Need help buying a buy and hold property with no money

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Need help buying a buy and hold property with no money

Jennifer Fernéz
Investor · Reading, PA · Member since 2014 · 167 posts · 49 votes

Hi, I'm trying to find out information for buying a small multi unit property.   I have a savings account with about 5k in it, which is not enough to pay for 25% down plus repairs.   I'm looking at properties in the $40,000-$100,000 range.   What is a good way to go about buying properties if you do not have a lot of money?   Is it possible to get a hard money loan to use as a down payment for a traditional 30 year loan?   Also, what is the best way to go about renovations with very little money?

Any suggestions would be greatly appreciated.    Thanks!

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Kevin Romines
Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
12y

I am buying on a contract and then turning and lease optioning the property out. I tell the seller verbally and in my purchase contract, that I'm not closing on the deal until I find my lease option tenant. I write a 60 day option period in my purchase contract. My down payment, reserves and small profit comes from the non-refundable option fee. Basically negotiate a smaller down to the seller than you will get on your option fee. I try to get 5000 more than my down to the seller. 3000 or so goes into a reserve account, 2000 is profit. I generally try to get 100-250 a month payment spread over my payment to the seller. I generally get 5000 to 15000 more on the back end when tenant buys, as I have paid down the balance a little and their balance doesn't go down except for the option fee they paid. I only do these on single family houses. But I have bought the last 4 houses for no more than 1 dollar out of my pocket.......... Now where else can an investor get rental property for 1.00 down? 

If you can't sell the house, your out your 1.00 and time, although with careful scrutiny of the numbers, you should be able to close on the deal........... I'm closing 2 more this week.

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  • Bill Jacobsen
    Salem, OR · Member since 2013 · 701 posts · 159 votes
    12y

    You cannot borrow the down payment.  It sounds like you need an equity partner.

    Bill

    0Reply
  • Jennifer Fernéz
    OP
    Investor · Reading, PA · Member since 2014 · 167 posts · 49 votes
    12y

    where is the best place to find a partner?

    0Reply
  • Mark Scarola
    Developer · San Diego, CA · Member since 2014 · 294 posts · 70 votes
    12y

    If you do the legwork of finding a specific property that's a good deal (undervalued and has real potential) then you can go to your local real estate investment group(s) and network with people there who have money and are looking for deals. You may be able to make some money when they do the deal (look into wholesaling on this site if you're curious about this) or they may want be interested in some partnership arrangement. There's also potential for a partnership where both parties have something to gain. If the partnership thing doesn't work out but you can locate and wholesale a couple of properties you can start to accumulate enough money for a down payment that you can then use for a property that you can buy yourself.

    0Reply
  • Carole G.
    Investor · Durango, CO · Member since 2008 · 163 posts · 59 votes
    12y

    You might try talking to older relatives who are close to retiring or have already retired, and their main retirement vehicle is stocks and bonds.  You can probably offer them a better rate of return than they are presently getting.

    0Reply
  • Scott Stevens
    Savannah, GA · Member since 2014 · 100 posts · 38 votes
    12y

    Jennifer,

    I admire you wanting to get started, definitely something to do sooner than put off. However, I would recommend that with only 5k in savings that you build up your cash reserves a bit more before seeking a buy and hold. I've been fortunate that nothing has occured at my houses "yet", but lets say a fire happened and I had to pay my insurance deductible, a tenant suddenly moves out of another house I have and takes all the appliances and ruined the carpet, etc. Lets say another emergency happened or I lost my job. I'd be wiped out and would have to scramble to sell off possesions, sell stocks, etc to make ends meet.

    That being said, I would find good deals and try to wholesale until you build a better cash reserve for the buy and hold property. Most lenders would want you to have 6 months reserves anyways.

    0Reply
  • Account Closed
    Homeowner · Pittsburgh, PA · Member since 2014 · 854 posts · 511 votes
    12y

    @Jennifer Fernéz 

    I am in a similar situation as well and trying to figure out how I am going to get started with my REI career. If an opportunity presents itself, I will look into whatever creative options are available to me. Until then, I am focusing on building up my savings and reading as much as possible.

    0Reply
  • Kevin Romines
    Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
    12y

    I am buying on a contract and then turning and lease optioning the property out. I tell the seller verbally and in my purchase contract, that I'm not closing on the deal until I find my lease option tenant. I write a 60 day option period in my purchase contract. My down payment, reserves and small profit comes from the non-refundable option fee. Basically negotiate a smaller down to the seller than you will get on your option fee. I try to get 5000 more than my down to the seller. 3000 or so goes into a reserve account, 2000 is profit. I generally try to get 100-250 a month payment spread over my payment to the seller. I generally get 5000 to 15000 more on the back end when tenant buys, as I have paid down the balance a little and their balance doesn't go down except for the option fee they paid. I only do these on single family houses. But I have bought the last 4 houses for no more than 1 dollar out of my pocket.......... Now where else can an investor get rental property for 1.00 down? 

    If you can't sell the house, your out your 1.00 and time, although with careful scrutiny of the numbers, you should be able to close on the deal........... I'm closing 2 more this week.

    3Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    12y

    Jennifer,

    You might not be truly ready yet though you want to, the stars have not aligned for you yet. 

    If you have limited funds you will set yourself up for failure as you will need more then that for reserves. My experience with multi family under $100k will be most likely they are in rough areas where you will experience higher then normal maintenance and vacancy along with theft. This could put you out of business fast. You might be better with SFR to get started when your ready.

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    0Reply
  • Paul Sorgi
    Real Estate Investor · Abington, MA · Member since 2011 · 356 posts · 114 votes
    12y

    Jennifer great questions to ask and the more answers you get the more questions you will have and the circle of Real Estate education begins.  My suggestion would be keep learning and when the time is right it will happen.  You will understand the deal, you will know where to get the money and others will have confidence in you to give you the money.  It does not happen overnight it is a process.  It took me almost a year to find the money while deals where all around me.  It all works out in the end.

    Get out their and Network tell everyone you meet what you do and what you are looking for!  (more stuff to learn)!

    0Reply
  • Jennifer Fernéz
    OP
    Investor · Reading, PA · Member since 2014 · 167 posts · 49 votes
    12y

    Thanks everyone

    0Reply
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