How did you fund your first deal

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How did you fund your first deal

Dyami Pike
Member since 2022 路 65 posts 路 21 votes

I'm looking at getting started in real estate and everyone talks about low/no money down. cause I've noticed that even a 10% down is $5k in my area, plus closing plus extra funds that the expect you to have. So even in the worst neighborhood in town I need $10k in cash. 

 My question is how did everyone fund there first deal(the part that the had to pay for)? 

did you save from your job, borrow from family, side gigs?

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Eliott Elias
Investor 路 Austin, TX 路 Member since 2021 路 9k+ posts 路 5k+ votes
3y

If the deal is good enough the money will come. I would rather borrow from investors than family. 

9Reply
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  • Taylor L.
    Rental Property Investor 路 RVA 路 Member since 2016 路 5k+ posts 路 4k+ votes
    3y

    I used a Self Directed IRA which I had built up over time through 401(k) contributions. I converted those into a Self Directed Roth IRA.

    6Reply
  • Claude Diamond
    Professional 路 Rancho Santa Fe, CA 路 Member since 2015 路 49 posts 路 39 votes
    3y
    Quote from @Dyami Pike:

    I'm looking at getting started in real estate and everyone talks about low/no money down. cause I've noticed that even a 10% down is $5k in my area, plus closing plus extra funds that the expect you to have. So even in the worst neighborhood in town I need $10k in cash. 

     My question is how did everyone fund there first deal(the part that the had to pay for)? 

    did you save from your job, borrow from family, side gigs?

    I was in my early 20's and bought a 25K condo from a bank with a bunch of cash advances from my credit cards. I do not endorse this strategy for many but it worked for me because I knew the area and the upward potential. I rented it out for years as a lease Purchase and made about $100 a month avg PCF. I refinanced it a few years later and bought another unit in the same development eventually, sold the condos for a huge 100K profit, moved to San Diego and it began a lifetime of fun and profitable investing.

    4Reply
  • Claude Diamond
    Professional 路 Rancho Santa Fe, CA 路 Member since 2015 路 49 posts 路 39 votes
    3y

    P.S.  Epilogue: I never went into credit card debt again. The business provides sufficient cash flow to pay all my bills in full every month.

    8Reply
  • Joseph Crunkilton
    Rental Property Investor 路 Oregon City, OR 路 Member since 2020 路 324 posts 路 780 votes
    3y

    Conventional financing. Saved up 20% down from work.

    You could use an FHA loan with househacking.






    7Reply
  • Dyami Pike
    OP
    Member since 2022 路 65 posts 路 21 votes
    3y
    Quote from @Claude Diamond:
    Quote from @Dyami Pike:

    I'm looking at getting started in real estate and everyone talks about low/no money down. cause I've noticed that even a 10% down is $5k in my area, plus closing plus extra funds that the expect you to have. So even in the worst neighborhood in town I need $10k in cash. 

     My question is how did everyone fund there first deal(the part that the had to pay for)? 

    did you save from your job, borrow from family, side gigs?

    I was in my early 20's and bought a 25K condo from a bank with a bunch of cash advances from my credit cards. I do not endorse this strategy for many but it worked for me because I knew the area and the upward potential. I rented it out for years as a lease Purchase and made about $100 a month avg PCF. I refinanced it a few years later and bought another unit in the same development eventually, sold the condos for a huge 100K profit, moved to San Diego and it began a lifetime of fun and profitable investing.

    That's awesome! Ive moved a lot so I'm familiar with a lot of towns and cities and looking at all of them to decide what has the most potential. I'm glad the credit card trick worked, I know some people can't do that! 
    thanks for the feedback! 
    0Reply
  • Dyami Pike
    OP
    Member since 2022 路 65 posts 路 21 votes
    3y
    Quote from @Joseph Crunkilton:

    Conventional financing. Saved up 20% down from work.

    You could use an FHA loan with househacking.






    I'm currently doing that with my job. I can't house hack right now cause we just bought a house last year. 
    thanks for the feedback!
    0Reply
  • Dyami Pike
    OP
    Member since 2022 路 65 posts 路 21 votes
    3y
    Quote from @Taylor L.:

    I used a Self Directed IRA which I had built up over time through 401(k) contributions. I converted those into a Self Directed Roth IRA.

