Investor · Frankfort, IL · Member since 2015 · 206 posts · 55 votes
Friday off let me I troduce myself and say hello. I'm new to the board and from a sw suburb of Chicago. My wife and I recently built a new home and were fortunate to rent our first home and keep it. I've always loved real estate and saw my grandfather provide for his family with it. Well now it's my turn!
What's my best steps to find downpayment funds or a partner? My goal is to have 10 properties by the time I'm 40 and I'm currently 32.
Tia and look forward to some of the people I'm going to meet here.
Real Estate Agent · Logan, UT · Member since 2014 · 222 posts · 102 votes
11y
You'll need to both read Brandon Turner's new book on no/low money down investing, and bring in more money. After you've leveraged yourself out, you need to get more creative to keep the deals coming in. @Stephen Masek has a good point, getting another job will help. I got my real estate license so I could make my own offers, but last year I did enough as a Realtor and brought in enough money that way I was able to quit my day job. There are many ways to make money in real estate to generate cash that can invest in more buy and hold properties, be it bird dogging, wholesaling, flipping, or representing other investors as an agent. Good luck with your goal, sounds like it's going to be fun!
Investor · Fort Wayne, IN · Member since 2014 · 1k+ posts · 515 votes
11y
@Nick Versetto post a picture of yourself and network with people here. If you have limited experience and no cash what do you bring to the table for a partner? Rehab experience ect? Of course you could get owner financing and not need a down payment, or save the money you are now getting from rents. Real Estate wealth is real, but in reality its work hard and slowly build wealth. Best of luck.
Property Manager · Pittsburgh, PA · Member since 2012 · 267 posts · 136 votes
11y
To help save money I saw an interesting challenge online called the 52 week savings challenge. Starting on week 1 (now is a good time to start being a new year) you put away $52. Since there are 52 weeks in a year each week the saving's amount goes down by a dollar.....so week 2 $51.....so on and so on. As the end of the challenge approaches you are down to only saving a couple dollars a week. At the end of the year you have about $1,300 in savings from doing this challenge. I think its a fun way to save money and this amount can fund a first wholesale mailer, etc.
Investor · Eagle Mountain, UT · Member since 2014 · 38 posts · 7 votes
11y
Welcome to the forum!
I am in the same boat as you as I just built a new home and turned my other primary residence into my first rental property. I am currently reading Brandon Turner's book on no and low money down as @Skyler Smith suggested as I am also looking for ways to come up with a down payment on my next propery.
Investor · Frankfort, IL · Member since 2015 · 206 posts · 55 votes
11y
same to you lync. Let me know what you come up with. I've sent so many emails to small banks in my area this week. I'm trying to find a portfolio lender first and then try to figure out where to find the down payments from.
I've learned ton over the last year and know my market like the back of my hand. I just hope I can strike before it's too late.
Miami, FL · Member since 2012 · 612 posts · 189 votes
11y
How do you become a property investor when you don't have savings set aside?
Real estate investing without cash means that you need to take it slow and steady to build equity. The worst thing you can do is overextend yourself and trash your credit even further. Here is what I would recommend:
Find a house that you can either sublet, rent to own or by on a land contract. Now you have to make sure that you find a good quality house with either two or three bedrooms. Why? You want to buy a house that others would want to live in and one that is not going to turn into a money pit.
If you want to earn a little extra money each month, find a place to rent where the rent is below market and then make sure that the rental contract will allow you to sublet. This means that you can turn around and re-rent it out for more. Finding cheap rent helps. For example, you rent a house for $600. You then find someone to rent it for $675. Every month you make $75. Of course, if they do not pay the rent then you have to cough up the $600. So find a good tenant. Now, do not spend this money. Save it to invest again.
Another option is to rent to own. For a time you pay rent and an additional rent premium which is used as the down payment on the home. After 2 to 5 years, you then use this equity to go get a bank loan to purchase the home.
The other method is to buy on land contract. Because mortgage rates are so low, this is not always the cheaper option but it keeps you from going to get a bank loan. In a land contract, the owner plays the role of the bank but he will charge you a rate higher than the bank, especially if your credit is poor. You put a little money down, let’s say $1,000 - $5,000, then you make monthly payments to the property owner for generally a period of 3 to 5 years. At the end of the payment period, you have to pay the remaining amount in one lump sum. That is when you get a loan. By then, you have equity and hopefully a higher credit rating. Meanwhile, you rent out the property for at least what you are paying.
