Does this make sense?

This may seem kind of dumb, but I just wanna know what you guys think of my thinking.

Im wanting to get into the rental buisiness. However, instead of buying single family homes, get a loan, and get rent. Im thinking about…

After I graduate from my local college(nursing), I am gauranteed easily a $40,000 per year job. Should I just hang low for a while and save like 25,000 cash. Then go get a killer steal on a house that is a good cosmetic flip and just pay all cash? I would need no loan, no interest or anything.

Do about 4-5 of those cosmetic flips, or until i save enough money to go out and buy a good 4-unit appartment building ALL CASH.

By doing this I would have no interest or anything. I also wouldnt be dealing with little-money-making single family homes.


I would never put all of my money into any one deal and leave myself with no backup funds…But that’s me…Maybe one of the RE pros will say different…

With a $40,000 per year job, how long is it going to take to save $40,000 cash?



I am not a real estate investor. I am still learning and trying to become one myself. From my my opinion, this is an excellent article (posted in the Real Estate article section from this site) that you might want to read …

Be a Smart Investor… Do the Math by Bill Bronchick

Here is a snippet…

“For years, our parent’s generation discouraged debt as a “bad” thing. For some investors, the goal is to own properties “free and clear,” that is, with no mortgage debt. While this is a worthy goal, it does not always make financial sense. If you have free and clear properties, you will make certain amount of cash flow and pay a certain amount of income tax. If you need more cash, you are forced to sell the asset, creating a taxable gain.” - Be a Smart Investor… Do the Math by Bill Bronchick


Your plan is fine. Go for it.

Well, It would take a year of course. But i would like to start small. Maybe with a 20,000 house. Living at home is really cheap. The only thing my parents say i have to pay for is my car insurance and gas. My car is payed for all ready. If I save every penny I think my plan could be good.

I understand what rookieNYC is saying though.

With $40k/year job, it will take you a good 2 to 3 years to save $25k that is assuming you live as a college kid during that period.

$40k income

  • Tax
  • SS
  • rent
  • food
  • bills
  • etc.

Its only going to college for 1 year. Im going to get my LPN nursing license. The community college is like 2 minutes away from my house. I wouldnt even call it a college really, its Ivy Tech. I know I can save 25,000-40,000 in 1 year.

I really like the idea of buying ALL CASH.

Me, unlike most other kids my age, im willing to hang low and save all of my money when im young, so I can have a bright future.

Wait till you start dating :slight_smile:

You should explore using leverage. Realistically, it is going to take you a few years to conventually save that amount of money. Using leverage properly can net you a better ROI if you work your numbers well and buy right. Also, this allows you to get started sooner and have extra money for unexpected expenses and costs. Your money will not be all tied into one deal. I suggest that you explore a little more before you set in stone that you absolutely must buy using all cash. Good luck!

OPM = other people’s money. One of the best things about real estate is investing with little money down and collecting the cash flow. You don’t need a debt free asset at your age…you need it when you retire to fund your later years. I’d look for a mortgage and purchase a house with little money down…maybe make it your first house, a duplex, so you can get out of your parents place. Also, interest is tax deductible and you always have the option to apply more money to your principle…although doing so may be risky considering the volatility of property pricing. Instead, consider using your extra money to buy another rental, or two, and increase your net worth 3 fold.

If you’re just going to save money you won’t get started.


I am trying to think of where I can buy a home for $20,000 in the USA that is really worth flipping.

Flips are a great idea but they do not all go easy. I have had several rehabs/flips that I ended up keeping for various reasons over the years. Going in I plan to have to keep the home as one of my plans so I need to know I can afford to carry the home and what it will rent for.

As for saving 20K a yr on a 40K salary. It is possibly if you live in state with no state or city tax and literally save 95% of each take home check.

Let’s assume you save $40,000. You could do 2 things. 1) Pay $40,000 cash for a prop. and have your ONE property. or 2) You could use the $40,000 and put 20% down on 4 different $50,000 properties. Real estate is a high stakes, high leverage business. Use that leverage to your advantage.

Point #2. You pay all cash for a building and something happens and you get sued, rest assured as soon as an attorney sees the building is free and clear he’s coming after it, bam, you’re done. If you had only 20% equity in a property, chances are he’s not coming after that. And if he/she did you would have the bank with an 80% interest in the property and they’re not going to get that from the bank.