I am a real estate agent just starting out and I would
Like to know as a want to be investor, how much do you recommend I save for my first Property?
That depends on the market you are going to invest in.
@Leslie Eason , talk to other experienced investors around you. if you do a conventional mortgage, you will need 25%-30% down and also want to have reserves for the repairs that always pop up at inconvenient times.
Find out how much money you can borrow. Then save up the down payment for that amount. If the bank will lend you $80K, you save $20K and buy a house for $100K with the 20% down payment.
I agree with @Theresa Harris on this.
Get preapproved for a mortgage loan
Save enough for the down payment ( I personally like 25%)
Make sure you have enough reserves to make ready to rent and holding costs
Get the place rented
Thank you guys! The feedback was very helpful.
Don't forget to have at least 3 to 6 months emergency reserves for your own protection from unforeseen personal expenses...medical, car repairs, unemployment, etc.
^ Yes, always a good idea to have something to fall back on.
Personally I like to have enough money to not have to worry about if something big happens. To me, that's about 5k to 10k in reserves; thinking new roof, flood, something. Chances of it happening might be lower, but piece of mind in your operations can be a fine line between success and failure.
Don't forget you'll have closing costs, marketing costs, repairs, etc., off the bat. Don't buy a 100k house and dump the 25% into it and have no money left over. If you've got debt dragging you down, take care of it to at least a comfortable/manageable level. If you would lose it all if the next paycheck didn't come, in my mind you are at significant risk for failure.
@Leslie Eason Plan for having the following:
1) Down payment
2) 2% closing costs and escrows
3) 6 months' payments in reserve
4) Repair costs to rent
If you move into a duplex or triplex and renting out the other part(s), down payment will be 3.5% minimum FHA. If single family house where you're renting rooms, consider 5% down Conventional (less cost and mortgage insurance than FHA). If you aren't going to occupy, 20% down is minimum, and better rates come with 25% down+.
Hope this helps.
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