I have this much money what should I do?

Question

Travis Boyer · Answer

Hi @David S. I am just down the road from you in Wentzville, welcome to BP!

My long story short, I had the exact same about of money 8 months ago, and had the same question. I know people are telling you many different things but I actually found a Joint venture partner and bought a SFR to rehab and flip. I got a hard money loan for the purchase and rehab, the $4,000 covered closing and my "skin in the game"

The property is going on the market next week "fingers crossed"

Again, there are many ideas and the neat thing about RE investing is that none of them are more right or wrong than the other, you just need to decide what path you want to take.

Let me know if I can help you any and good luck!

Tami DuBose · Answer

@David S. , there are many good ideas above. Still, the simplest & lowest risk idea in my opinion, came from @Jon Huber .

To be more clear, you should consider house hacking. Look it up here on BP if the term is foreign to you.

If your finances are in order (clean on paper), explore what programs are available to you for a primary residence. FHA will allow you up to a 4-plex as well as other programs, provided you qualify. Some areas still have 100% programs available. Most of these programs allow the seller to pay your closing costs, too.

Read up on house hacking.

Jeff McCaskey · Answer

@David S.

Hey David, congrats on having anything at all to start off with!!!!! That might sound like a joke but I'm serious, that's great!! I had 36 cents when I started, see my post about how I got started from scratch.......

There is actually a lot you can do with 4K.

1) Loan it out for a while and be a private lender and turn it in to more $ while the only thing required of you is trust in the other person.

(I accept amounts of private money from 1000$ and up and always have projects on going to put capital to work. If you're interested we can talk more about it)

2) Find an owner carry situation and use that as part or all of your down payment. (I bought one of my best income producing houses with a 2K down payment, owner carry for 3 years and a balloon payment meaning bank financing after that. That was a duplex.)

3) I bought my first house, a tri-plex, with a 5K down payment I borrowed from a cousin on the same deal. 3 years lease option with a balloon payment meaning bank financing at the end of the contract)

4) I bought one of my houses for 5K cash, little 1 bedroom place. Was a little rough, had to put another 4K in it I think but i was in the middle of another project so that was all hired out. I could have done it myself for 1K but didn't have the time.

5) Did the same thing on another 3 bed 1 bath, needed help so I put 2K down and did a contract for 5 years at 5% owner carry. Needed a new water heater and some carpet right off the bat so that was probably 1,500$ and I had to have tenant help me finish up little things the last couple days I was working on it because I couldn't get it done fast enough by myself.......

6) I bought another property for 0 down and no payment until it was rented out, that took about 6 months. I did spend about 17K on repairs so that doesn't fit your current budget but just showing that I bought one for 0 down and did all the work myself.

It can, will and does happen brother. Keep at it and it WILL happen!!!!

Like I said, I always have projects going on, in the middle of one right now actually, and would always use some private money and pay 10% on principle amount ex. 4,000 = 4,400 paid back.

Hope this helps man.......

Jeff

Jon Huber · Answer

@David S. To be honest, there won't be much... however, who you should be talking to is your bank. There are other factors that need to be in place when buying a home. These things include, but are not limited to: Your credit score, your income, where you're buying, etc. There are properties between you and StL for less than $50k. These will not be in the most desirable areas and they will not be in the best condition. That being said, if you were to qualify for an FHA loan (which allows you to put less than 20% down but you would pay a monthly mortgage insurance amount), you would essentially be spending your entire "nest egg" on a down payment. If it is a property less than %50k, you can count on some work needing to be done and you will wish you still had that "nest egg".

If you walk into your bank and speak with a mortgage specialist, they should be able to help you. But without knowing your income and credit score (and please do not disclose that), no one here could tell you what type of property you could get. You will need more than $4k, but maybe not as much as you think.

Lelith Walker · Answer

Wholesale or partner with someone who had more money.

Deon Knott · Answer

I agree with Chaz.  I am no pro but, I got my first property, a 2 bed room town house in the "bad" part of a good neighborhood with $7500 in savings on a land contract with 3,500 down.  Paid off the balance in two years.  One thing I am learning is rather you have $4,000 $40,000 or $400,000 you will do best when you are being creative.  I thought I had to have 30k in the bank, a 750 credit score, and tons of know how in order to get into real estate.  I couldn't have been more wrong.

Eric Taylor · Answer

Save more money, and use your time to read about REI in order to determine the niche that best suits your needs and personality.  Then strike.

Chaz Reid · Answer

What's your niche @David S. ? Everyone is going to tell you to go here, go there, flip a coin, eat some cheese, whatever... Its all pointless if nobody knows what niche you are mainly focused on.

Some routes you can be really cheap with, others not quite.

I got started wholesaling when I was bringing home right around $1k a MONTH, no savings, just gas in my car, and determination.

Figure out which niche appeals to you the most, do your research, then you'll be able to answer your question bro.

Good luck on your journey.

Patrick Donovan · Answer

House-Hacking is the way I am doing it. Finding a partner is a great way to start as well. But I started and I only have $6,000 and am getting a FHA loan with a 3.75% interest rate and only 3.5% down. Property must be owner occupied for at least a year but after that you would be able to rent it out and keep the low interest rate. The PMI will still be in place but after running the numbers it will still work for me as a rental. I am buying a $140,000 property with just $6,100. I also found a down-payment assistance program that was offered by the city, but I had a little to much money to be accepted for that program. Anyway long story long you can definitely get started with a small amount of money you just have to find which way works best for you.

I have this much money what should I do?

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