What would you do with $25,000?

Question

Let’s say that you had $25,000 and you wanted to invest in real estate somehow. But there’s a stipulation. You can’t use any additional monies i.e. partnering up, financing, etc. What would you invest in and how would you go about making the most bang for your buck?

Matt Faircloth · Answer

Hey Dan,

You really pose an interesting question as you limit the investment to cash only - no financing and no partnerships.  This really forces some creativity!

Here are some options:

1.  Buy property in a lower priced area like Trenton NJ per @Victor Barcik 's recommendation.  Trenton is my primary investment location and its hard to beat the returns as the properties rent very well versus the purchase price.  That being said, my concern is that the purchase will take all that $25,000 cash with no money left to rehab the house or for reserves.  Trenton houses do sell for $25,000 or less but most need work at that price.

2. Would see what you could do to double it up in 6 months.  The best way to do that is to invest in some marketing as @Cecil Russell  recommended but I wouldn't go so far as investing in infrastructure to setup a long term business .  I am not a big fan of Wholesaling long term and wrote a whole article about it on BP recently, but it can be a means to an end.  If you can turn the $25,000 into $50,000 and then into $75K or $100K, you can use that seed capital to build long term wealth through rentals.

I hope that helps!

Matt

Matt Faircloth · Answer

Hey Victor,

I would look towards Mill Hill, Chambersburg, Villa Park, and Franklin Park for multi families.  There are also some good ones in West Trenton but you would need to stay on the major roads, the side streets in that area get a little dicey.  I hope that helps!  Shoot me a message if you want to talk more.

Matt

Victor Barcik · Answer

Matt,

If I were to invest in Trenton multifamilies, what would be the better neighborhoods?

Thank you,

Victor

Victor Barcik · Answer

@mattfaicloth

Matt,

If I were to invest in Trenton multifamilies, what are the better neighborhoods?

Thank you,

Victor

Simon Campbell · Answer

I would invest in owner-financed rental properties. I would then turn around and get tenants in them on either a lease or a lease to own basis with a payment above my payment to the seller. Take the cash flow and reinvest.

Cecil Russell · Answer

I would start by setting up an office with multiple telephone lines and 1 or 2 assistants; Then I would set up 2 decent inexpensive webpages-one for sellers and one for buyers. I would then advertise in venues like craigslist and thrifty nickel (American classifieds) using them for your primary advertising. The free paper classifieds will give you the widest dispersal of flyers and you do front and back on the flyers. (One side for sellers and one side for buyers.) Excellent rates at least out here in Texas. OH!!!! and don't forget the coffee maker. using the 25,000 primarily on advertising should bring you multiple times that amount.

Victor Barcik · Answer

Buy a 2 family house in Trenton, nj for $25k and rent it out. Do you want to give me $25k to make that a reality?

Dawn Anastasi · Answer

This depends. Do you want to be a landlord?  A wholesaler?  A flipper?  What do you ultimately want to do?

Robert Blanchard · Answer

If you are limiting your RE investments to California, I would spend money on a Direct Mail campaign to get some wholesale deals done.   Some of the monies could be used to do a double close if you find a really good wholesale deal where you need to keep your purchase price a secret from your buyer.  I do not know how much bridge loans cost or the closing fees associated with them.  After doing several of these types of deals, I would consider doing a regular flip as you should have over $40K at that time.

Are you planning on doing some rehab yourself to keep some of your rehab costs down?  Do you posses any skills pertaining to remodeling?  I like to be the one doing the work as I am just starting out and would need to save some cash by not writing checks to contractors.

Good luck on whatever you decide to do.  Keep us updated on how things progress.

Justin S. · Answer

@Dan Bee - If subject to is considered "financing" then I would probably buy tax liens.

What would you do with $25,000?

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