Ideas to Invest $10,000

46 Replies

Hi everyone,

I should have $10,000 saved in the early months of the new year. I live in the Midwest where real estate is cheap in comparison to other parts of the country. I’m leaning toward buying a single family close to home in a C neighborhood where prices range from $60,000 to $85,000. I believe with the amount of available funds this may be my best option to get started. What are your thoughts and recommendations on investing these funds?

Thanks,

Dylan

You may need more money than that to do a deal at 20 to 25% down for a better interest rate, (depending on credit score) and then to maintain it.

Be careful in buying those $60K or less older homes because they come with a bag full of repairs, meaning you will need plenty of cash reserves when those repairs pop up, and sometimes when it rains it pours.

All the best to you.

I had about this much on my first house and definitely ran into issues. Its hard because in that area you may find a house that you can purchase with $10k but as soon as any good size repair comes you are going to be stressing.

I recently opened an online savings account for holding cash while saving for my next investment. The account pays interest monthly with an annual rate of around 2%. Maybe you could look at something like that while waiting to save a little more cash. This way you at least feel investing while waiting to get into real estate. 

Can you do an FHA loan and house hack with a roommate or two? If you put down 3.5% on a 60k property, you would still have about 8k to do a couple k in upgrades and keep some in reserve.

@Cory S. Thanks for the feedback Cory! I’ve spoken with a lender that would be willing to lend at 15%-20% down. Thanks for the advice about reserves on the cheaper homes. That is my biggest worry is buying then having a big repair that I am not ready for.

@Jacob Clark thanks for the advice Jacob! Luckily, my credit union offers 3.75% APY on my checking account as long as I meet their qualifications, so I do have that going for me. As for having money in reserves, I may see if the seller would be interested in seller financing that way I could put a smaller down payment if they are comfortable with that and still have money left in case of emergencies.

Yes sir, I’m living it right now.

I had $30k in reserves a few months ago saving for house #6 and now currently at I’m at $13k after a rash of expenses on my 5 houses including turnover, HVAC, roof, landscaping, etc. 

I’ve never had it this bad with so much at once. 

It’s seriously giving me a moment of pause on if I want to buy more houses and pushing the envelope on my risk tolerance level.

All the best young man.

Try investing the 10k in marketing to wholesale flip or rent. Or,

put it in the stock market or money market for a little while.

10k is tough because even if that's enough for a down payment, that's not the full picture. Should have about 5k for each rental set aside for the first few. One HVAC is 4 to 5k! What if you have to evict? No rent for a while, holding costs, turn costs, and court costs. Gotta have some cushion!

@Allan Smith thanks for the feedback Allan! I’ll look into a flip or wholesale option to increase my available cash. I’m eager to get started in real estate but you’re right, if something goes wrong before I have sufficient cash, then I’d be worse off than if I had just waited and saved more.

My most recent acquisition was a turnkey property for $49k. 2 bedroom in what I grade as the B area of town. It's actually the house I grew up in. It's a little cash cow, and I want a hundred more like it. 

Whether or not the price of an asset is a red flag is totally market dependent. Don't be afraid to explore lower-priced properties, but as @Cory S.  don't let your guard down either. I would put your guard up even higher if you wanted to purchase a house free and clear for $10k or less. 

I second @Kris L. 's house hacking advice. That's how I got into my first property for under $5k--and it was a SFH. I then used the money I saved from living for "free" to save for my second property. If you went this route, you'd still have a chunk left for repairs.

I'm in your exact position, Dylan. Have about 10k and ready to jump in. I plan do Wholesale next 6mo-1year, then do a House Hack. After that, and with some added experience, I can begin to build my portfolio of properties with more cash for a stronger start. Just my route! You're doing good considering all your options. Good luck and glad to see someone else in my shoes who is ready to make moves, not just talk about them!

There should be only one thing to invest in at this stage. Yourself. Buy some books, message people on bp (free), take walks around the neighborhood and just look at houses, open houses, etc

@Steven Ko Hi Steven, I’ve hit the books hard for the past 2 years and I feel like a lot of info is beginning to be redundant and that I need actual experience with hands on to take me to the next level. Realizing that my funds are low, I guess I should keep doing what I’m doing until I have more cash to invest.

@Dylan Thomas Hey Dylan! My first thoughts were to suggest looking into house hacking but I see that was already thrown out there. I just wanted to mention that $10k is a good number but it may not cover all of your closing costs. If you get with a local realtor they can give you guesstimates on what to expect for closing costs, down payments and your monthly payment for whatever price point you're looking for. This will give you a better idea of where you stand in your market. 

@Dylan Thomas - I may be a bit biased... but I don't think there is a better way to invest your money when first starting out than House Hacking. The returns you get are well north of 100% after you take into account all of the real estate wealth generators: cash flow, loan paydown, appreciation, and tax benefits. It's crazy! 

So if you want to start building massive amounts of wealth while also dipping your toes in real estate investing. House Hacking is the way to go! At an $80k price point, you can do 5% down for just $4,000. Not bad at all! 

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