How to go about my first ever real estate deal with small amount of debt, no job.

Question

Hey everyone! I’m looking for some insight and guidance.

I’ve been studying real estate more recently, watching videos on hard money lending, seller financing, ROI, cash-on-cash returns, and how to properly run the numbers (still working on mastering that). As I’ve learned more, new questions have come up about cash flow, expenses, and realistic expectations. I know many investors aim for a 10–12% ROI, which seems like a reasonable goal. Before that, I’d like to share my current situation so I can get realistic feedback.

My Current Life Situation

I have around $5K in credit card debt, with about a month and a half left of no interest. I also have about $2K in savings, which I’m using to pay down that debt. Most of this debt came from necessities, not luxury spending. I am just so tired of not having any money to simply eat, buy things I want, and live stress-free.

My small side business (3D printing and reselling) isn’t generating much income, and I’ve been applying for jobs with no success so far. This has been stressful, and it’s a big reason I’m motivated to get into real estate, to pay off the debt, start building equity and wealth, and ideally have tenants covering the mortgage with some cash flow on top, with a property manager handling the day-to-day.

Starting With Seller Financing?

Given my current situation, seller financing feels like the most accessible strategy. These deals can be flexible depending on the seller’s motivation, and the structure can often be tailored creatively. I still need to learn how to talk to sellers, realtors, and property managers, but I know that part just comes from doing it and gaining experience.

One idea I’ve considered is partnering with a friend, investor, or family member to cover the down payment and initial reserves (vacancies, repairs, etc.). If a seller requires a certain percentage down, a partner could help make the deal feasible. After purchasing the property, I’d hire a property manager to handle tenant screening and the day-to-day issues to keep things low-stress.

However, I know there are ongoing expenses such as vacancy, repairs, maintenance, and more. What typical percentages should I plan for? And what other expenses should I absolutely expect as a new rental property owner?

Hard Money Loans → BRRRR → DSCR as a Second Step?

If I started with seller financing and built some equity after 2-3 years, then I imagine a second step could be using a hard money loan to do a BRRRR project, and eventually refinance into a DSCR loan if the numbers allow it.

My Main Question

Given that I currently have:

No job, very limited-to-no savings, some debt, no personal reserves, would this path make sense for someone in my situation? Or would it be too risky or unrealistic at this stage?

I’d really appreciate any feedback, perspectives, or reality checks. Thanks!

Colleen F. · Answer

@Michael Ochoa  you think you are broke now, buy a house.

If the 3 D printing business isn't working for you and you have done everything you can to up visibility and get it going seriously, find a job any job.

Many temp agencies do temp to hire.  How are you going to pay your bills when 0% interest runs out?  Who is going to partner with you? to be a partner you have to bring something to the table, if it isn't money it could be skills but  if you had skills I think you wouldn't be here, you would be selling them and your idea to your people you know to reach your goals. If you set some goals on getting cash reserves and develop relationships you could get there into real estate in the future but now isn't the time.

Chris Seveney · Answer

With what you describe, I would strongly recommend you do not start investing in real estate. Real estate is very capital intensive and without a job in very little cash, I would not enter the real estate realm at this time

Nicholas L. · Answer

@Michael Ochoa

very short answer: no, you're not ready yet.  just save up enough and put yourself in a financial position where you can begin with your very own house hack.  no need to start with something exotic or risky.  it just makes zero sense.

if that takes a year or two, so be it.

Michael Smythe · Answer

@Michael Ochoa how hard are you willing to scratch & fight for a better life?

How many hours are you REALLY willing to work on a weekly basis?

WARNING: 99% of people lie to themselves about the above and are really just looking for a miracle or a get-rich-quick scheme.

If you're serious, you MUST start building your network, creating systems to stay top-of-mind with that network - all while also looking for potential deals for your network.

Sound fun?

IT'S NOT!!!

Here's some copy & paste stuff to think about...

--------------------------------------------------------------------------------------------------

Per this NY Times article, the average American knows around 600 people.
https://www.nytimes.com/2013/02/19/science/the-average-american-knows-how-many-people.html#:~:text=The%20average%20American%20knows%20about,do%20you%20know%20named%20Kevin%3F

Per the US Census Bureau, the average American moves 11.7 time in their life, which based upon an approximate lifespan of 84 years, works out to be about every 7 years.
https://www.census.gov/topics/population/migration/guidance/calculating-migration-expectancy.html#:~:text=Using%202007%20ACS%20data%2C%20it,one%20move%20per%20single%20year

So, if the average American knows 600 people and they each move about every 7 years, that means that the average American knows around 85 people that move in any given year.

How many of those moves do you want to be involved in?

