This is a great question, @Conway Churaman!
Let's start with a few disclaimers:
- I'm assuming this $30K is purely for real estate investing. Your day-to-day personal expenses are covered; you're free from credit card debt and other personal / consumer debts; you're saving in traditional retirement accounts, like a workplace 401k, up to your full employer match; you have a comfortable emergency fund.
- I'm assuming the real estate market, at this time, is "normal" (like 2014 or 2015). You have a sense that things will progress at a steady pace. You don't get the sense that the market is in some wild speculative bubble that's imminently headed for collapse.
- I'm assuming I qualify for conventional financing on the investments listed below.
- I'm assuming the rent rises at a pace that's equal to inflation (so we'll call it even).
With that said, here's what I'd do if I were starting from scratch with $30K:
1) Buy two Class B or Class C+ houses in a low-cost-of-living area. I'll use metro Atlanta as an example, since I know this area so well: I'd buy 2 SFRs, each of which are worth $50k. I'd put a 30% downpayment on each ($15k on each, for a total of $30k).
2) Assuming at least a 1.5% Rule, these would rent for $750 per month each, or $1,500 per month total. Assuming that half of this goes to operating costs/vacancies/etc., I pocket $750/month.
3) I'd save the first 6 months of this income ($4,500) for cash reserves. Then I'd save the next 18 months of this income ($13,500) towards making a down payment on a third investment property.
4) In the meantime, I'd have a 'day job' and save money from this to put towards future investments. Let's say that I can save a total of $1,000 per month -- that means after 2 years, I'd have another $24,000 to invest. So at this point, at the end of Year 2, I have $37,500 (which comes to $13,500 from the SFR's plus $24,000 from the day job).
5) Repeat. I'd use this $37,500 to repeat Steps 1-4.
6) At this point, at the end of Year 4, I'd have 4 properties generating $3000 per month in gross income and $1,500 per month in net income. I'd also more than $40k saved (including day job savings from the past 24 months). At this point, I probably wouldn't qualify for more conventional financing (since I'd be limited to 4 properties), so I'd use this $40k to pay off one of the houses. I'd have a little more than $5k leftover, which I'd apply towards paying off another house. Within 1 more year, by the end of Year 5, I'd have another house paid-in-full. (That's $1500 net income per month from SFRs + $1000 per month from day job = $2500 per month x 12 months = $30k in repayments, plus the extra $5k).
At this point, it's the end of Year 5, and I own 4 houses, of which, 2 houses are free-and-clear.
At this point, I'd re-evaluate my goals. Do I want to stay in the U.S.? If so, I probably need more money, so I'd repeat this process to buy more houses, until I've reached my financial goals.
Do I want to retire ASAP to a tropical beach in Thailand or to a gorgeous mountaintop retreat in Colombia? If so, I probably don't need much more money, so I'd spend another year or two aggressively repaying the last two houses, and then retire in some warm tropical climate within a total of 6-7 years after this all started.
