how much to get started?

Question

I've read lots of talk about how to get startered, and ways of generating cash (wholesaling, birddoging, etc) but no one ever talks about what it takes to get started.

I realze it can depend on you first deal, but let's say I wanted teo skip step one and just start buying properties outright. What's a good figure to have luquid in order to buy your first property and convince the bank you can be taken seriously? Or to put it another way, how much did you (or your "friend" cough) start out with?

Just loooking for a number.

Alan Brymer · Answer

if you're looking to wholesale houses to other investors, you don't need any cash in order to do that -- except maybe for an earnest money deposit that you use to type the property. This would be $500 at the most, though I have never used more than $100.

However, even if you are going to wholesale deals you'll probably have some expenses involved with marketing to find sellers. There are plenty of free ways, but even then there are some hidden expenses such as gasoline. If you're going to start out with basic methods for finding deals, I would just plan on having $1000 to spend on marketing and you could probably find your first deal with that -- and a little bit of hustle and elbow grease.

Chris F. · Answer

So no one is willing to post actual figures? It's easy to say "whatever amount puts you into your first deal." So why don't I take the first step and throw a number out there, since no one else will.

How about $25K liquid cash?

I'll break it down:

Assumptions are a buy and hold $75K property w/ 20 percent down NOO 7.5 30 year. (just a number but it's a realistic one)

P/I =525
rent =1150 (50% rule + 100 profit)

Therefore, to secure a loan (not hard money, considering buy and hold strategy)

So capital required is:

$15K downpayment
6 months @1050 reserves (monthly expenses minus profit margin)
3700 for closing costs, any minor repairs,etc

I know this doens't encompass every scenario, but for someone getting started, I think it's someone realistic. Yes you can get a money partner, or do seller finance or any other number of tricks, but is someone doing thier first deal going to be comfortable doing these things on thier own? somehow I doubt it.

If I'm way off, please correct me, but that's how it seems to me.