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Jeremy Martinez
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New to Investing Please help

Jeremy Martinez
Posted Jan 6 2023, 08:05

Hello,

I'm new to investing and have been approved through a lender and have a down payment. I currently own a primary home that I will rent out once I find another home. I don't have 20% down or I would stay at my current home. I currently don't have a network for off market deals but I do have a real estate agent for the MLS. I'm thinking of trying to find a property where move in as owner occupied and rent out a year from now and kind of rinse and repeat. What do you think would be the best steps in my current situation? Can I use my current lender for off market dealers from wholesalers?

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Ramandeep Sidhu
  • Rental Property Investor
  • San Jose, CA
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Ramandeep Sidhu
  • Rental Property Investor
  • San Jose, CA
Replied Jan 6 2023, 08:47

Wholesalers generally offer cash purchases to the seller they have under contract. If you want to use a lender to buy the property in cash, you could potentially use a hard money loan or a private lender, or even a combo of both. 


It is unlikely that a traditional loan would be an option for a wholesale deal, unless the seller is willing to work with you and the property qualifies for a traditional loan.

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Sanat Bhandari
  • Investor
  • Omaha, NE
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Sanat Bhandari
  • Investor
  • Omaha, NE
Replied Jan 6 2023, 09:19
Quote from @Jeremy Martinez:

Hello,

I'm new to investing and have been approved through a lender and have a down payment. I currently own a primary home that I will rent out once I find another home. I don't have 20% down or I would stay at my current home. I currently don't have a network for off market deals but I do have a real estate agent for the MLS. I'm thinking of trying to find a property where move in as owner occupied and rent out a year from now and kind of rinse and repeat. What do you think would be the best steps in my current situation? Can I use my current lender for off market dealers from wholesalers?

It really depends on the condition of the property. If it is decent and inhabitable, your lender should be able to finance it 

If it is not inhabitable, then you could get a construction loan through your lender to bring the property up-to-speed and then refinance into a permanent loan once it's done. I like this approach since you have a lot more control over your equity than the standard financing with 20% down. A good lender should be able to do both, the construction loan and the ensuing permanent financing loan 

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Wale Lawal
  • Real Estate Broker
  • Houston | Dallas | Austin, TX
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Wale Lawal
  • Real Estate Broker
  • Houston | Dallas | Austin, TX
Replied Jan 6 2023, 13:03

@Jeremy Martinez

You should connect with local agents and investors and look for deals that fits your investment criteria.

Get as much knowledge and experience as possible and find a mentor.

All the best!

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Nathan Gesner
  • Real Estate Broker
  • Cody, WY
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Nathan Gesner
  • Real Estate Broker
  • Cody, WY
ModeratorReplied Jan 7 2023, 06:21
Quote from @Jeremy Martinez:

Welcome to the BiggerPockets forums!

Your plan could work, but only if you purchase a new home that will cashflow as a rental. It's going to be hard to find a house in Denver that allows you to put down 5% and make it cash flow.

Here's a guide that describes what good cash flow looks like and how to analyze a property.

https://www.biggerpockets.com/...

  • Property Manager Wyoming (#12599)

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Matt M.
  • Realtor
  • Denver, CO
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Matt M.
  • Realtor
  • Denver, CO
Replied Jan 7 2023, 13:03

Use your agent; that is what he is hired to do... Don't waste time with wholesalers as you'll probably get burned. 

I've had many clients use that strategy, and some have bought 10+ homes that way. 

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Tony Iwen
  • New to Real Estate
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Tony Iwen
  • New to Real Estate
Replied Jan 7 2023, 13:26

First off, congrats on starting this journey. It is definitely one that requires problems solving skills in order to achieve the greatest results.

It sounds like you’re fairly open to trying anything that might work. I am not super familiar with your area and the inventory that is available.

I know that I my area when people are describing situation very similar to how you are. I often recommend house hacking in a multi-family house. This way since you are living in the house you are able to get in with a smaller down payment. Since it is a multi-family house there is less of a demand generally. You will learn a lot more quickly what it truly means to be a real estate investor. 

Best of luck on your journey!  

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Ben Rhodin
  • Realtor
  • Denver, CO
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Ben Rhodin
  • Realtor
  • Denver, CO
Replied Jan 9 2023, 07:59

Hey @Jeremy Martinez! Welcome to the forums you are in the perfect space to build a lasting Real estate Portfolio.  You are on the right path with house hacking a new house each and every year. That is the easiest and most approachable strategy to achieve Financial freedom. A couple of things came to mind after reading your post.

@Matt M. hit it on the head, you have an agent... use them and leverage their knowledge and expertise to assist you in developing a game plan for your investing. If he is an investor himself he should know how to find you the deal you need. When house hacking especially you shouldn't mess with wholesalers, since the power is in the lending opportunity which usually won't work on a wholesale deal. Your agent should, however, be tapped into off-market channels and if something fits your goals he should offer it to you. If he isn't guiding and strategizing with you, and/or isn't an investor himself it may be time to move on and find a new one that is better suited to your goals. You are only as strong as your team!

You shouldn't have too much of a hard time finding a new house hack opportunity on the MLS, depending on what rental strategies you are open to. There are still opportunities for cash flow here in Denver, and I have numerous clients achieving 10%+ COC returns on their House hacks. You just have to look beyond the traditional long-term rental approach. And especially if you are moving into the property, you have to look at the whole picture, as you are gaining rental income from your current house, and offsetting your mortgage payment on the new house (hopefully if you house hack). So you aren't just earning passive income, but you are also saving more each month. and that's not even mentioning your loan paydown, appreciation, and tax benefits you get as well.

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Tim Emery
Pro Member
  • Specialist
  • Englewood, CO
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Tim Emery
Pro Member
  • Specialist
  • Englewood, CO
Replied Jan 9 2023, 10:47

@Jeremy Martinez Welcome to investing. If you are working with a traditional lender to buy your properties you are much better off using the MLS and agents. Wholesalers expect fast closes and cash, traditionally lenders can't do that. Check out some of the meetups around town. There is one tonight, tomorrow night and Saturday morning.

I am seeing a lot of deals on the MLS right now.

Good luck

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Ben Einspahr
  • House Hacking Specialist
  • Denver, CO
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Ben Einspahr
  • House Hacking Specialist
  • Denver, CO
Replied Jan 9 2023, 12:00

@Jeremy Martinez, I would agree with most others on here. Sounds like you need to find an agent specialized in what you are trying to do. Nothing personal, just business.

If you are looking to HH, don't waste your time with wholesalers. 99.99% of house hacking can be found directly off the MLS.

Last thing. Find yourself a local meet up to expand your network and connect with others that are doing the same.

BEst of luck.