Classic Question, New to Me

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Classic Question, New to Me

Trace Carson
Nampa, ID · Member since 2016 · 11 posts · 4 votes

Hello again everyone! 

My predicament: I have a very, very small amount of capital to invest in real estate and deals and so forth (under $1500). I'm sure many new investors have this problem as well. 

My question: does anyone have any personal experiences or advice about growing this smaller amount into something that could eventually be a good size down payment?

All I can think of so far is trying to be part of an investment being done by someone with more capital than me, and then taking a small percent of the profits if there are any. My other thought is to bring an investor a deal, and hope they want to partner with me on it. 

I honestly have no idea, other than waiting about two years and saving more, how to go about growing my small amount of money through investing. Any help is appreciated, and if this isn't actually possible and I need to take a different path please let me know! 

Thank you. 

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Jerry W.Pro Member
Moderator
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
10y

The trip of 1,000 miles begins with the first step.  You are on your way by saving.  Doing inventory on your life, evaluating your job or career, etc.  You need to save more or even spend less.  A better paying job or some overtime can help the savings too.  Next you need to educate by reading through the Education section above it has loads of great info.  Once you understand more and have more saved and know your local market you have many more options.  You can look for great deals and bird dog or wholesale for a deal or two or do a joint venture with a more experienced person.  I do not know your area but sometimes a small amount of money will get you into a trailer house or some low cos first time homebuyer loans.  Good luck what ever way you decide to go.

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  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    10y

    The trip of 1,000 miles begins with the first step.  You are on your way by saving.  Doing inventory on your life, evaluating your job or career, etc.  You need to save more or even spend less.  A better paying job or some overtime can help the savings too.  Next you need to educate by reading through the Education section above it has loads of great info.  Once you understand more and have more saved and know your local market you have many more options.  You can look for great deals and bird dog or wholesale for a deal or two or do a joint venture with a more experienced person.  I do not know your area but sometimes a small amount of money will get you into a trailer house or some low cos first time homebuyer loans.  Good luck what ever way you decide to go.

    3Reply
  • Jeff Cooley
    Commercial Real Estate Broker · Clinton, IL · Member since 2015 · 40 posts · 8 votes
    10y

    Hello

    find sellers that are really desperate to sell and get creative with them. Have them carry the mortgage with no money down and a higher interest on their money. You will most likely need to find someone who is wanting to retire and still would like to have a steady income flow without paying capitol gains to IRS. You will need credibility though. Most people won't do this if you have no skin in the game. You need to build a relationship with them first.

    1Reply
  • Gino BarbaroPro Member
    Rental Property Investor · St Augustine, FL · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Trace Carson

    Hi Trace

    You can partner with someone, and manage the property for a fee.  If you put the entire idea together, then you can charge an acquisition fee and roll that fee into the equity.

    My partner started this way 3 years ago, and has been able to accumulate 675 units by buying, managing, refinancing the properties and using the acquisition fee.  He has done a terrific job managing the properties and adding value.

    It is a lot of work, but can be done.

    Good Luck

    Gino

    Podcast Guest on Show The “Conveyor Belt” System That’ll Build You a BIG Rental Portfolio Quickly
    1Reply
  • Bryan O.
    Specialist · Lakewood, CO · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    To do pretty much anything, you need to bring to the table one or more of these:

    • Money
    • Time
    • Exceptional Knowledge

    You are low on money, and since you are beginning I doubt you have exceptional knowledge yet. If you have time, begin to network. Get to your local REIA meetups, the BP ones, and whatever ones you can find. Use that time to network, build more money, and learn. I would recommend seeing if someone who is doing whatever it is you would like to do will allow you to shadow them.

    You are on the right track. Good luck and happy investing.

    1Reply
  • Leland Barrow
    Investor · San Marcos, TX · Member since 2015 · 272 posts · 360 votes
    10y

    REI is about having the resources to take advantage of great opportunities. Know what your target investing areas are and build up your resources first. You need to know where you are going before you can figure out how to get there. Lets say that after thorough research on BP that you decide to invest locally in Nampa, Idaho. The plan you develop is to buy 5 SFR to build some assets, before moving into MFR. You determine that the average SFR cost $100,000. You also know that you want to purchase properties that need maximum amount repairs of ~$5,000. That is your destination and now that you have identified it, you can build a road map to get there. To have the resources you will need $20,000 for 20% down, and $5,000 for repairs, $3,000 in closing cost, and probably another $5,000 in reserves for about $33,000 total. (All arbitrary numbers).

