$30k to begin real estate. What do you do?
Now let's say you have a relative who has recently passed away. You have been left $30000 as residue from their estate. You decide to invest this money in real estate. You are working part time and studying an honours in finance and economics in the meanwhile. Leaving you with only a few hours a day to dedicate towards research and after making a purchase, property refurbishments. You are to complete the work alone with no help. You want to upscale constantly with a focus on student and rental opportunities from your property/properties. You only have 2 years to save and make around $30k per year total on top of this. Being able to save around $25k of that money. You have no debt. Best answer wins. Good luck.
Keep saving
$30k won't get you much besides a FHA loan on a condo in a tier 2 market. If you plan on staying for a while, I would try and buy something and get a roommate. Other than that invest in stocks, you cannot do real estate on a budget.
Probably ex-US given an “honours” degree, likely from the UK.
Yup pretty much. Living in Scotland at the moment.
LMAO this is such a fucking brain dead answer.
I can get a duplex in a teir 1 market with strong rental demand for that with a FHA loan. Who cares if you are piling money into the deal now, getting in when rates are high, competition is significantly lower, and prices are down somewhat is as good of a time as any in the past 5 years. When you go to refinance when rates come down there will be significant equity built in due to prices rising again with the rate moves. You get out of the FHA loan into a conventional at a lower rate and no lifetime PMI.
stonks only go up
30k isn’t a meaningful amount of money in most places for real estate investing. Pay off existing debt, and either invest in equities or put it into a high yield savings account.
Also word of advice but stop posting about yourself in the third person and making these posts seem like competitions on who could give you the best answer. You seem autistic by asking questions this way.
I am 16 with literally no clue at all what I am doing. And making it into competitions seems to be working as people just completely ignore it otherwise. Thanks for the input though believe me it is appreciated. Just trying to get a grip of what to do with the prospects I have.
My bad for sounding like a dick. It’s good that your interested in FO roles and investing at 16. I’m only a few years older than you and I probably would have blown it all on stupid shit. I wish I could help you out with some recruiting advice but I can’t help too much as I’m based in the U.S. As long as you don’t blow a significant portion of that 30k for the next few years I’d say that’s a win. If you decide to invest in equities or something like that make sure it’s a small amount. You might get lucky in the market but you could also be burned. Safest bet is a high yield savings account and then using that money down the line for whatever you wanna do whether it be buying property, investing in a fund, etc.
Get a job from a property manager and learn about apartment operations. Biggerpockets is a resource for scrappy people who want to do creative deals with little money and might be able to help you. Unless you’re trying to be the next sam zell id focus on getting a good gpa, networking, and landing a good job that pays well
Thank you very much. I am going to have a look into a few different ideas and see where my money can take me. I am pushing to gain a position as an investment analyst. So hopefully I will be able to have the finances available to me to begin investing in real estate. Cheers for the advice.
Bigger pockets is a good source, but just starting out take a slight, slight bit of caution with it. The forum is usually pretty good, the podcasts can get gimmicky, they have guests who come on who are like "2 years ago I was in $300K of debt now I'm a real estate millionaire"
Haha. "I own $5mm* worth of real estate!"
*Not including the $5.3mm of debt. So... still $300k in debt
I share a similar sentiment as the posts before me. I was in a similar position a few years ago (but got lucky with stocks as opposed to inheritance) and wanted to put my windfall into real estate. Man was I dumb. Throughout the life of a real estate investment, there are so many things to consider besides having enough capital to make the initial purchase of a property such as expenses, bad tenants, surprise repairs, taxes, etc. Instead, I put my windfall into a Roth IRA and personal brokerage account for the sole purpose of investing and slowly growing that money. If I were you, I'd use that inheritance to pay off any high-interest debt and keep the rest in large-cap and growth stocks.
If you REALLY want to invest in the real estate market, I'd suggest investing in public REITs. By owning shares in a REIT, you can indirectly invest in the real estate the company owns without actually buying any real estate. Even better, these REITs usually own a single type of asset, such as multifamily or industrial real estate. So if you want to invest in the industrial space, you can buy shares in an industrial REIT.
Hope this helps.
Utilize an FHA 203k loan which will allow you to buy up to a 4 unit property for 3.5% down, so long as the purchase price is within the limits (there’s a different limit based on number of units). Find a property in a good location that has room to push rents with some improvements—move into one of the units and reduce your living expenses while generating FCF on the other 3 units. Improve them and push rents, sign new leases and so forth. Refinance if/when rates come back down. After 1 year of living in the property, you can move out and lease your own unit to someone else. Keep working on the side, and eventually you should be able to 1031 into a larger property utilizing proceeds from sale of the 4 plex and your own cash savings. You can’t have multiple FHA loans out at once, so scalability here is limited by your liquidity since you’ll be looking at 20% down on subsequent purchases after this first one.
This is what I did for my first purchase, though it was a duplex. I closed for $9k in cash, moved into a unit, and lived at a low cost for 3 years while improving the first floor unit. Pushed rents over that period, and then moved out. Sold the property with one vacant unit (we moved out), and an occupied unit at a rent of $2150 vs $1650 when we bought it. New buyer underwrote $2250 on our unit on the acq and we sold for $700k vs $475k PP. Spent around $50k all in with improvements and initial cash to close. Generated an EM of 4x+ using this strategy and turned the initial $50k into $225k.
Is this still viable for someone living in the UK?
By living in it for 1 year, are you allowed to move out and still retain the FHA loan terms? Is there a limit to how long you can rent it out (i.e., not have the home be your primary) before defaulting(?) on the loan?
Buy some REIT shares.
Sounds like you're in a position to afford 15,000 powerball tickets, my friend!
THATS HOW WE DO IT BROTHER. GONNA WIN 100%.
As others have said, save the $30K or invest in a diversified stock portfolio for the next few years. When the time is right and you are a little older, purchase a 2/3/4-unit property, live in one of the units and fix up / rent out the others.
1) sounds like you’re in HS. I’d work my tail off academically and get into the best school I can then I’d pay for college. School is so ridiculously overpriced and 80% of classes are useless BUT it’s still a way better investment than any real estate deal in terms of dollars in/dollars out (even assuming you go into a semi-decent earning profession- say accounting). You’d be debt free upon graduating which is awesome and you’d be guaranteed a nice life at worst.
That out of the way— If you’re well off enough to go to college on your parents dime or get a scholarship. And the part about saving 25kish a year is true. And you go to a good enough school where you can reasonably expect to place into IB/CRE/etc type work….
I would max a Roth IRA, put half of what’s left over in various HY account or a CD or S+P or however you decide to dice it up.
Now for the controversial part — with the other half I’d just enjoy college years. Wouldn’t work during the year. Get good grades, stay on top of the job hunt and lift/booze/talk to chicks in your free time. I went to a state school but had to work a lot to pay my rent and missed a ton of parties, couldn’t always afford the bars, etc. I did what I had to do, but now that I work it does sting I didn’t get to max out the college experience. I also think it’ll make you well rounded, more likeable, and overall more successful.
I am currently in high school in the UK. Im not sure If this affects your answer. I am 16 and have been offered places to study economics and finance next year. Right now I'm not sure if leaving school a year early gives me an advantage, but we will see. Currently, I am working towards a position working in IB and I have been reaching out to people via LinkedIn for advice and to make connections. If any of this changes your answer please let me know. Thanks.
$30K goes further with scratch tickets
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