20 year old with $30,000
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[{"id": "g452367", "text": "I think you\u2019re going to need more than 30k for commercial or multi-family. I\u2019d say buy the deal u talk about in ur post to help build a financial history that will help you get a bigger loan in the future for a multi family investment.", "replies": [], "depth": 1}, {"id": "g455o40", "text": "To be fair tho. I\u2019m in a similar boat. 23 with about 100k. I\u2019d like to get into real estate investment as a career but it seems like I\u2019m too broke to get j to multi family but single family housing seems like too slow of a process/more like a passive/part-time sort of thing.", "replies": [{"id": "g45902d", "text": "Look at triple net investments. There\u2019s avenue to get way more creative with adaptive reuse than multifamily.", "replies": [{"id": "g459bve", "text": "I\u2019ve always heard that NNN investments are even \u201cbigger\u201d than commercial. Is it relatively easy to break into that market?", "replies": [{"id": "g45iaz3", "text": "NNN are great if you have access to that level of funding. It'll depend on the kind of market you live in to really know what your potential deal could look like. If you live in a lcol area like the midwest its easier to jump on some local NNN game.", "replies": [], "depth": 4}, {"id": "g45meyj", "text": "There are all kind of NNN, it just means the tenant takes responsibility and thus it is easier to manage and usually most commercial leases are NNN or NN. I have seen small corporated guaranteed NNN and NN investments that you could buy. For example a year or two I remember seeing a NN USPS in a rural area going for $430k. Also finding a decent non-recourse loan is fairly easy.", "replies": [{"id": "g470dr7", "text": "NNN non recourse these days...good luck. Partial yes, but non recourse you need to be at about &lt;40% ltv. But yes a few months ago...wouldn\u2019t be an issue.", "replies": [{"id": "g48dqmg", "text": "You are right with retail.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "g45tgoo", "text": "In your case, I'd use SOME of your money and buy a duplex or preferably a 3 family and LIVE IN IT for 24 months ( at least.) .  You'll be building income and equity at the rate you're looking for with your tenants paying your mortgage...but in an asset that you're getting preferred rates and tax advantages on too, cause it's an owner occupied asset.  \n\nGet the best rate possible, put 10, 20K down and  bank the rest.  You'll need it for (1) a cushion and (2) either  repairs or TI (paint, carpet, lead mitigation, etc.)", "replies": [{"id": "g47pkgg", "text": "This is what I\u2019ve been highly debating. I just don\u2019t want to live in any of the units. Would rather rent both. I\u2019m debating if I should make myself a W2 employee from my own LLC - feel like this would make the banks like me more. Any thoughts on this?", "replies": [{"id": "g4849xz", "text": "I think this attitude, \"I just don\u2019t want to live in any of the units.\" Is  common, but also shortsighted and damaging in multiple ways, , monetarily, and, in experience.   \n\nFirst, you can save a ton of money, both in terms of your own housing payment AND your interest rate.   \n\nSecond, by living among your tenants, you become a better lLL for the LONG haul.  You will feel more personally connected to the asset, and you will understand better about what makes for a sound, but not over-improved apartment.  Living there also  teaches you to choose better tenants in terms of creditworthiness and personality.    \n\nFinally, it's temporary---only as long as the lender would \"require\" you to do so to acquire the preferential owner-occ status, but until you refi, that status remains on the asset and outlives your status as occupant.  You can ask toyr loan officer or an attorney about this time frame.  I recommend  asking  both.   \n\nLook, The world has lots of crappy tenants.... but also lots of crappy landlords.  You learn the differences by being present, and only by being present. Then, you take those skills-- and the $$$ you have saved-- onto the next asset in an accelerated fashion-- mush faster than people with only one income-earning asset and who are paying for their own housing outright can. \n\nCan I ask why you would not \"want to live in any of the units?\"", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g459l8c", "text": "It appears you do not have 2 year steady income to be qualified for a mortgage. So that may be the only choice.", "replies": [], "depth": 1}, {"id": "g45dbdj", "text": "If you have steady income, I\u2019d recommend a vacation rental. Especially if there\u2019s existing historical revenue, a bank will lend you money easily, your rentals should easily be able to offset your mortgage payments. Find a property you think you improve and you\u2019ll make your down back fast and have the rental revenue be earning you more asset value along the way.", "replies": [], "depth": 1}, {"id": "g45f4fv", "text": "$30k isn't a whole lot for commercial real estate but I could get you a commercial hard money loan for a multi family property if the deal is good enough.", "replies": [], "depth": 1}, {"id": "g45hu96", "text": "Research mobile home parks and self storage. Both are still great niches with plenty of opportunity.", "replies": [], "depth": 1}, {"id": "g45ia2x", "text": "Buy the single family property and when u refi in 3/4 years you can pull out your initial investment. At that time you'll have a good credit history and banks will loan to you so you can use that initial investment as the down payment for other properties.", "replies": [], "depth": 1}, {"id": "g45qc32", "text": "If you\u2019re able to buy a single family rental for $25k, I\u2019d be seriously concerned about deferred maintenance needs. Where can you possibly buy a cash flowing SFR for $25k? Are you in the US?\n\nIs this $30,000 all the money you have? It\u2019s great you\u2019re thinking about investing, but unless you have considerable other savings, I would have a lot of hesitation about this investment. Why can\u2019t you get a loan? If you had sufficient capital and a solid property, I\u2019d be surprised a bank wouldn\u2019t lend, even with your age. Clearly the lenders have concerns about your ability to execute which I would likely as well.