Can You Get Started In Real Estate With $50,000?

October 12, 2007 by

Flip Real EstateA few weeks ago I received an email from a gentleman by the name of John. He seems to be a bright guy around my age and was looking for some advice on how to invest in real estate with $50,000. He wanted to get involved with flipping houses and already had one successful flip with a net gain of $55,000.

I love getting these sort of emails and thought I’d share our conversation with you since he’s not the only one looking to do this. Here’s his email to me:

Hi David, I came across your blog and have found that its fresh, open and direct approach really set it apart from the glut of information out there. So thanks, and I look forward to exploring the site more fully! I’m wondering if you offer any one-on-one coaching or personalized tips for the beginner (in this case, one with a little bit of money to start with).

A little about myself: I am a 33-year old classically-trained professional musician who recently completed a Master’s degree at the Yale School of Music in Connecticut. I have been making a decent living for the past 8 years as a full-time musician, and have really enjoyed some wonderful experiences performing in other countries, etc. However, now I am thinking about settling down with my fiancé, and would like to explore opportunities in real estate more fully.

I recently sold my first property, a condo that I bought when I began my studies at Yale in 2004. After the expense of some cosmetic upgrades and broker’s fees, etc., I will net about $55,000 at the closing. This really opened my eyes to the power of investing, especially when for the past 3 years I have been living in a beautiful, spacious condo personalized to my tastes, while my peers have been paying about the same amount to live in small apartments in cramped buildings.

My basic question for you is this: do you think it’s possible for someone to get started in real estate investing with $50,000, and if so, what are some of the approaches that one might take? I looked into becoming a realtor, but I don’t think that that is the way for me; I’m more interested in investing and rehabbing properties. I have a good eye for design, etc., and am able to do cosmetic repairs myself, though I would rely on a contractor for serious remodeling like roofing, etc. I am relocating from Connecticut to the West Coast due to my girlfriend’s job situation, and I hope to devote as much time as possible to real-estate investing, while working a separate part-time job if neccesary.

I hope that you can offer me some insight, and again, I appreciate all that you do to share your knowledge with people like me. Thanks!

Here’s my response to John’s email:

Hi John-

Thanks for the complements and I appreciate your email. You’ve got off to a great start thus far! I actually don’t provide any “official” one-on-one coaching but I’m happy to give you some advice. When I first started it was all self-taught either by reading books, online information, or just trial by fire. I never really had someone to take me under their wing which is usually the best way to go.

Based on the situation you explained below, it’s definitely possible to get started in real estate with only $50,000. That’s more than most people have to begin with! So the big question is where to start. Flipping properties is a very lucrative business especially if you enjoy fixing up places and looking for deals. I’ve always wanted to do this myself but living in CA makes it tough since the market has softened and it’s important to be driving distance to these types of projects. If you feel the real estate market in your area is in better shape, I’d go for it. I’d also recommend a couple great resources to get your started. The first is a book called “Find It, Fix It, Flip It!” (aff) by Michael Corbett and gives you a great step by step approach to flipping properties. The second is checking out economic reports by a fellow named Ingo Winzer. He saves you the hassle of trying to do your own real estate research by providing amazing reports. Each one costs $99 per city but it’s well worth it. http://localmarketmonitor.com/

Those tips should get you started so after you get going, let me know if you have any other questions along the way and I’ll do my best to answer them!

Good luck!

~David

Now there are many different responses and additional details I could have provided him but each real estate investor needs to do some research and reading themselves. I find that books and just reading blogs or websites is the best way to increase your knowledge before purchasing your first investment property.

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17 Responses to “Can You Get Started In Real Estate With $50,000?”

  1. Real Estate » Can You Get Started In Real Estate With $50000? on October 12th, 2007 11:21 am

    [...] Michelle Musick Jones Allen Texas Real Estate (Coldwell Banker Residential Brokerage) wrote an interesting post today onHere’s a quick excerptI am relocating from Connecticut to the West Coast due to my girlfriend’s job situation, and I hope to devote as much time as possible to real-estate investing, while working a separate part-time job if neccesary. … [...]

  2. Dream House Las Vegas Realtor on October 13th, 2007 9:25 am

    Thanks for that information. I am a Realtor in Las Vegas and helped a few people flip houses too. However, I just wanted to point out that in 2007, with the market slowdown and subprime mortgages becoming almost impossible to get, real-estate flupping has become a thing for only the rich pros again. I guess it’s the market’s way of weeding out the amateurs..

  3. Boontb on October 16th, 2007 9:35 am

    Nice blog first of all, very professional !.

    My wife is a Realtor as well but she only began like a year ago, with success I must say! I told her to start blogging but she is not into that ;(.

    Anyways thank you for commenting on bontb and let me know if you need any help.

  4. Real Estate Guru on October 16th, 2007 9:54 am

    Thanks Boontb. You should have your wife read my “5 key reasons real estate agents should blog” post. That might convince her otherwise. :-)

  5. John on October 17th, 2007 5:34 am

    I think that you can get started with that amount. But, without a doubt you need an advertising tool that will support your demand. Newspapers, internet, email marketing. There’s a ton of ways to do it economically.