Investor · Frankfort, IL · Member since 2015 · 206 posts · 55 votes
11y
I probably should've mentioned that in both of my homes I have over 20% equity, but that's where all my cash is.
I'm thinking my best bet is a heloc to use for a down payment to get me going. I'm trying to find a small bank that portfolios their loans so I can build a relationship with them and eventually purchase another 2-3-4-10 homes.
The hard part is finding a portfolio lender that'll look at what I'm trying to long term not just short term
Friday off let me I troduce myself and say hello. I'm new to the board and from a sw suburb of Chicago. My wife and I recently built a new home and were fortunate to rent our first home and keep it. I've always loved real estate and saw my grandfather provide for his family with it. Well now it's my turn!
What's my best steps to find downpayment funds or a partner? My goal is to have 10 properties by the time I'm 40 and I'm currently 32.
Tia and look forward to some of the people I'm going to meet here.
One strategy you may consider to raise the downpayment for a buy and hold is to purchase a property to flip then use the gain from the flip as the downpayment for your next buy and hold. Now your 1st reaction is- I don't have the money for a buy and hold so how can I do a flip. If you find the right deal, one w/ a high ROI, then a partner will materialize to fund a flip.
Or find someone that just invested in a long term bond @ 2% & offer them 4% for the downpayment.
Friday off let me I troduce myself and say hello. I'm new to the board and from a sw suburb of Chicago. My wife and I recently built a new home and were fortunate to rent our first home and keep it. I've always loved real estate and saw my grandfather provide for his family with it. Well now it's my turn!
What's my best steps to find downpayment funds or a partner? My goal is to have 10 properties by the time I'm 40 and I'm currently 32.
Tia and look forward to some of the people I'm going to meet here.
One strategy you may consider to raise the downpayment for a buy and hold is to purchase a property to flip then use the gain from the flip as the downpayment for your next buy and hold. Now your 1st reaction is- I don't have the money for a buy and hold so how can I do a flip. If you find the right deal, one w/ a high ROI, then a partner will materialize to fund a flip.
Or find someone that just invested in a long term bond @ 2% & offer them 4% for the downpayment.
I absolutely agree with @Crystal Smith. The key to any deal, especially when you have a low DP or none is finding an excellent deal. There is way more money than deals out here, so if you find the right deal you will get the funding. Just keep on networking with the right people in your area @Nick Versetto.
BTW I played football with a kid named Nick Varchetto at Lincoln-Way East. It's crazy that you guys almost have the same exact name and are from the same city.
Investor · Frankfort, IL · Member since 2015 · 206 posts · 55 votes
11y
@Ben Oki very close name. lol. Everyone keeps saying there's all this money out there but I'm yet to find anyone. Any advice on where to look in our area?
@Ben Oki very close name. lol. Everyone keeps saying there's all this money out there but I'm yet to find anyone. Any advice on where to look in our area?
Don't overleverage yourself. It will potentially take the excitement and replace it with anxiety, stress, misery, and ultimately your failure in this venture. Save money from your income and current rental to buy another and then repeat.
@Ben Oki very close name. lol. Everyone keeps saying there's all this money out there but I'm yet to find anyone. Any advice on where to look in our area?
In terms of PML or wholesalers/sellers?
In terms of there's more money out there then deals.
Don't overleverage yourself. It will potentially take the excitement and replace it with anxiety, stress, misery, and ultimately your failure in this venture. Save money from your income and current rental to buy another and then repeat.
I can handle stress my wife and I have 3 daughters under 5. I'm just trying to secure a future for family.
I probably should've mentioned that in both of my homes I have over 20% equity, but that's where all my cash is.
Four questions to ask and answer yourself before proceeding: 1) Have you fully considered what happens if you lose what you take out with a line of credit? 2) What happens if you lose all of that, but still need more to pay some sort of expense? 3) What happens if you lose your job, perhaps at the same time something else happens? 4) Will you be able to sleep at night with all kinds of debt? The real estate seminars, clubs, books, and so forums are loaded with success stories, but far fewer of the people who fail can or will write or talk about their experiences. This does not mean avoid risks, but it does mean take calculated risks.
