Problems facing while starting out
Hello, I'm very excited about starting to invest into real estate. Last week I went to look at a Condo that need some repairs and that could leave some profits after all the repairs are done. Now I'm trying to find a lender to get a Hard Money Loan from. This is the step that I'm stuck at. I have no money to put down, the lender offers between 80% to 90% LTV, I'm trying to figure out where I can get that rest of the money in order to be able to purchase the property. I have also been looking at houses that I could be able to house hack by getting a mortgage and rent out the rest of the rooms. But I don't have money for a down payment. I'm in the military and I can use the VA Loan benefit. but I'm stationed in Camp Pendleton, California, where the houses are worth around 500k. And if I get pre approved I might just get like 150k for a house, and I will not be able to find a house for that price around here. So I was thinking of getting a big loan for a house with 6 bedrooms where I could live in one of those but again, the price is 550k and I doubt I will be approved for that amount with a VA loan according to how much I earn and the DTI. Then I was thinking to just get a house out of state with this VA Loan but It is for primary residence so I can't because I have to be living there for at least a year. A DSCR Loan could work for this I heard, I'm not really familiar with it but the problem again would be the down payment. Which I don't have. These are kinda the problems I'm facing and I'm stuck without a solution since It's gonna be my first time trying to get a house. If you guys could share with me some insight or what would you guys do.
As an active duty service member I would recommend trying to use that VA loan, you can use income from other units to qualify for the loan; get a 2 to 4 unit property, honestly in San Diego it will most likely be a 2 unit. I am assuming you get BAH and do not live in the barracks, if that isn't correct, you're right, you won't qualify for a mortgage in the San Diego area.
Everyone is different, I would not invest in a condo or try and do a hard money deal on my first purchase. I understand the desire to get into real estate and start making things happen but if you genuinely have no cash you could put yourself in a bad financial position. Emergencies occur and you need to be able to pay for them, closing costs almost always have to be paid out of pocket, you can always use someone else's money but it can be hard to find someone who wants to give money to someone with no experience.
I would recommend saving some money prior to purchasing a property. Investing in real estate with no money is typically a bad idea, especially for those that are brand new and learning.
Quote from @Tristin Crum:Thank you so much for your reply! I was so eager to start in real estate investing especially after watching all this videos about it, but now that I'm starting to get a little more into it and see what options I have to start, I have found myself stuck. I think I will continue my journey by saving up or trying another business. My goal is financial freedom. It's just a bummer for me the situation I'm in rn.
As an active duty service member I would recommend trying to use that VA loan, you can use income from other units to qualify for the loan; get a 2 to 4 unit property, honestly in San Diego it will most likely be a 2 unit. I am assuming you get BAH and do not live in the barracks, if that isn't correct, you're right, you won't qualify for a mortgage in the San Diego area.
Everyone is different, I would not invest in a condo or try and do a hard money deal on my first purchase. I understand the desire to get into real estate and start making things happen but if you genuinely have no cash you could put yourself in a bad financial position. Emergencies occur and you need to be able to pay for them, closing costs almost always have to be paid out of pocket, you can always use someone else's money but it can be hard to find someone who wants to give money to someone with no experience.
I would recommend saving some money prior to purchasing a property. Investing in real estate with no money is typically a bad idea, especially for those that are brand new and learning.
@Manolo Tamayo Ramirez - So you can try to find a hard money lender out there who offers a higher ceiling on LTV. In my area here in Omaha, NE, I have a couple guys that I work with that have private lenders that will do 100% LTV. They are out there you just have to network. Also you may want to try getting a hard money loan and a separate rehab loan if you really have the numbers down. As the other guy replied, there are things that can go wrong that you will need contingency/reserve money for though, so be careful. Also, do you listen to the bigger pockets podcasts at all? I was listening to a couple the other day and found this pretty unique woman investing out of Detroit. You should check her website under products and see if she has a higher LTV to offer you or at least the rehab: https://www.ashleyhamiltoncons... if you go under products she has an application for a hard money loan with her. If I remember correctly, she offers one for 30 years which is strange because its more like a traditional mortgage, but better rates than a normal hard money loan. I'll see if I can get you a hard money lender that offers 100% LTV, and I will get back with you.
