New Investor with little cash and underdeveloped credit score.

11 Replies

So I am new to real estate investing and have been reading books for some time now and recently signed up with my local REIA. I am 19 years old so i havent really established a credit score yet and have saved up about 6k. I am looking to do my first real estate transaction and am stuck between buying a duplex and living in one side while i rent out the other, or trying to flip houses. the only problem is the financing part, im not sure how ill be able to finance a rehab flip with only 6k. I could use some tips and help. anyways thanks for reading my post and hope to hear from you guys soon! Thanks!

Weall congrats on saving up that cash. I did the same and life threw some curve balls and now I'm trying to come back. First I would try and getting a credit card, I myself have a line of credit, credit card, and a car payment. I'm 20 and my credit great now. I don't know what your market is in your area, but if you could go up to a four plex because you can them still apply for an FHA loan. In my area I have to get a duplex or else try and get a private investor involved to buy anything bigger. To go along with my last statement unless you have a great job your going to either need more cash or a private investor. Because again depending on the shape of the duplex, you will need a reserve for maintenance. In terms of flipping unless you have a lot of construction skills, Or a good enough deal, or comfortable with hard/private lender I'd probably avoid it. Again this is all going to depend on your market your working in.

Money and Credit is a crutch! You need to read up on "Creative Financing". Join your local REIA club, go to "meetup.com" and look up your area. Creative financing is lease options, seller financing- they're the bank, partnerships, Joint Ventures.

If you can do deals without putting your own credit/money at risk then in harder times you will also be successful.

If you depend on credit/cash then when the hard times come and you don't have either, you're out of options...

Click on the LEARN tab above and check out the "Podcasts", you will most likely learn everything you want to know.

Family and friends can also be a great resource.

Good luck!

@Robbie Knecht

Welcome to Bigger Pockets community. Be sure to check out “Learn” for all kinds of useful resources and free how to guides.

Thank you for the replies, i will make sure i go through the learning tab today! I have signed up for the MKE REIA and learned a lot from the first meeting!

Buying are duplex and renting out the other side is a great way to get started. I'm actually looking for small multifamilies at the moment. If it needs rehab you can always go with a loan that allows you to roll rehab costs into the loan. I believe you an do this with HomePath loans. I don't like using FHA if you don't have to because of the high PMI, but with the little cash you have ($6k) you can get in with as little as 3.5% down.

If you'd rather not roll rehab costs into the loan, you can always live in one side and rehab it.  Then move into the other side and rehab it.  This way you can "pay as you go" rehab instead of financing and paying contractors to do the work.

The trend is that most people lose money on their first flip, with so little to invest I'd suggest the house hack duplex route.

@Doug Royce

HomePath loans no longer exist. You'd have to use HomeStyle, or FHA 203K.

This post has been removed.

Originally posted by @Robbie Knecht :

So I am new to real estate investing and have been reading books for some time now and recently signed up with my local REIA. I am 19 years old so i havent really established a credit score yet and have saved up about 6k. I am looking to do my first real estate transaction and am stuck between buying a duplex and living in one side while i rent out the other, or trying to flip houses. the only problem is the financing part, im not sure how ill be able to finance a rehab flip with only 6k. I could use some tips and help. anyways thanks for reading my post and hope to hear from you guys soon! Thanks!

Definitely work on fixing your credit because that's something you'll need eventually to help you get more loans/ better rates in the future. I would suggest you focus on looking for a mentor. Since you don't have a lot of money saved up, and low/bad credit, then you're going to have a harder time buying a property on your own. If you find a good deal try to turn it into a JV with a mentor so they can show you the ropes; learn by doing.

Either way, Congrats on taking your first steps and Good luck @Robbie Knecht!

Originally posted by @Gerardo Dominguez :

Either way, Congrats on taking your first steps and Good luck @Robbie Knecht!

 Thank you for the information and I am still in the process of finding a mentor.

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