Risk is not static. At one time we had mortgages on nine rental houses and our home, and negative cash flow on several of the rental houses. We had the resources to do that (savings and income, various types of insurance), and watched the marketplace, selling all but two of the rentals just before or at the peak. No great crystal ball capabilities on our part, just watching and considering the possibilities. When the risk of keeping them passed our threshold, they were sold. Overall we made quite a bit, as some had appreciated sharply, while others were even or down.
Investor · Avilla, IN · Member since 2013 · 796 posts · 769 votes
11y
Nick Versetto
Seller financing can allow you to build a nice portfolio very quickly with very little money down.
Here's a thread where I discuss how I buy. I'm set to close a 12 units deal either today or in the next few days where I'll have less than $1500 out of pocket to get possession. That includes getting my insurance started.
http://www.biggerpockets.com/forums/311/topics/125040-how-do-you-scale-your-business-so-quick
Seller financing can allow you to build a nice portfolio very quickly with very little money down.
Here's a thread where I discuss how I buy. I'm set to close a 12 units deal either today or in the next few days where I'll have less than $1500 out of pocket to get possession. That includes getting my insurance started.
I probably should've mentioned that in both of my homes I have over 20% equity, but that's where all my cash is.
Four questions to ask and answer yourself before proceeding: 1) Have you fully considered what happens if you lose what you take out with a line of credit? 2) What happens if you lose all of that, but still need more to pay some sort of expense? 3) What happens if you lose your job, perhaps at the same time something else happens? 4) Will you be able to sleep at night with all kinds of debt? The real estate seminars, clubs, books, and so forums are loaded with success stories, but far fewer of the people who fail can or will write or talk about their experiences. This does not mean avoid risks, but it does mean take calculated risks.
Risk is not static. At one time we had mortgages on nine rental houses and our home, and negative cash flow on several of the rental houses. We had the resources to do that (savings and income, various types of insurance), and watched the marketplace, selling all but two of the rentals just before or at the peak. No great crystal ball capabilities on our part, just watching and considering the possibilities. When the risk of keeping them passed our threshold, they were sold. Overall we made quite a bit, as some had appreciated sharply, while others were even or down.
I think that's where my philosophy of buying in areas I would only want to live in and deal with people like myself is going to play a huge factor on my success. I appreciate the info and will ask myself those questions as I continue to grow my portfolio.
Laguna Hills, CA · Member since 2014 · 146 posts · 31 votes
11y
@Nick Versetto in addition to the other recommendations of getting a 2nd job, which is an excellent idea, if you bank online, this is what I did and it helps immensely. I credit the idea to Robert Kiyosaki through his audio books.
Create (3) buckets, or as many as you wish. To simplify, I opened up (3) saving accounts, one for Saving, Tithing, and Investing.
Our W-2 directly deposits to the checking, then we set up auto transfer to each of the (3) (you can choose weekly, bi-weekly, monthly, etc.) accounts.
Take action, start small, then work up to larger numbers and stretch yourself. It's not how much you make, it's how much you keep.
When we started, we figured we could do $5 per day in each account * 7-days = $35wk
We are now many multiples higher now and buy (3) properties /yr with this strategy and have seen this amount grow!
Nice thing is when your income does grow, you increase your deposit into each account accordingly and forget about it...
Investor · Bakersfield, CA · Member since 2015 · 161 posts · 46 votes
11y
I like the idea of owner financing. I'm investing in California, so the numbers will have to work to cash flow properly, i.e. purchasing the property at a discount due to 95-100% financing. We are working down this road as well. Another suggestion I haven't seen here just yet is taking some of your savings and putting it an investing club. There's lots of them throughout the country, but a very ambitious one is in Bakersfield, CA. They're called Bakersfield Investing Club, and last year, they returned 33% on shares. If you re-invest, it will compound even faster. We're in the process of reading BIC's contract right now. www.bakersfieldinvestingclub.com. We're thinking of putting a substantial amount of our savings in this account for about 2-3 years, and let it grow so we can purchase (hopefully) two properties.