How much capital should you have

Question

How much capital should one have when starting out in REI in California? I tried searching previous discussion but could not find anything specific to California, and out real estate is crazy here :/

@Jay Hinrichs maybe you have some input.

Jay Hinrichs · Answer

as a beginner you can count on having at least 20 to 30% of purchase price in cash and ALL of the rehab money needed  plus reserves.. if you can demonstrate that. you will find Bay Area lenders to loan at about a 9 to 10% APR for one year and if you want referrals to said lenders happy to do it.

Sean Carroll · Answer

@Jay Hinrichs and @Andrew Johnson What would the different numbers be for buy and hold? would 20% down be the rule? I look at flipping houses as a way to build capital to purchase long term buy and hold properties. I would like to really have passive income mixed in with my portfolio. Hopefully to the point where I do not need to flip but do it more as a hobby to keep me busy. (a hobby but still strictly business as far as discipline wise.)

Jay Hinrichs · Answer

@Andrew Johnson  he was asking how much he needed if he wanted to start to flip homes in northern CA.... not buy and hold..  buy and hold has a whole nother set of numbers with those numbers in my mind being very regionalized.. IE are you in a area with a lot of snow and such.

or deep south with wind hail and bad soil.. or in an area were crime rates are above the normal or better areas of west coast.. all of these things will eat into cash flow if your buying and holding.

Sean Carroll · Answer

@Jay Hinrichs and @Franco Li I am sorry I should have been more specific. I am looking to initially buy and flip residential homes. I am looking from the bay area to about 30 minutes north of Sacramento to South Lake Tahoe. Bay are homes are extremely pricey ranging from 400k to 800k and outside of the bay area you're are looking around 250k.

Jay Hinrichs · Answer

that question is too vague.. there are a lot of different types of real estate investments and all have different capital needs.. maybe if you narrowed down what it is exactly you want to do in RE folks could give you some feedback

How much capital should you have

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