Does it matter if I only have $50,000 to invest? What’s the minimum I need to invest?

Firstly, It does matter how much you invest in the sense that without a minimum 25% down-payment or if the minimum isn’t in synch with your long term investment plan, you are at a disadvantage from the beginning..

But, the spirit of the question and the context it is usually asked is from first time investors, in California, asking what is the recommended minimum.. I’ll examine the question in that context.

My advice is to not think the amount as small or big, but about the asset size you are taking on and your cash flow requirements: For e.g. IF you are buying a $250k condo in Sacramento, putting 25% down, $7k more for closing costs, i.e. a total of $70k approximately, you really need to be making $1400+ in monthly rental to make your investment meaningful.. But that same $70k can buy you a decent piece of land in other areas of California, which over a 7-10 year period, can give you very decent return, but no immediate cash flow..

So it is really your cash flow requirement and asset quality in the portfolio you intend to accumulate, over successive years of dollar-cost-averaged investing, that are the key factors..

Yes, btw, I would definitely recommend first time investors buying land, especially if is within city parcel, residential zoned.. these parcels, in outer metros, tend to be good starting points for investors who don’t have a lot of time to manage properties, don’t need the cash flow near term.. You ALWAYS have the opportunity to build on the land later, convert it into a rental income property.

There are a lots of ways of getting started, some more creative than others, of course more risk-loaded than others as well.. Let me know if you need ideas to get started with your investment 🙂

call/txt me @510.676.1940

Till next time… I will answer another hot topic: Is there still value in SF Bay Area real estate buying?

 

 

One thought on “Does it matter if I only have $50,000 to invest? What’s the minimum I need to invest?

  1. Great insight – never thought of starting to invest with land. Thanks for sharing this perspective. Makes total sense – see a good return without the hassle of property management. Good way to diversify your holdings

    Liked by 1 person

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