All Forum Posts by: Adebayo Olusada

Quote from @Adebayo Olusada:

Hello team, I live in the DC area and work and tech. I wanted to know how to invest 20k as a first time real estate investor. Wanted to know the dos and don’ts of this industry as I know there is a wealth of knowledge here. I’ve seen that is it a risk with investing but having money just sitting in a bank doesn’t really help when trying to build wealth. Any suggestions are appreciated. Thank you!

My first reaction, given the price points in your market it's going to be a stretch getting started with only $20K. Here's what I recommend.

1. Find out the maximum you can borrow given your income and savings for an owner occupied loan.  Find out the same for a non-owner occupied loan. At a minimum get pre-approved for an owner occupied loan

2. I've been to DC area many times staying in local AirBnBs. Once you get approved start looking for townhomes, condo or even single family homes in the DMV area where you can purchase and implement an Short Term Rental (STR) strategy.  It will have to be at lease a 2 bedroom, 2 bath property.

3. Live in the property for one year then repeat the process and purchase another one

Another thing to potentially consider is start to network with investors in your area. Find 4 other people that have $20K and put together a plan to pool your money; now you'll have $100K and go find a deal. 

$20k won't get you far if anywhere in the dc market or acquiring a single family but there are many other ways to invest in real estate passively. 

@Adebayo Olusada

hello.  i would start with a house hack as soon as you're ready.  it's tougher in the DC area, but still possible.  you may have to just save up for a while.  i know that's not what you want to hear.  think about it this way, though.  the median age of a first time home buyer in the US is 38.  doing something else crazy with it sooner will just be taking on risk.

hope this helps

$20k won't get you far if anywhere in the dc market or acquiring a single family but there are many other ways to invest in real estate passively. 

You're absolutely right—letting money sit in a bank won’t do much to build wealth. Real estate investing can be a great way to grow your assets, but it’s important to be strategic.

Since you're in the DC area, one smart approach would be to look at markets that are more affordable but still offer strong potential for appreciation and rental income. Richmond, VA, for example, has a lower cost of entry compared to DC, while still being a growing market with a strong economy, universities, and demand for housing.

Here are a few key dos and don’ts for first-time real estate investors:

Dos

• Research the Market: Look for cities where property values are rising but remain relatively affordable. Richmond, VA, could be a strong candidate.
• Consider Turnkey Properties: These are homes that are move-in ready and can start generating rental income immediately.
• Analyze the Numbers: Make sure your expected rental income covers expenses like mortgage, maintenance, and property management.
• Start Small: A single-family home or a duplex can be a great way to get experience without taking on too much risk.
• Leverage Financing Options: Even though you have $20K, consider loan programs that allow you to maximize your buying power.

Don’ts

• Overextend Yourself: Avoid buying something beyond your budget just because it looks like a good deal.
• Skip Due Diligence: Always inspect the property, research the neighborhood, and review all financials before purchasing.
• Ignore Property Management: If you’re buying outside your immediate area, consider hiring a property manager to handle day-to-day operations.
• Forget About Taxes & Fees: Factor in property taxes, insurance, and any homeowner association fees when calculating potential profits.
• Rush Into a Deal: Patience is key—take your time to find the right property that fits your strategy.

Good luck!

Hi Adebayo! I'd recommend start exploring options like house hacking. It's buying a multi-unit property, living in one unit, and renting out the others. This strategy can help offset your mortgage and get your foot in the door as an investor. If you go this route, an FHA loan might be a great fit since it only requires about 3.5% down and is more flexible for first-time buyers.

If you're looking to buy strictly as an investment (not living in the property), you’ll usually need a conventional loan, which typically requires 15% down for a single-family and 20-25% for multifamily properties. Either way, I’d strongly recommend keeping a portion of that $20k in reserve for unexpected repairs or vacancies can pop up, and you don’t want to be cash-strapped right after closing. Best of luck on your journey and hope this helps!

Hi Adebayo, I would recommend house-hacking if you are not already. You can buy a single family home to live in and rent out the other bedrooms or buy a small multifamily (2-4 units) and rent out the other units. House hacking will allow you to buy deals with less money down, get a lower interest rate (compared to investment property loans), and reduces your risk while getting started.