\n\nI know this isn\u2019t likely the advice you want to hear, but I think right now you should focus more on getting your career/life figured out as a young adult and revisit investment properties 5 years from now. You\u2019re young and ahead of 99% of other people your age, which is fantastic, but I would give it some time to let the pandemic play out, get a better understanding of your long term financial goals and then pursue real estate if it is still what you want to do.", "replies": [{"id": "g4651s2", "text": "I bought a property for $26,500 that rents for $650 monthly. I haven't owned it long term, so we'll see. But I have a great property manager and so far seems like a great deal. Of course it's not in the fanciest neighborhood, and the PM takes 10% of the rent, and I doubt I'll see much appreciation beyond keeping up with inflation, but it's still great cashflow for the price.\n\nAs far as refinancing. If you get one or two more properties and the total value of the properties is over $70,000, and they have renters with signed leases and cash flow, then you should be able to refinance  through a portfolio loan, I would think.", "replies": [{"id": "g484opi", "text": "How are you cash flow positive on that long term? Net of the PM fee you\u2019re grossing $7k/yr assuming 100% occupancy. If anything goes bump in the night at the property it\u2019ll wipe out a year of NOI and when you go to sell the thing how deep is market? Out of curiousity where and what is it, I\u2019m picturing like a shotgun shack in a bad neighborhood in like Mobile", "replies": [{"id": "g49h2aj", "text": "I mean, if you gross $7k on a property you bought for $26,600 then  you're doing awesome. Of course you have insurance on the property. I'm hoping after the property manager fee (10%) taxes, insurance, etc. that  I gross something like $5,000. But even $4,000 wouldn't be terrible.\n\nAt a certain price anything sells, and, it's  been  said, that  long term inflation makes every real estate investor look like a genius.\n\nIt's a pretty nice, renovated house in Mississippi. C class neighborhood. Great property manager who did all the renovations. So I don't worry about it too much. If I was managing the property I wouldn't want a C class, but I don't even live  in Mississippi.\n\nAt those kind of returns obviously it's not about appreciation, it's  only about cashflow. And you can't refinance a property that inexpensive, unless you have a bunch of them and you refinance the whole group with a portfolio loan, which is what I intend to do.", "replies": [{"id": "g4a22d4", "text": "For sure I guess I\u2019m overthinking \u201cbuilding systems\u201d at that price I guess is just rip out as much cash as I can not fix shit and call it a day.", "replies": [{"id": "g4aq8p0", "text": "We fix everything, and we're careful with tenants. Obviously we're not installing hardwood floors. But we're not slumlords. At the same time, a house that's worth less than $30,000, you're not going to spend $1,000 for a fridge with an ice-maker. But we're not slumlords. I have a good property manager. $650 a month in rent is enough for us to fix stuff. In similar properties we've had tenants an average of 4 years. But things that might matter at $1200 a month, like a granite countertop, don't matter in a house like this. It's a big enough house. 1,000 sq. feet, 3 bedrooms. You can't get a house this size at this price in other neighborhoods. That doesn't mean if your fridge stops working i'm not going to replace it.", "replies": [{"id": "g4aqgw1", "text": "Really it's just the other side of the investing coin. A lot of the big money is made on speculation and appreciation. Cashflow is actually a much more conservative investment. You make 15% on properties that almost never go up in value. But you make 15%. Cheap properties that cashflow well are in neighborhoods with zero speculation, hence no appreciation.\n\nI have 3 other properties in A areas in Louisiana, so I can see it both ways. Diversification.", "replies": [{"id": "g4arjpc", "text": "Yea I get it that\u2019s some sweet cash on cash. It\u2019s nice to not play in the reversion all day. Good luck with it, sounds like you\u2019ve figured out a way to do own down market without having it be a major headache. Keep it up \ud83d\udcaf", "replies": [{"id": "g4be64z", "text": "Thanks!", "replies": [], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "g46guxx", "text": "I have purchased 6 SFH all for $27k or less in the Midwest.  Not in bad locations.  Each house I put approximately $10k or less in to get them rent ready.  I did all the work myself, besides HVAC/electric.  It\u2019s possible though and if the kid goes all in he could accomplish it.  Please take no offense, but don\u2019t scare the kid out of the life he wants.", "replies": [{"id": "g47fuiv", "text": "No offense taken. That\u2019s killer cash flow, great job. Sounds like you have a lot of rehab know how to be able to do the repairs yourself and the result is solid sweat equity. \n\nMy advice was geared more towards OP being 20 years old and advising that sinking your entire savings into a single property might not be the wisest choice. I\u2019m by no means discouraging their desire to get into real estate, it can be a great wealth building tool, but there also is considerable risk, especially for the inexperienced. I don\u2019t think building up some additional capital and gaining some additional knowledge could hurt. It would be a different story if he was maxing our retirement accounts and had other significant savings. To each their own, this risk aversion is why I likely won\u2019t even be that real estate mogul you always hear about.", "replies": [{"id": "g47mniu", "text": "I just know that I would not have made it if I didn\u2019t have the guts to go all in when I did.  I didn\u2019t know everything and sure as heck still don\u2019t, but I\u2019m in the game now.  I wish I would have had the guts to do something like this when I was 20 though, I waited until around age 30. I would be on my way to early retirement if I would have started 10 years earlier.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g45v2su", "text": "Seller financing is your best friend. In that case, someone who owns the property would act as the bank allowing them to receive a small down-payment and keep residual income while you still cash flow and build equity. I think in your situation that will put you in the most lucrative position monetarily. However, putting an asset in your name will make you a strong candidate for future investments and will be a place of residence for you should anything ever go wrong.", "replies": [], "depth": 1}, {"id": "g47bme4", "text": "Man all I gotta say is I WISH I could buy anything at all for $30k where I am!", "replies": [], "depth": 1}, {"id": "g47h4wl", "text": "$30,000?????? Dude you\u2019re RICH. Just retire and fatfire off 4%!", "replies": [], "depth": 1}]