Creative Finance Obstacle

4 Replies

My current situation: Im 24, My income was 22,000$ In 2014 (with my current steady job) and really low in 2013 (cant remember the number, but was jumping from job to job) and a 750 in credit score. I want to invest in an owner occupied duplex with an FHA loan in NJ and house hack. I have a little more than 2,500$ for a down payment saved up as of now and no assets, debts, or equity.

I can get a co signer with higher income for me to get pre approved for a loan for a house in my criteria, but by the looks of things, It seems like I could put myself in huge risk due to my low income and no money reserves. Just with 1month of vancancy can pretty much screw me over (rent around my area goes for about 1,500-2,000) and cant even imagine dealing with an eviction (lawyer fees, court fees).

Can anybody please give me some options or suggestions on what I can do to get my REI started?

@Kevin Izquierdo Research and find a bank in your area... Most likely a smaller bank. Go in there with all your info printed out and sell the bank. I don't foresee any problems . With no risk there is no reward. Good luck

You are on the right track.  Reserves are truely a vital part for investing in real estate.   I would suggestion you keep saving and find legimate ways to increase your income.  Train to get in a better paying job, work more hours, and please don't try to rush the process.  Watch the podcasts for they offer many different ways to approach and they also  offer great motivation from their success story.  It have been proven that those who can make long range plans and work at it succeeds.  Keep learning and tak action on your plan.  You have a very good credit score, so keep it that way.  Don't try to keep up with the Jones for most are  living paycheck to paycheck without a rainny day fund.  Keep saving and maybe try wholesaling or become a real estate agent.  Finally you can join your local reia group(s) and start make good contacts that may prove to be invaluable down the road.

You might check out Financial Peace University (Dave Ramsey). He has a lot of helpful advice, in particular for folks getting started. You'll want an emergency fund, no consumer debt, and some savings. He also says to keep your mortgage payment at 25% of your income or less.

We bought our first house when I earned just enough to qualify for the loan. We then paid that mortgage for eight years before we converted that house into our first rental. When your income is low, it takes a lot more patience to get started safely.

You are in too tight of a spot, need more reserves, I would suggest you be ready to pay 6 months of full carrying costs as well as a few thousand for repairs, especially going into winter in NJ.

Worst case the person doesn't pay, you have to evict them, and something breaks or they destroy the unit. Then you need to repair/ make ready AFTER evicting the person, THEN find a new good tenant. You don't want to be in the position where you are desperate for a tenant and don't have time to wait for the right tenant. 

I would suggest saving up some more, look at side jobs in real estate you can do to earn some extra cash to get you there faster. Also look for properties that you could cover the whole monthly nut on your own and dont have to have the rent to survive. 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

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.

Lock We hate spam just as much as you