Real Estate Investor · Los Angeles, CA · Member since 2015 · 2 posts · 2 votes
Hey guys, my name is Johnny, 26 years, and live in Los Angeles, CA. I recently read rich dad poor dad and it really got me interested in investing in real estate. I don't have much money saved ($10,000) and I sit with a bad credit score of 640. I can currently save $1,500-$2,000 a month. I also have the maximum amount given on a VA Loan which I was thinking of getting multi-family home. I was wondering if anyone could give me some information, guidance, and recommend me some good books.
Should I be saving a certain amount of money before I get started or should I start with my VA Loan? Thank you for your help.
Investor · Orem, UT · Member since 2014 · 25 posts · 22 votes
11y
Johnny, I'd use your VA loan on a multi-unit. IF you have confidence in your ability to analyze deals, then the sooner you get in the game the better. It also depends on your risk appetite. Credit score of 640 isn't too bad. If you're going to occupy the home and you find a pretty good deal on a fourplex, I can't see any other route that's better than that.
Most investors have a huge barrier to entry on a tri or fourplex because they've got to put 20 - 25 % down. Which will create less competition. And most people who CAN afford the down payment of a fourplex don't WANT to live in one so the seller will like that you're going to occupy because that will say to him that you are more vested in the deal going through if he accepts your offer and puts you under contract. So the more units you get the better (up to 4 with a VA) because you're leveraging your 0% down card which is an absolutely amazing card you have. But the numbers have to make sense from day 1
Rental Property Investor · Los Angeles, CA · Member since 2010 · 804 posts · 230 votes
11y
Welcome to BP. To invest here in LA, you need to know what the going prices for multi-units are and can you afford the monthly payments even with a low down VA loans. Keep saving and give some time to let your credit score rise.
You may consider investing out of the area like Palmdale, San Bernardino or even out of state where you can get started sooner with less cash.
Thank you guys for your welcoming words and great tips. I will definitely look into it! It's so hard to take that first step into the real estate world.
Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
11y
Welcome!
I agree with the others I would get started with a VA loan on the multi-unit. We got started with the va loan and it was a great start (my husband is active duty). You can use that to build up your credit score and add more cash in your pocket. We personally bought with 0% down and than self funded the repairs. After we had fixed up alot of the issues( it was a fixer upper) and had accumulate more in our savings/cushion. We used our cushion to buy our first "pure investment".
When we were transferred to the next area we used the rest of our entitlement. By this time the real estate had bitten us and we just have baby stepped our way to where we are now :)
We have done the Va loan twice, so feel free to pm me if you have any questions or want links articles on the VA loan