How to find cash flowing properties w/ only 5% Down?
Member since 2019 · 4 posts · 1 vote
How to find cash flowing properties w/ only 5% Down?
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4yQuote from @Rachel Whiteman:
If you've done even the most basic research, you'll know that home prices around the country exploded the past two years. With such high purchase prices, it's very hard to find a property that cash flows.
I recommend you stop looking for property right now and focus on education. The market will still be there when you're done.
1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.
2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.
3. As you read these books, watch the biggerpockets podcasts. This will help clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.
4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. Biggerpockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.
5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.
6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.
You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.
The DIY Landlord Book4.7248 Reviews
8 Replies
- Member since 2022 · 33 posts · 19 votes4y
Hey I’m in the same boat, and a brand new invested. People recommended Airbnb, furnished finders, vrbo, etc for short term. They also recommended housing hacking… if u can’t find anything in ur price range…then yes looking out of state or finding a cheaper price makes sense to me. Also The feds just said they are raising the interest rate again yesterday. Even with the increase interest rate people have said it’s always a good time to buy a house if you can find a “deal” so I’m actively looking and waiting for the right opportunity. I’m gonna start putting offers in (probably below asking price) and see how it goes. (not sure if that’s the right strategy as I’m still learning, but I’ll change up my strategy as I go). Hope that helps.
- Atlanta · Member since 2022 · 710 posts · 640 votes4y
Quote from @Rachel Whiteman:
Hello everyone, I would like to purchase a single family home with only 5% down that cash flows at least $300 - $500. Range from $200k- $300k in the surrounding suburbs of houston. I am using the BP calculator, if i put down 20% all these deals cash flow. I would like to rent out to section 8 tenants. It seems the only way these properties i'm finding will make money is if i rent by the room ( i rather deal with 1 family then 3-4 different tenants). OR i could find a cheaper property in the hood for $150k- $170k.
I do not know what to do if i should lower my price range, rent by room, look out of state, wait for the market to go down. i'm already pre approved just need to find a strategy and locate the property. Any advice would be greatly appreciated.
are you planning on living in it? think you have to put down 20% if you are buying a straight rental.
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes4y
Killeen Texas, I invest there and am happy to talk more about it. DM me
- Bay area, CA · Member since 2021 · 383 posts · 306 votes4y
Hello Rachel,
By law, can't buy a house without a 20% down payment unless you buy a primary or secondary house, or you buy with some of the lenders that offer a 15% down option.
Looking at the overall market in general, you would need an extremely good and rare deal to get what you are looking for, however, renting it by room or short-term rental in a good touristy area can definitely give you high cash flow for the price range you are considering.
If you have the required knowledge, BRRR is the way to go to have juicy numbers with every deal. If you want, I can show you or connect with people who deal with high cash-flowing properties in different markets and see if you like something.
Good luck,
Ruchit
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes4y
Quote from @Rachel Whiteman:
If you've done even the most basic research, you'll know that home prices around the country exploded the past two years. With such high purchase prices, it's very hard to find a property that cash flows.
I recommend you stop looking for property right now and focus on education. The market will still be there when you're done.
1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.
2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.
3. As you read these books, watch the biggerpockets podcasts. This will help clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.
4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. Biggerpockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.
5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.
You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.
The DIY Landlord Book4.7248 Reviews - Member since 2020 · 36 posts · 18 votes4y
Try putting in offers and ask for seller concessions. Use that to buy down the interest rates. You may see that it helps the property cash flow a little more! I heard that strategy from MG the Mortgage Guy!
- 4yMatthew CrivelliBusiness MemberLender · MA · Member since 2021 · 1k+ posts · 1k+ votes
Who is giving pre-approvals based on 5% down for investment properties? I'm sure this lender is for a residential purchase. I would talk with your lender and communicate what your intentions are with the property you want to buy because this doesn't sound right to me. @Rachel Whiteman
Freedom Capital Funding, LLC523 Reviews - 4yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
The only way you can buy a house with 5% down is if you are living in it for a while. It may not cash flow even with a long term mortgage (eg 30 years), but you can look at it as you have a place to live where your costs are lower (ie the property may not cash flow, but you are paying less for your living expenses, so it does save you money).
Do not buy a place that is super cheap in a bad area. On paper the numbers may look good, but in reality you will have higher turnover and more problems that will cost you more money.
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