I live in a 2 bedroom 1 bathroom home. I have $30k. My wife and I are eager to investing in real estate and start buying and flipping houses.
What would you do?
or
Hey New to the Game, let’s take a look at your circumstance.
So you have $30,000 in cash, which is an excellent asset, and you currently live in a 2 bedroom and 1 bathroom home with your wife. You are eager to begin investing in Real Estate under the Niche of “Wholesaler” or a person who buys properties at a bargain and sells them higher to obtain a profit.
Your question is, what would I do in this situation? You say you have the option of adding onto your current home or use the $30,000 to purchase your first home and flip it. Okay, let’s start breaking this down some.
If your goal is to be a Wholesaler and obtain properties at a bargain and fix or update them and sell them quickly, what I tell my clients is to become an EXPERT in their field. Become an EXPERT in your niche. Seeing that you want to do wholesales, I need you to study the fundamentals, principles, and procedures involved with being an excellent wholesaler.
I want you to become a professional wholesaler, by obtaining the wisdom needed to become one. Now, the next thing you do is begin building your needed team or as some call it your “A” team. This includes your money source for capital, and I want to tell you something, your $30,000 is an asset. You learn how to obtain properties at a bargain (can be a foreclosure, property needing repair, seller just being nice or needing to get rid of it) and learn how to structure the deal so that your HARD MONEY LOAN will fund the entire deal. That includes all lender points, fees, and closing costs. This is what is referred to as No Money Down Deals, at least one of the ways to get a NMD Deal. And a HARD MONEY LOAN or a private loan is just a loan from a private lending company where the owner has pooled together private individuals and companies who are willing to invest their money in Real Estate Deals short term, to obtain a 14-18% profit and return on their cash.
Take your $30,000 and, not to sound like a financial planner, but I would put that in a side fund that’s conservative and allow that $30,000 to earn a 7-9% rate of return. If you don’t need it, then I would put it away safely and earn that rate. While CD’s aren’t advised much by many investors, I know of banks where you can get a CD with 8% on it. I mean, a mutual fund does around 10%, and here you can get a CD that’s SAFE at 8%. I don’t think that’s a bad deal at all.
Let chat a bit here on this forum, tell me more New to the Game, what are your goals in Real Estate? Where do you see yourself in 1 year, 5 years, 10 years? What niche and area of Real Estate are you most interested in, and are you willing to study and become an expert in that area?
or
wholesalers don’t buy and fix properties…wrong term.
i’ll shorten it for you -
take the 30k and do nothing. simply read about real estate investing more and become more familiar with how INVESTING works.
it depends ALOT on where you’re located, your ability/willingness to move if needed and your comfort level with certain aspects of investing in general, especially real estate investing.
quick i.e. - use 30k buy a rehab, fix and sell it - make 15k profit (50% return). this is missing many details.
or
buy a rental or two, or three (depending on where you’re located) refi’ng them and put together some cash and work this and that out - and you’re making $900 cash flow a month from each…again MANY details missing - but now your money is working HARD FOR YOU. through depreciation and appreciation, loan amortization (that someone else is paying for) and the CASH FLOW you’re receiving will begin to add up. it’s like putting your 30k into a mutual fund (with LESS RISK) but EARNING 30%…
or
take the money and put it into your house - say BUH BYE…unless you have a plan to increase the value of the property and sell it, that’s a complete waste or unless your family needs the space…and if that’s the case, why not HELOC and pull money out to pay for that, use the cash to invest in real estate and start pulling in some CASH FLOW from rei.
know this - no mutual fund, CD or IRA puts CASH FLOW IN YOUR POCKET MONTHLY - it just does not happen.
keep in touch, TAKE YOUR TIME and GOOD LUCK!
and you're making $900 cash flow a month from each
meant to say “$300” in cash flow a month each."
just my craziness, it’s late - AGAIN THIS IS A QUICK BANG UP EXAMPLE.
8)
I have a question. Where can I get a CD with an 8% return?? I was thinking of putting a little money in a money market account, but if you can direct me to an 8% CD, I’m there.
Thanx,
Steve
Question. What’s HELOC stand for?? Never heard this term or maybe just never heard the ackronym…Thanks.
HELOC = Home Equity Line of Credit…
To your left, in the left column is a link called “Investing Abbreviations” and another called “Investing Glossary” - both are quite helpful.
http://www.reiclub.com/real-estate-abbreviations.php
http://www.reiclub.com/real-estate-terms.php
Keith