    Save until you get that amount. You can mow lawns, work part time, deliver pizza, or whatever it takes to get that 30,000.  

    Buy your first deal and then make a decision on how to keep the momentum going. This is when being creative comes into play. Now you can use a brrrr strategy, partnerships, or hard money to keep going. Or just use the BSR method; buy, save, and repeat.

    Your first deal should:

    -Teach you discipline

    -Teach you the process

    -Start building your network

    -Give you an asset to build upon

    -Give you some legitimacy

    Don't put the cart before the horse and jump into a situation that failure is far more likely than success. Just my advice.

    1Reply
  • Leland Barrow
    Investor · San Marcos, TX · Member since 2015 · 272 posts · 360 votes
    10y

    SBR* Save, buy, repeat. See even dummies like me can do it. So you can too lol.

    0Reply
  • Jack Aduwo
    Investor · Lehi, UT · Member since 2015 · 65 posts · 25 votes
    10y

    Hi there @Trace Carson

    Here are some practical ideas for you

    Some great suggestions have been made above and I agree with a number of them.

    So you have $1,500 to begin and the question is what you can do with it. Here is my advice and this advice assumes Four things 1) You have a good reliable job 2) Reasonable credit score, 3) You have a relative that can give you a few grands like say 4k and 4) You have not bought a house before or last time you bought a house was over 5 years ago or You recently relocated to Boise area from somewhere far like Twin Falls or another state

    • 1)What kind of house should you look for? The answer Is Duplex or Triplex or Fourplex. These types houses would make you qualify for certain loan and while rent out parts of them
    • 2)Why Duplex? 1) It enables you to live on one side and rent the other. In the Treasure valley area (especially Nampa / Caldwell area or Mountain Home area ) you can get Duplex for a price close to SFR.
    • 3)Why Fourplex. You can live one side and rent out the other 3 units. The average price for a Fourplex in treasure valley area is about 350k. As an investor, keep away from Fourplex in Boise City because they are over currently inflated. So look at the surrounding Cities like Nampa. For example in Caldwell you can get Fourplex for under 330K and I am not talking about some run down 40+ year old fourplex. Yes with a little patience and market monitoring, you can get this.
    • 4)Financing: 1) First Time Buyer: Are you a first time home buyer then take advantage of the first time buyer 3.5% down paying loan program. 2) Military loan, got to meet military requirements and this could be up to 100% financing, 3) USDA Loan: This could be up to 100% financing. You gotta meet the USDA loan. There are some parts Caldwell for example that would qualify for this type of loan hence the building has to be in those area 4) Idaho Loan assistance programs which can also pay up to 100% of your down payment
    • 5)Only go for something where the numbers would make sense. Your Cash-On-Cash return must be solid double digit percentage. Do not settle for anything less
    • 6)Network with your local REI and do more research before you jump into anything and do not attend any of the Guru trainings. The knowledge you get from Biggerpockets and local REIA will be more beneficial than what you can get from those expensive Guru trainings

    Good luck on your search and let me know if any these tips are able to help

    3Reply
  • Jonna WeberPro Member
    Moderator
    Investor · Boise, ID · Member since 2011 · 1k+ posts · 736 votes
    10y
    Trace Carson - time is on your side. Keep reading and learning. Sometimes, those with the least amount of cash make the most shrewd investors. The nice thing about being in Nampa, is that there are actually properties available under $100,000.
    208-608-4884Podcast Guest on Show #80
    2Reply
  • Trace Carson
    OP
    Nampa, ID · Member since 2016 · 11 posts · 4 votes
    10y

    @Jack Aduwo

    Wow, your advice lines up so well with thoughts I have had about getting started! The duplex idea and the FHA and USDA loans have all been running through my mind.

    You've helped me clear up any doubts in my head, I think this is the direction I will begin planning for! 

    0Reply
  • Matthew Woodin
    Investor · Caldwell, ID · Member since 2016 · 20 posts · 9 votes
    10y

    Check out the womens small buisness center, don't let the name fool ya. They let men in too. I'm from Caldwell and my wife and I utillize there help a lot. We're in the same boat as you, starting with near nothing. We've studied for the past one and a half years now and are just taking our first steps. I really like what Jack said above, follow that and it'll help a lot too. Do you currently have an agent in the area who's helping you, some might be a bit shy do to the lack of funds, but if you hold your tongue and they see your actually listening they open up pretty quick.

    1Reply
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