What do I need to get started? A Cosigner/Funder ?

Question

Hey, Biggerpocket members! I'm new to the community and even newer to Real Estate Investing. I took my first steps December 9, 2015 when I decided to walk into a local realtor and ask questions. They were helpful and explained everything very well and in a simple manner. I told them my plan about taking out an FHA loan and buying a duplex to establish a passive monthly income. Everything seemed to be going great until we got to the actual loan part. I don't qualify.

I have good credit (706), I have a steady part-time job making steady income, and apart from my car, the only bills I'm paying for is credit card bills.

The reason I don't qualify is because I haven't held my part-time job long enough. Now either I could find a full-time position and save up funds from there, or I could find a cosigner to help me qualify for the loans (still needing to pay for 3.5% down and figure out closing cost).

I'm 19 and I'm doing what I can to get started as soon as I can. Investing has always been a dream of mine. How can I make this a reality?

Ask any questions, I will answer

Charlie Fitzgerald · Answer

FHA will allow for a non-occupying co-borrower to go on the loan with you. Talk to your parents about joining you in this venture.

David Dachtera · Answer

Three key skills (among the many) will help anyone get started...

As a rehabber or fix-and-flipper, building a buyers list is probably the first task to tackle. Most "uneducated" beginners save this for last - after they've already completed repairs and are stuck with holding costs until it sells.

As a buy-and-hold investor, and for most other strategies, finding funding is a key skill. Forget about banks for now. They'll come into play later, but not now. Learn to find private lenders first, keep hard money as a "no other choice" backup. (Sneak preview: my investing group just had a two-day credit workshop. Things are coming in mid-2016 which will hit most borrowers who use banks and other institutional lenders REALLY hard! Alternative lending may be poised for a rise in prominence of historic proportions.)

Learn to build a team. One philosophy is to build the skills you have and hire out the ones you lack. No one does it all themselves - no one does it alone. Contractors, trades people, title agents, attorneys, real estate agents and brokers, inspectors, appraisers, etc.

Once you've developed in those three key areas, THEN you can think about learning to analyze properties, finding the ones with the most profit potential, determining a suitable strategy for each property (if any), determining which ones to offer on and determining how much to offer. That "determining a suitable strategy" part is another area where "uneducated" people trip themselves up. They only know one or two strategies. There's an old saying: "when all you have is a hammer, everything looks like a nail". Rather than try to find properties matching the strategy(-ies) you know, find a property and determine a suitable strategy for it (there may not be one; that's when you walk away).

... my humble opinion, of course. Your mileage, as they say, may vary.

Nicholas Armstrong · Answer

@Miguel Luna

Welcome to BP! I am 21 and also new to REI. The best advice I can give you as of now is to soak up any information from seasoned investors! There are plenty of them on here and (most) are more than happy to answer any and all questions.

But as far as your financial situation.. (Considering it is a good deal) Don't stop pursuing the property just because a lender says you don't qualify. Ask yourself HOW you can purchase it rather than just quitting because someone says you can't. I agree with @Darren Sager Determination and persistence is key.

Look at creative financing. (i.e Seller "refi" takeover, lease option, seller financing, private lending, etc) There are several options if you are smart about it!

Listen to the BP podcasts, read books and forums and get educated before making any decisions though.

Happy investing!

Darren Sager · Answer

Determination and persistence. I would try to find out anyway possible to make it happen. Getting full-time job will help you get your loan. I would network with other people you're a BiggerPockets and see if you can partner up with someone to get more experience. There're many other things that you can do before you get your first income property. I also look into seeing if I can work part-time for a property management company. You may gain some valuable experience this way.

What do I need to get started? A Cosigner/Funder ?

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