To maximize the number of transactions you’re involved in you will need to:

• Be Top of Mind when they think about moving - which requires consistent reminders.
• Be seen as an Expert – which requires a consistent message and Evidence of Success stories
• Gain their Trust – which requires communicating with integrity

So, start out by CONSISTENTLY posting what you are doing on whatever social media channels you currently use. Not on any? You better fix that! You may also want to figure out which channels your family & friends use the most and get on those if you’re not on them currently.

What should you post?

How excited you are about what you’re doing in real estate investing! Share stories about your successes AND challenges. Then, ask them for their help!

IMPORTANT: do NOT ask people for THEIR business, ask for referrals! Why? Because they will get defensive if they feel you are pressuring them. Remember, they can always refer themselves😊

Use one of the ideas below to trigger who they know that they could connect you with:

• Just inherited a home
• Had a loved one pass away
• Is behind on their mortgage or tax payments
• Has a relative that can’t take care of their house anymore
• Has a house they’re having trouble selling
• Is facing bankruptcy
• Knows a probate attorney
• Knows a bankruptcy attorney
• etc

Putting this in OVERDRIVE

Create a spreadsheet (Excel or Google Sheet) listing everyone you can think of that would recognize your name or face.

Why a spreadsheet?  Because later, you can easily upload to a CRM like Constant Contact to create an email list!

Create columns for Name, email, cell and even Street Address, City, State, Zip and then contact info: Last Contact, Relationship, Status.

Then start calling these people. Divide the number of people on your list by 20 - and that’s how many you want to try to target daily.

Whether you get ahold of them or leave a vm, use 1-3 of the above triggers for referrals.

Why only 1-3 off the list per contact? Because on average, we can only remember three things at a time. If you try to go over the whole list, you’ll lose the attention of the average person and they won’t remember anything!

It should only take you about a month or two to contact everyone on your list and then the tough part – you start all over again.

Be sure to also ask what social media channels they are on and connect with them there.

Why the repetition? Because it takes repetition for people to remember things and you have to be top-of-mind when they encounter a potential client for you!

Have you ever been to McDonalds? Of course you have! So, why is McDonalds still spending billions on advertising?

One more tip – people remember stories that trigger their emotions. So, tell a story of how you (or a fellow wholesaler) helped a seller out with their challenge(s). Change your story each month as different stories will resonate with different people AND use each story to emphasize one of your “who do you know…” questions.

One last thing – we recommended you create a Status column on your spreadsheet, now we’ll explain why. If you find someone that seems to know a lot of people needing your services, wouldn’t it make sense to focus more resources on them? Conversely, you will run into people on your list that just seem to be a waste of time, so you’ll want to avoid them. So, create status codes for both of these and a few in-between codes to help you work smarter, not harder.

Roberto Reyna · Answer

Definitely wait. No need to rush risk.

Jaron Walling · Answer

If a ship is sinking you need to fix the hole. Doesn't matter if it's slow or the Titanic running into an iceberg. Financial stability looks different for everyone; getting into REI without it is crazy.

"Buying a house is will fix my finances" - Person that claims renting is throwing money away

When you rent you don't have to fix a garage door that started fall apart in 27 degree weather with snow on the ground. Renting buys you time, gives you flexibility, and lets you go deeper on strategies that align with your future goals. I fixed my garage door, saved at least $1000, but only because I took the time to develop skills to do so.

Bruce Woodruff · Answer

I agree with @Nicholas L.....Although yes, of course you could get into the RE game somehow and do something.....it would be much smarter to just wait a bit. Get a steady source of money flowing in regularly and then go for it.

You have zero money for back-up when something bad happens (note that I said when, not if)

IMHO, you are setting yourself up for failure. Real Estate will be there next year, just get your house in order first. Use that time to study more and get a solid plan ready to go. Figure out which type of investor you want to be, and get a realistic plan of action down on paper.

Just my $.02

Caleb Brown · Answer

As others said get your financial foundation in order. It is unwise to chase the carrot of real estate with 2K in savings and income being inconsistent. It won't answer the need you have. You need consistent $$.  Find a job or two, get rid of those CC debts then save. Once you have those things in order seller financing is a great option. You can network as you do these things, you can also learn during the beginning stages.

Aaron Zimmerman · Answer

You need to get your financial house in order first. I know the job market is not ideal but ideally just find any job so you can get out of debt.

from there, try to focus your time on increasing your skills and value to the marketplace. Real estate has great roi over the long term but the best roi you'll get in the short term is self education. I'd recommend that first.

then with any additional time, I'd spend it on Learning more about real estate and going to networking events. Once you're ready, you'll ideally have the capital, network, and the knowledge to execute. You could also provide value to existing real estate investors at these meetups as well and someone might be willing to mentor you in exchange.

How to go about my first ever real estate deal with small amount of debt, no job.

My Current Life Situation

Starting With Seller Financing?

Hard Money Loans → BRRRR → DSCR as a Second Step?

My Main Question

Most Popular Reply