    Interesting, I should look into what my 401k has done, since I don't track it. 
    thanks for the feedback! 
    0Reply
  • Eliott Elias
    Investor 路 Austin, TX 路 Member since 2021 路 9k+ posts 路 5k+ votes
    3y

    If the deal is good enough the money will come. I would rather borrow from investors than family. 

    9Reply
  • Jon KellyPro Member
    Investor 路 Bethlehem, PA 路 Member since 2016 路 929 posts 路 951 votes
    3y

    @Dyami Pike saved money from my W-2 job. You should also consider ~6 months of reserves, so maybe have $15k to start. 

    If saving $10-15k is a problem I would focus on that first before considering diving into real estate. You need to understand how to manage your personal cashflow before jumping into a business. Increase your income or reduce your expenses... 

    8Reply
  • Jared HottleBusiness Member
    Real Estate Agent 路 Cedar falls IA Waterloo, IA 路 Member since 2020 路 902 posts 路 549 votes
    3y

    I saved for years not knowing what to do with the money and then found real estate. If I could do it over I would start alot earlier and house hack with a conventional loan. 

    [email protected]319-288-5382
    Jared Hottle Real Estate59 Reviews
    WebsiteView Page
    7Reply
  • Paul Ivanov
    Contractor 路 Richland, WA 路 Member since 2019 路 19 posts 路 9 votes
    3y

    My wife and I saved a bunch within about 6 months and borrowed from family to get the rest for the 10% down.

    One of the best things we ever did was buy our first home which propelled us to where we are now with several homes under the belt.

    Approach with wisdom and dive in! 馃檪

    4Reply
  • Dyami Pike
    OP
    Member since 2022 路 65 posts 路 21 votes
    3y
    Quote from @Jon Kelly:

    @Dyami Pike saved money from my W-2 job. You should also consider ~6 months of reserves, so maybe have $15k to start. 

    If saving $10-15k is a problem I would focus on that first before considering diving into real estate. You need to understand how to manage your personal cashflow before jumping into a business. Increase your income or reduce your expenses... 


     I agree. That's actually what I started with. We've increased income by $20k or so for this coming year and we will decrease expenses by about $10k by the end of year, we have 6 months saved up just working on funding the real estate side now!

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker 路 Cody, WY 路 Member since 2010 路 28k+ posts 路 41k+ votes
    3y

    Increase your income, reduce your expenses, get your personal finances 100% under control, have no debt, and save up. 

    There are short-cuts, like borrowing from others or running up credit card charges, but those are fraught with danger. Be smart. There are very few people that successfully become wealthy through shortcuts.

    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    8Reply
  • Dyami Pike
    OP
    Member since 2022 路 65 posts 路 21 votes
    3y
    Quote from @Eliott Elias:

    If the deal is good enough the money will come. I would rather borrow from investors than family. 


    Of course! I'm just trying to find the money for down payments!

    2Reply
  • Dyami Pike
    OP
    Member since 2022 路 65 posts 路 21 votes
    3y
    Quote from @Nathan Gesner:

    Increase your income, reduce your expenses, get your personal finances 100% under control, have no debt, and save up. 

    There are short-cuts, like borrowing from others or running up credit card charges, but those are fraught with danger. Be smart. There are very few people that successfully become wealthy through shortcuts.


     That's what we are doing! Personal finances are taken care of or will be this year. The money I'm talking about is 100% for real estate, now that we have gotten our personal finances figured out!

    1Reply
  • Dyami Pike
    OP
    Member since 2022 路 65 posts 路 21 votes
    3y
    Quote from @Jared Hottle:

    I saved for years not knowing what to do with the money and then found real estate. If I could do it over I would start alot earlier and house hack with a conventional loan. 


    House hacking would've been how I started if I had known about this 5 years ago! And if I had started saving 5 years ago! 

    0Reply
  • Dyami Pike
    OP
    Member since 2022 路 65 posts 路 21 votes
    3y
    Quote from @Paul Ivanov:

    My wife and I saved a bunch within about 6 months and borrowed from family to get the rest for the 10% down.

    One of the best things we ever did was buy our first home which propelled us to where we are now with several homes under the belt.

    Approach with wisdom and dive in! 馃檪


     That's awesome! All I do( even at work) is real estate podcasts and research! I'm excited to get into it! We bought our house at low interest rate during the COVID market and I'm excited to get us our first investment property!

    1Reply
  • Carlos Ptriawan
    Member since 2019 路 7k+ posts 路 4k+ votes
    3y
    Quote from @Dyami Pike:

    I'm looking at getting started in real estate and everyone talks about low/no money down. cause I've noticed that even a 10% down is $5k in my area, plus closing plus extra funds that the expect you to have. So even in the worst neighborhood in town I need $10k in cash. 