    John
    http://www.listpropertiesnow.com

  6. Noah on October 17th, 2007 4:36 pm

    The title of this blog caught my eye as I had the same dollar amount in mind for a deal. I just came up with this new idea tonight and am interested to see what people think about it:

    Real estate on the Gulf Coast (I live on Perdido Key, FL) is at a stand still. I have, however, two condos that I have got to sell. Now with the market flooded with other units for sale, there is no way anyone is going to pay a good price for either of these units. I have come up with an idea that might work. Please read through it and let me know what you think:

    I would create an s-corporation and recruit real estate investors. I would sell my shares in the s-corp for say $50,000 a share. The money that is collected, I use to pay off my mortgages, and I then roll the paid off property into the s-corporation as assets for the corporation. Money that is not used in the deal is retained by the corporation and can be used to invest in other properties on the Gulf Coast where there are plenty of great opportunities. I would keep a minority share of the corporation and would stay on as the managing director as I live on Perdido Key and know the market and the real estate options well. The real estate investments would be rented out as possible as these are mostly vacation and resort properties. Plus, the market will eventually recover and the properties can be sold for a good profit when that happens.

    What do you think? Is this just crazy or is it just crazy enough to work? I think $50,000 as an investment might open doors for some people who might not be able to invest more, but still want to invest in real estate.

    I welcome all comments, but please be constructive.

    Thanks.

    noah

  7. John on October 17th, 2007 11:57 pm

    Hi Noah,

    You say that the market will eventually recover. How can you be so sure that the time of recovery will be less than the time of loss on your investment?

    John
    http://www.listpropertiesnow.com

  8. Noah on October 18th, 2007 4:29 am

    That is a very good point, and there is no guarantee; but I do feel positive about the market in this area. All of the latest towers are nearing completion, and I have seen no new foundations started for more towers so it is a matter of the market absorbing the existing units. I would have more concerns if many towers were just starting and would be flooding the market in the next few years with brand new units.

    Plus, if this is set up as a corporation and people purchase shares in the corporation, the investors can sell their shares which are a lot cheaper than purchasing an entire property as a single investor.

  9. Real Estate Guru on October 18th, 2007 1:43 pm

    I think that’s a great idea Noah but the hardest part would be convincing other real estate investors that it’s a good idea. They’d need some sort of guarantee besides just ownership in the s-corp. If you’ve got legitimate experience that would help. Would you have enough capital to invest in other real estate once your mortgages are paid off?

  10. Noah on October 18th, 2007 2:17 pm

    I agree. It will be a very tough sell; and no, I have never organized an s-corp before. I will have to put together a strong team of advisors (accountants, attorneys, real estate professionals, bankers) in order to add credibility to the endeavor (which will all be needed to organize it anyway, not just to add credibility). Plus, I would not mind bringing in someone to head to corporation instead of me if that makes it easier for investors.

    Yes, I have put together a five year plan (based on the numbers I have personally put into my four properties over the past five years) which would allow for at least one other property to be purchased in the area and be able to service the debt for five years. All of this in mind for ten investors (including myself). If I opened the opportunity to more investors, more money would be available and more properties could be purchased and even extend the debt serviceability beyond five years.

    If anyone else has organized, worked or invested in a similar situation, I would love to hear about it; and everyone, I really do appreciate the interest and responses thus far.

  11. Real Estate Guru on October 18th, 2007 2:37 pm

    Sounds like you’ve really put some thought into this Noah. I have a friend who does something similar here in the SF bay area. He pools together $50k per investor and usually buys older apt buildings to refurbish. His company is called Drake Property Group and you might be able to get some ideas from his business model.

    I hope things work out for you…it’s really a great idea and once you get the investors (maybe family and friends first), then it’s much easier to get off the ground.

  12. raffy on October 24th, 2008 9:11 am

    Drop The Rent!!!

    At HometownRenter.com we understand that you want to get the highest rent for your property. Our advice to owners is to make sure to stay competative in the market. A property not rented in most cases is another mortgage payment paid. If the property is worth $1,000 a month but everyone in the community is at $1,000 a month, the chances of you renting your place are very slim. If you drop it to $950 you will be able to rent your place fast and not miss another month.

    Well qualified applicants are aware they are a hot commodity in this era of tarnished credit and lost jobs. They are shopping their well qualified applications out to the large inventory of investment property on the market. How do you attract them? Drop the rent! Gimmicks do not work–these people have worked hard to keep their credit scores up, their incomes stable and their rental history in tact. Drop the rent…it really is that simple! Prompt placement of a qualified applicant immediately stops the bleeding of lost rents, continued advertisemement expenses and the real possibility of a break in or vandalism. You may not receive top market rent–but you will see regular income that you can count on. Find your best tenants and rental properties for FREE at HometownRenter.com. Your local and national rental site.

  13. Staten Island Real Estate Agent on August 5th, 2009 5:35 am

    $50,000 is definitely more then some people start out with. I would say start out by reading a few books on investing on a limited budget. There are endless amounts of ways to invest.

  14. Casey Perry on September 17th, 2009 11:22 am

    I think that you can get started with that amount.
    And i think proper promotion that will support your demand is a must too. There a lots of ways to do it economically like internet marketing.

    SouthBendbankOwned

  15. dzoyce on November 23rd, 2010 10:31 pm

    Instead of that you can try this site for the cheapest foreclosure
    CLICK HERE
    It’s free to join and they actually own their homes and not just a broker.

  16. Holly Marden on November 5th, 2011 9:25 pm

    I believe, starting with 50000 USD in a real estate business is a possibility. Make sure to take advantage of the free services, especially online so you can lessen your expenses.

    Website:
    Gilbert Homes for Sale

  17. Justin James on November 5th, 2011 11:58 pm

    With this amount, I guess, it is still possible. But that will be really tough. You need to be very resourceful with what you have and know how to take advantage of services you can get for free, especially online, if you will be going into marketing, too.

    Please visit:
    Encinitas Homes for Sale

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