How's it going everyone? I'm planning on investing in real estate as soon as possible and wanted everyone's opinion on what my best option would be starting out. Currently i'm working on getting my bachelor's degree and working weekends.
I was thinking about purchasing a foreclosed or distressed property and wholesaling it to an investor within my area just so I can start to build up my money to use to invest in fix and flips or rental properties in the near future. All suggestions are much appreciated.
My suggestion is for you to purchase a great deal (foreclosure, REO, whatever) for you to live in, rehab it, get a HELOC on the equity, and then starting investing with the HELOC. If it's a home that you would like to live in anyway, it's a great method to learn and build capital with less risk.
Hi @Connor B.
Unless you are living with your parents, you should do a search on BP for "house hacking" and explore options for living in your property while you rent it out and/or fix it up using very low downpayment options. HELOCs (home equity line of credit) are also really useful.
Get some business cards printed up with "property investor" as your title and start handing them out to friends, family and colleagues. Always be networking with people who can help find deals in your local market and consider partnering with more experienced investors who need hungry, hard working guys willing to do a lot of running around while they learn the ropes.
Finally, find out what other BP members are in your local area, go to local REA meetings and invite people for coffee while you pick their brains. Most investors love helping out young investors like yourself.
Thank you @Bryan L. i'm not too familiar with HELOC but, i'm going to do some research to learn more about it.
Thank you @Colin Murphy I am still currently living with my parents but trying to learn as much as possible. I have been trying to meet with experienced investors and plan on attending REA meetings in my area.
HELOC - Home Equity Line Of Credit.
For example, say that you buy a fixer-upper for $50,000 and put $10,000 into the repairs. And this can sometimes be done with no (or little) money down. So, you are all-in at 60. Now that you've fixed the place up, it may appraise for 100. And you may be able to go to a bank and get a HELOC (which would be in second position in this case) for 80% of the value, minus your first mortgage. In this case, 80% of 100 minus 50 (assuming that you did the repairs yourself and/or had the cash to pay for them). So, they give you a line of credit for 30. This can be set up as a revolving line with check writing capabilities. Basically, it's like a credit card with a 30K limit that you can use for anything that you want. And it usually has a good interest rate (mine is currently prime +0 or something very close to that which is the 3-4% range). Fees are usually pretty low too. Having great credit will help you with this though (and may be required).
So, what do you do with that 30K line? Buy a house to fix and flip, or buy a rental to hold, or use if for marketing, or whatever (most people use them for tats and 4-wheelers which I do NOT recommend).
@Bryan L. That was an excellent explanation. Now I truly understand what HELOC is and think thats a great idea for me to start out with. Thank you so much for the info!
You are welcome.
This post has been removed.
@Chet Maxwell I just went and bought your app and it doesn't work at all. I click start and it tried to bring me to a domain that is forsale...
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.