Hi, I just joined and am just starting in investing. My plan is to invest in 2-4 units. My question is what should I do first? Should I get financing lined up or talk with a realtor? Is there a way I can get into a duplex with no money down? Thanks, Mike
Welcome to the forum! You are in the right place. There are many ways to buy investment properties but if you are looking to do it with creative financing (no money down) I highly suggest you take a look and talk to Ben Leybovich and his CCFU program.
Those are good questions actually. Let's think these through:
Financing is important because when you've found a bird you have to have a way of bringing it down, which in most general terms is a function of having access to money - financing is important.
Talking to a realtor will result in gaining access to MLS listed property. Generally speaking, anything that is listed in the MLS will need to be bought using conventional (all cash to buyer) financing. Thus, until you have the financing lined up, don't waste time talking to realtors.
Finally, lining up financing may involve elements other than simply going to the bank and getting pre-qualified. And finding property should involve things other than looking on the MLS. If you don't understand specifics of what I just said, then the proper thing to do now is to gain some education :)
I have dealt exclusively with single family so far but am entering into negotiations for 3 duplexes in a row down the street from 2 of my single family units. My single family units are 3/1/1, 900 sq ft built in 50's with vinyl siding and original wood windows....each need replaced in both houses in next 10 years best case scenario.
The duplexes are 3/2/1, each side 1200 sq ft...12 years old, on a slab vs crawl space. I got both my single family units over there in the $30's and invested another $20k in each....so about $110,000 for both. 1 rents for $750 and the other for $800.
The duplexes rent for $750-$795 but even if i get them for loan payoff of about $138,000 each, that is $28,000 premium to the single family units.
How do you go about comparing apples to oranges like this? The duplexes are 100% occupied and I like the area. Is there a premium expected for newer units....3 in a row near other units i already own? Also for the fact they are currently occupied and cashflowing vs vacant for 4 months during renovation?
Am I just creating an excuse to pay more because I want these units or should the disciplined side of me win out and stick with older, single family units that can be purchased and rehabbed for less?
Lining up financing will show a realtor and any sellers that you are at least somewhat serious and not just wasting their time.
If you have no idea of how much financing you need to line up you may want to have a discussion with a realtor first to clarify your goals and the range of prices of the types of properties that match your goals.
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