BRRRR - Buy, Rehab, Rent, Refinance, Repeat
2yFollow

How to get started in real estate with 150k cash

Jeff Hines
Member since 2023 · 9 posts · 22 votes

Hey everyone,

I am a 28 year old who currently lives in Charlotte, NC. I just want to explain my circumstances and see how people with experience and knowledge in real estate would move forward if they were in my shoes. I have $150k in cash that I received from an inheritance and would like to use it to invest in real estate(I already have 6 months of reserves of my own money saved). I also have a credit score of 756.

My overall goal is to buy enough doors to supplement working full time so one day I can focus full-time on becoming an entrepreneur. I know that will take some time but I would like to get started ASAP! I took a few years out of work to take care and spend time with my father who passed, so I have only been working for a year now. This has caused me to have trouble with getting approved for loans/mortgages due to my work gap. I have done some research and have found a few ways I could possibly start investing in real estate. If you would take a different route than the ones I’m going to list below please let me know.

  1. Since I can’t afford to pay cash for a home here in North Carolina, pay cash for a home in places like Detroit, Alabama, or Ohio. I would then renovate, rent, and refinance. Rinse and repeat this process over time.
  2. Instead of paying cash use that money and spread them over multiple dscr loan so I can own more doors and just collect the cash flow after expenses.
  3. Wait another year so I can have two years of work history/W-2s. This would increase my chances of being approved for a FHA loan. This would allow me to save money compared to paying cash or the huge Down-payment DSCR loans require.

Are there any other no documentation loans other than DSCR loans that I should look into?

If anyone has any advice or recommendations on how you would get started in real estate if you were in my shoes please let me know any and all suggestions would be greatly appreciated!

3Reply
72 views

Most Popular Reply

Carrie Matuga
Lender · Riverside, CA · Member since 2017 · 248 posts · 98 votes
2y

I'd take a different approach - instead of looking at tougher markets with lots of D neighborhoods (think Detroit, Milwaukee, Cleveland, Philly...) that seem like they have amazing cashflow, I'd go into solid B/C+ neighborhoods. There's a high risk that you might find the tenant base in developing neighborhoods is harder on your properties and more sensitive to changes in the economy and has a lower rate of making on-time payments. Learn from my mistake and if I were getting started again, I'd buy a solid value-add building in an economically strong area in the best neighborhood. Reach out if you want to talk more.

2Reply
See this reply in the discussion

14 Replies

Jump to latestLatest
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    2y

    Do you own a home currently or are you renting? Any previous experience in investing?

    1Reply
  • Jeff Hines
    OP
    Member since 2023 · 9 posts · 22 votes
    2y
    Quote from @Caleb Brown:

    Do you own a home currently or are you renting? Any previous experience in investing?

    I am currently renting, I have never owned a home or invested in real estate before 
    0Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    2y
    Quote from @Jeff Hines:
    Quote from @Caleb Brown:

    Do you own a home currently or are you renting? Any previous experience in investing?

    I am currently renting, I have never owned a home or invested in real estate before 
    I'd start off slow with house hacking. I know you mentioned having issues with getting approved but a year work history should be enough to qualify unless you had job change or there's something else. Use as little funds as you can. Stick the rest in a high interest savings account. During the house hack learn and figure out a niche. Then use 150K. Don't be hasty in spending it. Maybe you can do a live in flip. 
    1Reply
  • Christian EhlersBusiness Member
    Real Estate Agent · NH & MA · Member since 2021 · 457 posts · 291 votes
    2y

    I agree with househacking first, you need a place to live anyways and might as well pay yourself part of the mortgage vs paying somebody else's, it's also one of the lowest risk ways to start investing. Caleb Brown had all great points here. You shouldn't need a full 2 years work history in a lot of cases unless you're self employed

    [email protected]978-396-9939
    1Reply
  • Travis Biziorek
    Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
    2y

    With $150k available you can definitely go with option #1 in a market like Detroit. That's how I built my portfolio quickly and it's a great way to scale quickly as long as you know what you're doing.

    Finding a primary would also be a priority seeing as you don't have one yet. That said, given prices and rates it doesn't make as much sense to own vs. rent as it used to (I just did a LOT of research on this and happy to share).

    The good thing is you have options. So definitely take the time to weigh them all.

