What's the best way to invest $50k?

Question

Curt Davis · Answer

How do you plan to turn $50k into $1,500 to $2,000 per month in income?

Brant Richardson · Answer

If you can get $1000/month or more (1500-2000 would be incredible) using $50k then you have great numbers to work with. The question is how decent is the area? Will you have high turn over, evictions and people trashing the property which makes those very nice looking throretical yields a struggle and turns your passive investment into a not at all passive income.

Brant Richardson · Answer

I am buying properties with traditional financing 20% down from a big bank (Wells Fargo). Property managers want the property to be in pretty good condition to get top rent in good areas. So the properties need some work to be "rent ready". If they had major health risks or were uninhabitable there would be a problem getting financing. One property had a roof leak and Wells Fargo did a hold back on the funds necessary for the repair but still gave me the loan.

Curt Davis · Answer

@Brant Richardson

If the guy buys doing conventional 20% down payment, the rehab has to be done already, otherwise the bank will not make a loan against the property so in this scenario there is $0 rehab cost but the closing cost is accurate. He will be around $17-$18k out of pocket on a $60k purchase.

James Hamling · Answer

Leverage.

The who what when where why and how can be argued and go round and round all day but the fact is hands down the best investment for 50K is a leveraged investment, find your maximum leverage.

I know it sounds simplistic, almost too simplistic, but too many get lost in all the banter of how and forget the fundamentals and end the day in a deal that "was supposed to" have xyz returns, but was never a leveraged deal.

If that were all I had and would ever have........ I would offer it up as funding for someones "amazing" deal who needed some funding help (I would probably factor it as the total amount 50K would buy me so call it 300K, 400K, what ever).

I would charge a handsome lions share, thats about the maximum leverage I can think of..... should earn about 20K-35K if done correctly.

Brant Richardson · Answer

I am doing this in Kansas City right now. I am buying 3/2's for 50-60k that rent for $850-900/mo, in decent suburb areas with decent schools. Unfortunately it takes a lot more that $12k to make this happen. There is the 10-12k for the down payment, then 2-8k in rehab costs and closing costs around 4.5k. So I am looking at around $20k in cash per house. The Turnkeys I have looked at charge quite a bit more to be in the areas I am in but your overall cash input would be less because you would not have to pay for the rehab in cash.

Aaron Montague · Answer

@Aaron Westerburg

1. Great first name!!

2. I'd keep going with your Fix and Flip strategy. Invest the 50k into a flip. From those profits I'd take 60% towards your next flip project, 35% towards Buy and Hold and 5% to your pocket for a nice reward :)

This strategy keeps you doing what you know well. It also builds your future portfolio with Buy and Hold properties.

Kevin Auyong · Answer

Steve, I understand as a fellow Bay area person. You can't even buy anything close to $60K here. A year and a half ago there was some good buys on townhouses at that price point in Concord, but they have sine tripled in price. So what have you discovered in those areas? Turn key I assume?

Steve Cook · Answer

@Kevin Auyong I wish I was investing in the Bay Area! The returns simply aren't there for the price points I'm looking at. I'm currently looking at Indianapolis and Memphis.

Kevin Auyong · Answer

Steve do you have an area you are looking at for these numbers? Have you found good property managers-I assume you are not buying here in the Bay area.

What's the best way to invest $50k?

What's the best way to invest $50k?

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