Quote from @David U Mccabe:
@Manolo Tamayo Ramirez - So you can try to find a hard money lender out there who offers a higher ceiling on LTV. In my area here in Omaha, NE, I have a couple guys that I work with that have private lenders that will do 100% LTV. They are out there you just have to network. Also you may want to try getting a hard money loan and a separate rehab loan if you really have the numbers down. As the other guy replied, there are things that can go wrong that you will need contingency/reserve money for though, so be careful. Also, do you listen to the bigger pockets podcasts at all? I was listening to a couple the other day and found this pretty unique woman investing out of Detroit. You should check her website under products and see if she has a higher LTV to offer you or at least the rehab: https://www.ashleyhamiltoncons... if you go under products she has an application for a hard money loan with her. If I remember correctly, she offers one for 30 years which is strange because its more like a traditional mortgage, but better rates than a normal hard money loan. I'll see if I can get you a hard money lender that offers 100% LTV, and I will get back with you.
Thank you so much for this information! I'll be definitely looking into that as well as the podcast that you just shared. I'll keep doing my research a little bit further about this 100% LTV lenders.
Quote from @Manolo Tamayo Ramirez:
Quote from @Tristin Crum:Thank you so much for your reply! I was so eager to start in real estate investing especially after watching all this videos about it, but now that I'm starting to get a little more into it and see what options I have to start, I have found myself stuck. I think I will continue my journey by saving up or trying another business. My goal is financial freedom. It's just a bummer for me the situation I'm in rn.
As an active duty service member I would recommend trying to use that VA loan, you can use income from other units to qualify for the loan; get a 2 to 4 unit property, honestly in San Diego it will most likely be a 2 unit. I am assuming you get BAH and do not live in the barracks, if that isn't correct, you're right, you won't qualify for a mortgage in the San Diego area.
Everyone is different, I would not invest in a condo or try and do a hard money deal on my first purchase. I understand the desire to get into real estate and start making things happen but if you genuinely have no cash you could put yourself in a bad financial position. Emergencies occur and you need to be able to pay for them, closing costs almost always have to be paid out of pocket, you can always use someone else's money but it can be hard to find someone who wants to give money to someone with no experience.
I would recommend saving some money prior to purchasing a property. Investing in real estate with no money is typically a bad idea, especially for those that are brand new and learning.
Thank you for your service. You have earned the VA loan benefit and should make use of it at some point.
I have not read this book and in a hot seller's market it is my belief that there were few options for low money down RE (or more accurately a lot of competition from the buyer's side). Bigger Pockets "The Book on Investing in Real Estate with No (and Low) Money Down". As the market transitions to more a buyer friendly market, sellers may become more receptive to alternative options to conventional financing. Owner financing, lease options, assumed loans, etc.
Hopefully the book provides you some options to consider.
Good luck
@Manolo Tamayo Ramirez I am in the SD area and invest there and other cities in California. Would be more than willing to jump on a quick call and answer any questions you may have.
Definitely take advantage of the VA loan, 0% down. If you need the names of a few local VA lenders shoot me a message.
Quote from @Mark Frattini:
Definitely take advantage of the VA loan, 0% down. If you need the names of a few local VA lenders shoot me a message.
Yes but the problem right now is that I'm living in a very expensive area where if I get approved for the VA Loan, I wouldn't be able to buy any property with the amount they approve me for. And one option would be using it out of state but I can't either because VA Loans are for the primary residence I heard so I would have to be living in the property for a year.
@Manolo Tamayo Ramirez I would learn about wholesaling, you can make a quick $10K-$20K just by wholesaling one deal. That would be a good way for you to save up some capital to then go and use a DSCR loan on a place if you wanted to do a rental. You will have to come up with 20-25% down depending on the lender but that will allow you to get your first property. With DSCR loans the lender goes of the debt service of the property as long as the rental numbers work they can typically loan to you.