Hello my friends and welcome to another episode of Ask Marco where I answer your investing related questions.

Today's question comes from Max. He says, hi, my name is Max and I was wondering what kind of strategy you would use given my financial position. I am turning 25 and finally moved out of my parents' home from New Jersey to beautiful and cheap Memphis, Tennessee. I make $35,000 per year before taxes and my rent and utilities are about 900 a month. I also have about $25,000 saved up in my bank account. I budget every cent that comes in and out of my pocket and saves as much as I can after taxes, food, and rent. I'm only able to save about $400 a month. I'm thinking about buying my first property now but I am a little hesitant given where the housing market may be headed. What would you do if you were me, please? Thank you - Max.





Okay. I think you have two comments or questions in here that need addressing. Overall what you're asking is how do I start investing with a low salary? So first and foremost, given what you're saving, that's great. You know, if you're saving $4,800 a year, it's gonna take you a little while to get up to 18,20 $22,000 to make up enough for a down payment on a good quality rental property and probably a B class neighborhood. Um, because that's what it's going to take. Somewhere around 18 to $25,000 is what you're looking at on a per property basis. And typically we're talking about middle of the road, middle-class bread, and butter housing, three-bedroom, one and a half, two baths. Now first and foremost, the thing I want to say is that if you've got $25,000 saved up, that's great before you deploy those funds into an investment and leave yourself with nothing in savings or on the side and cash.

The first thing I would do is make sure you have some reserves for yourself for emergencies in case you lose your job or you have to move or you get transferred or you have an unexpected expense come up, be it. You know with your car, a medical emergency, you know you always want to have reserves for yourself personally before you spend every last cent you have in savings for an investment. You just got to put yourself first. Your income is okay, it's just on the low end. Of course of the spectrum that you are on and you could do better. So how do you do that? Well, it's going to be challenging to cut your expenses, especially if there's not much to cut. What you want to do is increase your income. You want to focus on the top, not so much the expenses.

Focus on income. So how do you increase your income so you have more to save and you can save faster? Well, there's really two basic ways to do that. The first would be to change your employment. In other words, get a new job or a promotion where you are earning more. I'm sure there's a lot of opportunities. I don't know what your uh, skills are or your education or what line of business you're in, but you know, stop and think about what other opportunities there might be available to you given your skillset and your knowledge that can increase your income can. Because sometimes that could be a sizable jump right away. Just finding new employment where you can apply yourself. The other way is to get a second job and that doesn't mean a full-time job. It means just additional employment. And that could be a small sideline business.

It could be literally a, a job, a job, it could be anything that increases your income, where you have the time and the ability to do that. So you want to increase your income. Now, if that's going to be challenging or hard to do, then uh, what you might want to consider is wholesaling if you have the time to do it. So if you understand wholesaling, it's essentially finding distressed sellers or distressed properties that you can put under contract at a deeply discounted rate where you flip the contract. In other words, you assign that contract to another real estate investor for a fee.