One question that I get a lot: If you had $50,000 to invest today, what would you do with it?
As I said, this question is very common. The amount varies depending on who is asking the question, going from $5,000, $50,000, $100,000, $1 million to even $10 million. The question itself introduces a restriction, in other words, the question is directing you to a limitation of yourself based on your money only. The richest people in real estate actually make money by raising money from other people.
The quickest answer is that you should invest in someone else’s deal, but of course, learn all you can about the deal so that you understand it.
Or you can use the $50,000 and buy something yourself. Use the $50,000 as your 20% down payment and leverage (borrow) the remaining purchase amount.
The better answer is to understand what makes a good deal so that you are able to identify one on your own. By learning cash flow and understanding how to build a team, you will be able to find deals on your own and be able to raise money from other people interested in real estate investments. Real value comes from your ability to see how the cash flow from a property can support the necessary equity and debt that is required to own it – and then presenting that analysis to the right investors and bankers to raise the money. So, as with a lot of things in life, education is key.