    1Reply
  • Grace Walser
    Real Estate Agent · Charlotte, NC / Lake Norman · Member since 2022 · 35 posts · 35 votes
    2y

    I also live in Charlotte, NC but have been investing in Cleveland, OH due to their lower price points. I'm able to purchase turn key properties and still cashflow. With the higher rates of a DSCR loan it might be difficult to cash flow here in Charlotte since rent will be lower than your mortgage payment. If your main goal is to supplement working full time I would purchase as many properties you can in a different state instead of paying cash for one property.

    I also had issues getting a loan since I haven't been in real estate for 2 years yet but I was told if I file my taxes in early 2024 I would be able to get approved so you could see if that would work for you. You most likely just need another year's worth of work history. 

    Another good way to start is house hacking here in Charlotte or doing a live in flip, rent it out, and purchase your next house-hack or live in flip. I'm a real estate agent in Charlotte so happy to help you look in to some options or talk more about investing out of state! 

    2Reply
  • Bryan H.
    Member since 2021 · 53 posts · 26 votes
    2y
    Quote from @Grace Walser:

    I also live in Charlotte, NC but have been investing in Cleveland, OH due to their lower price points. I'm able to purchase turn key properties and still cashflow. With the higher rates of a DSCR loan it might be difficult to cash flow here in Charlotte since rent will be lower than your mortgage payment. If your main goal is to supplement working full time I would purchase as many properties you can in a different state instead of paying cash for one property.

    I also had issues getting a loan since I haven't been in real estate for 2 years yet but I was told if I file my taxes in early 2024 I would be able to get approved so you could see if that would work for you. You most likely just need another year's worth of work history. 

    Another good way to start is house hacking here in Charlotte or doing a live in flip, rent it out, and purchase your next house-hack or live in flip. I'm a real estate agent in Charlotte so happy to help you look in to some options or talk more about investing out of state! 

    Can give an example of your turnkey purchases in Cleveland, with specific figures? Are you including $ for capex?

    0Reply
  • Carrie Matuga
    Lender · Riverside, CA · Member since 2017 · 248 posts · 98 votes
    2y

    I'd take a different approach - instead of looking at tougher markets with lots of D neighborhoods (think Detroit, Milwaukee, Cleveland, Philly...) that seem like they have amazing cashflow, I'd go into solid B/C+ neighborhoods. There's a high risk that you might find the tenant base in developing neighborhoods is harder on your properties and more sensitive to changes in the economy and has a lower rate of making on-time payments. Learn from my mistake and if I were getting started again, I'd buy a solid value-add building in an economically strong area in the best neighborhood. Reach out if you want to talk more.

    2Reply
  • Tanner Lewis
    Lender · Austin, TX · Member since 2021 · 447 posts · 441 votes
    2y

    Hi Jeff, the main complication here seems to be your work history and with that I see two main options that you can do.

    1) Wait another year and do a low money down/FHA owner-occupied house hack. I would do this with a 2-4 unit and use the rental income to cover your living expenses.

    -or if you want to start in the meantime-

    2) I would go with hard money/DSCR lending. I am not sure about your experience with rehabbing, but one option is to BRRRR with hard money and refinance into a DSCR loan, but if you are just looking for turnkey rentals, I would begin with a standard DSCR loan which can usually go up to 80% LTV based on the lender.

    You laid out a pretty good framework of these options already, but the main item is your timeline. If you have a property that fits your buy box now, go DSCR, if not, hold out and wait for an owner-occupied home. Getting a DSCR loan before an FHA loan could make the FHA more difficult since it will increase your debt-to-income ratio.

    Another thing I suggest is to start working with a lender that works with investors and oftentimes, your lack of work history can be supplemented with other activities. For example, I am looking for an FHA househack right now, but have 6 months of work history, but my 1.5 years as a student will satisfy the rest of the two-year requirement. Ask your lender if the time you spent caring for your father can help you meet those requirements (I doubt it will but its worth asking).

    0Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    2y
    Quote from @Jeff Hines:
    Quote from @Caleb Brown:

    Do you own a home currently or are you renting? Any previous experience in investing?

    I am currently renting, I have never owned a home or invested in real estate before 

    The first priority has to be to stop paying rent. House hacking with a duplex is a good option if you are up for it, but there is nothing wrong with buying a single family home. And there is also nothing wrong with putting 20% down if you have the cash. FHA and leveraging up to the chin is not something that is particularly advantageous, but for some people it's the only option to get out from paying rent. Plus you have to pay PMI every month.

