BiggerPockets

I have about 35k saved up which was going to be the down payment on a house or condo, but I'm thinking I might hold off on that for a while to get started in RE investing.

I had entertained ideas of wholesaling but... frankly after my experiences pursuing that, I think it's basically a crack dream.

So, I would like to get into rehabbing, but I don't really see how I could acquire a property since even the rough ones go for at least 100k here in NYC.

Is my best option to acquire a property using my cash for the down payment and a loan to cover the rest of the cost? Or what else could I do? Are there some other types of investments I should do for now instead to build up my cash until I have enough to just buy an entire property outright?

Yea from the info I have got if you are willing to put that money into the deal you should have no problem getting hard money if the deal is good.

If you don't own a primary residence you could combine buying a house or condo with rehabbing and investing. Just look for a great deal on a fixer and refi it after you finish the work.

Or maybe invest in a different, cheaper area.

With hard money the highest loan amount will be roughly 65% to 75% of the after repair value, so the better deal you find the more of your loan you can spend on repairs.

I think there are a couple of other financing rehab options depending on your situation. The fha 203k loans are one, and the Fannie may Homepath loans also.

Hand money lenders will lend based on the ARV. The exact limits vary widely, so you'll have to find some in your area and see what they will do.

I know of one here who will go 80% of purchase plus 80% of rehab, up to 70% of ARV. She charges 2 points and 12%, interest.

So, if you can buy a house for $100K, and it needs $20K in work, and it would be worth $180K when fixed up, she would lend you $80K for the purchase and $16K for the fixup. You would need to put in $24K for the purchase and rehab. Two points, $1,920, comes off the top. You'll have to make interest only payments of $960 monthly. You'll have to pay for some of the work up front, then get reimbursed as its completed. If it takes you six months to fix up and sell, you would have about $8000 in money costs (points plus interest), plus insurance, utilities, and the like. So, that comes pretty close to chewing up your $35K. I get $32K adding that up, and something always goes wrong.

You sell for $180K, paying $18K in closing costs, commissions, and seller concessions, netting you $162K. You pay her back $96K and yourself back $35K, leaving a profit of $31K.

Rinse and repeat.

You're good to go. Just got to find the right market.

Your best bet is a local REIA. Start talking to people and ask if they know anyone. Look for ads in the RE section in the paper that say "money to lend for real estate". Start calling mortgage brokers. 99% will have no idea of what you're talking about, but eventually one will.

The $31K in the example would be treated as short term capital gains. That's taxed at ordinary income rates. So, the $31K goes on top of whatever income you already have and gets taxed at your marginal rate.

You should plan on using a CPA. A good one will know exactly how to handle all the various expenses to minimize your taxes.