How to invest 20k in cash?

Question

Hi, Like the title says . How to invest 20k in cash?

I do just require some advice from someone already experienced in this industry as to how I should start this journey.

Let me give you the basics so you can best advise me on my situation...

Im 33 years old I’m from NWI Indiana I own a home so that mean I’m definitely going to need at least 20% down because this is not my first time buying a home unless I’m wrong here. I have saved hard and my capital is currently sitting at 20k.

My goal is to increase my cash flow ASAP as well as increase my portofolio size ASAP. I suppose you can say im looking to replace my wage ASAP as well as build up a large diverse portfolio in a short amount of time.

With a small starting capital I understand this may be difficult which is why im after advice on the best route to go down, baring in mind I am well aware of all the different strategies available I feel advice will help me make a further informed decision so i can plan and strategise effectively. Or should I go a different route instead with the 20k?

Please let me know what you think. Would investing the full 20k into investment properties be a better strategy baring in mind my goals?

Steve Milford · Answer

@Eduardo Cruz If I had $20k itching a hole in my pocket, I would rent out my current house and go buy another house.

Dillon Dale · Answer

@Eduardo Cruz you can still use a low downpayment option like FHA if you will occupy the new place. That is what I would recommend based on what you're saying in your post. Use your 20k as a downpayment on a 4plex and live in one of the units. Good luck!

Scott Swanson · Answer

Eduardo,

I would look for properties where you're able to do a "seller finance" deal. Basically, you could put down anywhere between $10k and $20k and then you make payments to the seller. For example, try and find 2 properties, where you can put down maybe $10k each. Then you make monthly payments to the seller AND after all of your expenses, you still make a profit each and every month. Our investors love these type of deals! It's a great way to build your portfolio with a small amount of cash. Best of luck.

AJ Shepard · Answer

@Eduardo Cruz

You own your own home already, do you have a HELOC on that home?  Is it possible to get one?  I would explore that option first to see if you can increase your buying power.

20k may not be enough for a down payment in your area, I’m always a fan of staying close to home for the first rental to learn the ropes.

What sort of deals can you qualify for with 20k?  Have you looked for owner financing?  Some owners will take less down for a higher interest rate or maybe little more in price.  My philosophy is it never hurts to ask?

Couple ideas on finding these:  have your broker run a search for houses or properties on the market longer than normal (maybe more than 90’days?, 120 days?).  Start asking them if they will accept owner financing?  Search for sale buy owners and ask if they will consider owner financing?  Search Craigslist for FSBO.  Drive for dollars, drive around and find properties that look like a lot of deferred maintenance and see if the owner wants to sell.  Contact property management companies and introduce yourself as a potential buyer and if they have any properties come up that the owner doesn’t want to fix up.

Whatever you decide to do, jump in with both feet and don’t give up.  The deals are out there, it just takes some work to find them.

If you are thinking of not wanting to put in so much work, find a syndicator, vet them, and put your money with them.

Grant R. · Answer

@Eduardo Cruz Here are some great starter options:1. Buy a 3BR single family home with a conventional loan, 20% down.  Budget is $95k or less.  In your area, these should be available on or off market, and should cash flow $150 to $250 per month if done right.

2. Invest with a partner.  Find a partner of like mind with experience, and split a property with them.  You bring the cash and some labor, and have them bring some cash and experience.  50/50.  Buy a house, duplex, or even larger based on available funds.  Be sure to have an operating agreement in place.

3. Find a property where owner wants to sell and will do seller financing.  Offer them 10k down, and save the other 10k for repairs and maintenance cushion.  Fix and rent the property.  Pay the seller over time like you would the bank.

4.  Invest in a several properties at once using crowdfunding.  Check out FundRise, RealtyMogul, etc.  It's like a syndication where you go in on a deal with a group of investors.  Minimum investment is usually around $1k.  You could invest in 20 different deals, or maybe just 2 deals at 10k each.  The more you invest, the more you can earn.  Vet the deals just like you would normally.  All investments carry risk.

Ian Walsh · Answer

Pretend you don't have that or maybe only use 5k to get some marketing going, get your real estate license and learn to wholesale.  Learn to make it in this business with very little cash.

Warren Swede · Answer

@Eduardo Cruz

Any possibility you could house hack your current home and collect some rent to increase your 20k?

Eduardo Cruz · Answer

@Scott Swanson Hmm never heard about this method something to really consider. Thanks for your insight!

Eduardo Cruz · Answer

@Erickson Sainva I’ve only been at my home for one month. I actually put 20% down with a conventional loan . I’m hoping there will be some lenders out there for the 5% 10% down.

Eduardo Cruz · Answer

@Steve Milford Thanks for the reply! I’m not looking to rent out my current home since I only been there for a month and it was a new build.

How to invest 20k in cash?

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