BiggerPockets

O.k i've been lurking and posting here over a year now but im a little nervous about taking the plunge. Heres my situation, i have 45k, terrible credit, monthly income of 3500 as of april 08 (new job). My thought was to buy a 3 bdr house for 24-30k in a mediocre area.....clean it up and rent it out then possibly continue until i have reached my goal (15-20 properties). please help with any advice but try to stay on topic thx.

To expedite the arrival of your status quo, 15 - 20 properties, you should seriously explore the power of leveraging your money. Instead of using the 45K in liquid assets on one or two properties, use only a paltry amount of that for closing costs and down payment. Long term wealth can be built faster by using other people's money (OPM), in this case a bank.

A typical 30K house can often be closed with less than 5K out of pocket(down payment and closing costs). You could probably purchase 7 or 8 houses with your savings depending on the lender.

rtremc,

I will be VERY DIFFICULT to get a bank loan with terrible credit. Credit is a measure of financial trustworthiness, and banks won't loan money to people who they consider to be less than trustworthy with money.

Therefore, I would suggest that you do whatever it takes to take care of your credit problem. Start by getting a second job and working your butt off to pay your bills (current and past). Get your credit straightened up and then think about investing.

In the mean time, you can study the business; study your local market; and join your local REIA.

It is very difficult to build a successful rental property business with only $45K and terrible credit. On the other hand, it is relatively easy to build a successful rental property business with $45K and excellent credit.

Good Luck,

Mike

What part of Houston are you considering? Remember to confirm that you can get insurance on it (lots of redlisted areas) and how bad the property taxes will be with no exemption.

Forget the " benefits of leverage" angle. Spend carefully, get a second job and get your credit to A+++ condition. Follow MikeOH's advice and you can't go wrong.

all cash

If you are still scared and thinking of using your cash for a rehab house you are not ready to start in the business yet. I'm not trying to be rude or anything but more knowledge equals less fear and from what you expressed it seems you are starting out on the wrong foot. Contact your local REIA. In Georgia ours is fantastic but find yours and connect with people already doing business in your area. There are as many ways to make money in real estate as there are patterns in snowflakes so study up and find your niche. Also consider your asset protection; you don't want Uncle Sam and Aunt IRS to get all your profit. Read some of the books out there that are really good. Go to the free 3 day seminars that go around. Of course they are going to try to sell you something at the end but you'll get a lot of information first. You might consider a self directed Roth IRA that invests in real estate. While CONTRIBUTIONS are taxed going in EARNINGS are tax free. I do not work for or get commissions or anything like that but I like the services of David Griffiths at Equity Trust Company. You can start with as little as $500 and they will answer all the questions you can come up with. That way you be earning while your learning.