     My question is how did everyone fund there first deal(the part that the had to pay for)? 

    did you save from your job, borrow from family, side gigs?


    well well well of coz it's from the job for the most part, the money doesn't fall from the sky, but I've investing since 19 years old, buying whatever land, whatever house I can purchase on my own and it just grows in there. And every 5 to 10 years, you move that investment to somewhere that would appreciate more.

    2Reply
  • Jay ThomasPro Member
    Real Estate Agent 路 Houston, TX 路 Member since 2021 路 1k+ posts 路 715 votes
    3y

    Househacking with an FHA loan is a great way to finance a property purchase if you have saved up at least 20% of the down payment from your income. It can help make homeownership more affordable, while also providing additional rental income when done correctly. Keep in mind that there are certain restrictions and requirements associated with FHA loans, so be sure to research thoroughly before committing. Good luck!

    [email protected]832-889-5607
    2Reply
  • Dyami Pike
    OP
    Member since 2022 路 65 posts 路 21 votes
    3y
    Quote from @Carlos Ptriawan:
    Quote from @Dyami Pike:

    I'm looking at getting started in real estate and everyone talks about low/no money down. cause I've noticed that even a 10% down is $5k in my area, plus closing plus extra funds that the expect you to have. So even in the worst neighborhood in town I need $10k in cash. 

     My question is how did everyone fund there first deal(the part that the had to pay for)? 

    did you save from your job, borrow from family, side gigs?


    well well well of coz it's from the job for the most part, the money doesn't fall from the sky, but I've investing since 19 years old, buying whatever land, whatever house I can purchase on my own and it just grows in there. And every 5 to 10 years, you move that investment to somewhere that would appreciate more.

    Thanks for the feedback! I agree, money doesn't fall from the sky, just trying to see how anybody did it. I know some maxed out CC and others borrowed money from family.
    0Reply
  • Dyami Pike
    OP
    Member since 2022 路 65 posts 路 21 votes
    3y
    Quote from @Jay Thomas:

    Househacking with an FHA loan is a great way to finance a property purchase if you have saved up at least 20% of the down payment from your income. It can help make homeownership more affordable, while also providing additional rental income when done correctly. Keep in mind that there are certain restrictions and requirements associated with FHA loans, so be sure to research thoroughly before committing. Good luck!

    Thanks for the reply! We can't do FHA because we just bought a property, but it was something we will consider in the future! 
    0Reply
  • Kiera Underwood
    Real Estate Agent 路 Oklahoma City, OK 路 Member since 2019 路 956 posts 路 600 votes
    3y

    FHA and house hacking! Bumped up price a bit over asking and asked seller to cover max allowed closing costs!

    2Reply
  • Michael Vittorio
    Investor 路 Bucks County, PA 路 Member since 2017 路 46 posts 路 16 votes
    3y

    @Dyami Pike I saved up from my day job. That might be the slowest way to do it and may be simply impossible for some. I was blessed enough to be able to do it.

    2Reply
  • Jaron WallingPro Member
    Rental Property Investor 路 Indianapolis, IN 路 Member since 2018 路 4k+ posts 路 4k+ votes
    3y

    Before I bought anything I got my finances under control and hammered out bad debts. This took 3 years. My friend and I also saved $$$ by sub leasing with another roommate. Up until that point I was blowing money all over the place. I had a car payment and a high cost of living. I sold a motorcycle to pay off the car. We basically lived with a stranger. Everyone tries to save money but from my experience BIG sacrifices have to be made to make BIG dents.  

    During this time I found a passion for cycling and turned it into MARKET RESEARCH. You can see rediscover a whole city while riding a bike. It's easy to find coffee shops, breweries, and up and coming neighborhoods. This is one way to get off the beaten path and find the neighborhoods with potential.

    Once I saved enough $$$ from the 9-5 job I started making low offers on distressed properties. It's not rocket science. 

    2Reply
  • Dyami Pike
    OP
    Member since 2022 路 65 posts 路 21 votes
    3y
    Quote from @Michael Vittorio:

    @Dyami Pike I saved up from my day job. That might be the slowest way to do it and may be simply impossible for some. I was blessed enough to be able to do it.

    I figured that would be the most common way to do it! Thank you for the feedback! 
    0Reply
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