    Be conservative, buy quality and stick to what you know - your home town. Going OOS is probably the worst idea, followed by investing in D neighborhoods, which BTW you have in every city, not just Milwaukee.

    And frankly, what is a little bit concerning to me is that you have not been working. The reason we work 8 hours, is so you can sleep 8 hours and still have 8 hours to do whatever else you need and want to do, like spending time with your family (or build a business on the side). Maybe I am getting the wrong impression, but just so you know most people who succeed in real estate investing are very driven and work nights and weekends to make stuff happen.

    0Reply
  • Grace Walser
    Real Estate Agent · Charlotte, NC / Lake Norman · Member since 2022 · 35 posts · 35 votes
    2y
    Quote from @Bryan H.:
    Quote from @Grace Walser:

    I also live in Charlotte, NC but have been investing in Cleveland, OH due to their lower price points. I'm able to purchase turn key properties and still cashflow. With the higher rates of a DSCR loan it might be difficult to cash flow here in Charlotte since rent will be lower than your mortgage payment. If your main goal is to supplement working full time I would purchase as many properties you can in a different state instead of paying cash for one property.

    I also had issues getting a loan since I haven't been in real estate for 2 years yet but I was told if I file my taxes in early 2024 I would be able to get approved so you could see if that would work for you. You most likely just need another year's worth of work history. 

    Another good way to start is house hacking here in Charlotte or doing a live in flip, rent it out, and purchase your next house-hack or live in flip. I'm a real estate agent in Charlotte so happy to help you look in to some options or talk more about investing out of state! 

    Can give an example of your turnkey purchases in Cleveland, with specific figures? Are you including $ for capex?


     Yes including 5% for capex, 5% for maintenance, and 8% for property management and still receiving a 16% cash on cash return. 

    0Reply
  • Bryan H.
    Member since 2021 · 53 posts · 26 votes
    2y
    Quote from @Grace Walser:
    Quote from @Bryan H.:
    Quote from @Grace Walser:

    I also live in Charlotte, NC but have been investing in Cleveland, OH due to their lower price points. I'm able to purchase turn key properties and still cashflow. With the higher rates of a DSCR loan it might be difficult to cash flow here in Charlotte since rent will be lower than your mortgage payment. If your main goal is to supplement working full time I would purchase as many properties you can in a different state instead of paying cash for one property.

    I also had issues getting a loan since I haven't been in real estate for 2 years yet but I was told if I file my taxes in early 2024 I would be able to get approved so you could see if that would work for you. You most likely just need another year's worth of work history. 

    Another good way to start is house hacking here in Charlotte or doing a live in flip, rent it out, and purchase your next house-hack or live in flip. I'm a real estate agent in Charlotte so happy to help you look in to some options or talk more about investing out of state! 

    Can give an example of your turnkey purchases in Cleveland, with specific figures? Are you including $ for capex?


     Yes including 5% for capex, 5% for maintenance, and 8% for property management and still receiving a 16% cash on cash return. 

    What kind/size property? 
    0Reply
  • Michael Margarella
    Investor · New York City · Member since 2020 · 164 posts · 75 votes
    2y

    Hi Jeff, investing in a syndication or fund could be a good fit given your situation.

    Even if there is a crash, and people downsize, those people will have a need for self-storage, as evidenced by storage occupancy rates during past recessions. And during inflationary times rental rates increase. Pick solid operators and solid asset classes.

    We syndicate self-storage projects. These syndication can provide an 8%+ cash-on-cash return - providing you monthly cash flow - and a 15-20% IRR over the length of the project. We're also able to evaluate our rates, and keep pace with inflation, on a monthly and quarterly basis because of shorter term leases. Feel free to reach out

    0Reply
  • Devante S.
    Investor · WI · Member since 2020 · 32 posts · 15 votes
    2y

    Hey Man! I'm gonna go the opposite way here instead of telling you a bunch of complicated methods. Heres what I have. Buy a place that's ready to rent or just needs a few touch ups in a more rural area. (or on outskirts of cities)  Don't overspend. and Don't overspend your time. Rent it out. Maybe live in one unit if the property allows for it. Build up your income and work history and then Slowly move onto the next. Investing is a process. If you want I can send you a guide I wrote on how to rent out your first couple units without needing to pay a property manager or attorney. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free