Starting with small savings—creative funding tips?

Question

Hey everyone,

I’m in college with a steady internship income, solid credit, but limited cash. I’d love to hear how others financed their first rental when funds were tight. What strategies or programs worked best for you, and what would you do differently?

Thanks for sharing your experience!
—Jack

Greg Kasmer · Answer

Jack - I've heard people say there's several parts to a deal, one is money/capital, but undoubtedly there is also finding/acquisition the deal as well as the execution/operations of the deal. If you're short on one, you can look to partner with others for the other components. In your case, I would focus on finding/locating deals and provide the "hustle", whereas you lean on others for the cash and ability to secure the loan. Good Luck!

Jack Spicer · Answer

Thank you all for the helpful advice and encouragement. I really appreciate everyone taking the time to share their experiences—it's been super valuable as I continue learning and figuring out my next steps.

Theresa Harris · Answer

I purchased my first home while I was a grad student.  I had enough for a down payment and my parents co-signed the loan for me.  I made all the payments myself, but they knew how important it was to get started early (they had rentals of their own).  It was also cheaper for me to buy a condo, than it was to rent a place.  I got a 2 bed condo (Vancouver, BC is expensive) and rented out the other room.

Chris Seveney · Answer

House hacking is hands-down one of the most common and effective ways to get started when cash is tight — especially for someone in your position.

Most people start by using an FHA loan (3.5% down) or conventional loan (as low as 5% down) to buy a duplex, triplex, or even a 4-unit. You live in one unit, rent out the others, and let the rental income offset (or completely cover) your housing costs.

It’s a smart move because:

If I could go back, I would’ve house hacked earlier. It’s not flashy, but it builds a strong foundation and opens doors to scale up from there.

Aaron Zimmerman · Answer

There could be down payment assistance programs in your state but they may be restrictive for what you may be looking to do.

otherwise, you could maybe get a friend to go in on the loan with you that has more income

Bryce Jamison · Answer

You can house hack so your down payment is significantly lower than a purely investment property.

You can also invest a few hundred dollars into getting your license and all associated memberships then use the proceeds from the commission of buying your house as a down payment.

I'm seeing a lot of partnership advice. The problem is when you're first starting out with no experience or a network of buyers and sellers it may be very challenging to get people to agree to cut you in on the profits when you're not putting any of your own money in the deal.

We've all been in your position. When your young your time horizons are shorter and you want things now. The reality is this, more often than not, is a marathon and not a sprint. Maybe it takes you 5 years to save up for your first place. That's okay because after that you could house hack a new house every other year, easily be a millionaire by 35-40, and probably be able to retire by 45-50.

Doug P. · Answer

Jack, I purchased my first rental with a lease option. The lease was for the seller's payments and the option was for the mortgage balance at the time of exercise. No money down and I took over their tenant. I raised the rent to market and was instantly making $300/month cash flow and had $25,000 in equity.

I recently heard a statistic that 50% of first-time landlords become disillusioned and sell their property within 1 year of purchasing it. If that's true that makes for a massive market of tired landlords to buy from.

Brendan Mullenholz · Answer

Partnering can be a good way to pick up slack in the financing department.  Always have a good long conversation about it with who you're partnering with to make sure you're both on the same page.

Starting with small savings—creative funding tips?

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