Orlando, FL · Member since 2017 · 2 posts · 0 votes
Hello,
I've just recently found this community a little over a month ago and have been listening to the podcasts non stop ever since. In my hunt to acquire as much knowledge as possible as a 24 year old and recent college grad, I want to realistically know at what point I'll be able to jump into this world myself and start investing. This may seem like a very basic or silly question to most of you, but with my knowledge base just beginning I figured I would make my first post and see what anyone had to say. Any tips or advice at all, related or not, will be very appreciated! If it matters at all, I am currently living in Orlando, FL.
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
9y
everyone is different. Your market, your risk tolerance, and your strategy all change this answer.
bought my (primary) first house with 0 down and $1K to my name
bought my (Primary) second house with a tad more in the bank but only put down $3.5K
Point being, capital is not always the most important factor in RE. Also, risk tolerance will partly determine how much you need. I always run my deals super tight and go flat broke to purchase, which is risky, if you are more risk averse, you're going to want more reserves.
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
9y
everyone is different. Your market, your risk tolerance, and your strategy all change this answer.
bought my (primary) first house with 0 down and $1K to my name
bought my (Primary) second house with a tad more in the bank but only put down $3.5K
Point being, capital is not always the most important factor in RE. Also, risk tolerance will partly determine how much you need. I always run my deals super tight and go flat broke to purchase, which is risky, if you are more risk averse, you're going to want more reserves.
Orlando, FL · Member since 2017 · 2 posts · 0 votes
9y
@Alexander Felice Thank you for your response! In terms of risk, that is not anything I would shy away from as long as I know what I'm doing. Do you have any advice on where I can go to learn more about getting started with as little money down as you did yourself?
What about real estate interest you, what strikes your passion?
How much money do you need to start? Depends on what you want to do; if you haven't decided that yet that's not a problem at all. Set yourself up for being able to try the opportunity that will invariably present itself someday by getting your personal finances locked down. This is where the age old advice freshly presented by @Scott Trench is outstanding, you have to live below your means and save as much money as you can.
5 years ago my wife and I bought a house. "You were just lucky", one might say. No. That was not the only action we took. We also improved the house with custom closets, landscaping, curtain rods, additional cabinets, fencing the back yard...
We also lived below our means so we could buy stocks.
We participated in an employee discount stock purchase plan.
We also contributed to retirement accounts through work, we are not at those companies anymore so now these funds are available for self-directed IRA real estate investments.
We paid down other debts.
We saved into hard assets like PM and art.
Because we began filling these money buckets 5 years ago we had the funds available this April when my wife found the property she really wanted 5 years ago but we could not afford.
You have to do a lot of things at once, keep researching, learning, sharing your knowledge, connect with people and build up your assets so that once opportunity comes, you're ready to pull the trigger.
@Alexander Felice Thank you for your response! In terms of risk, that is not anything I would shy away from as long as I know what I'm doing. Do you have any advice on where I can go to learn more about getting started with as little money down as you did yourself?
HA! You can only know so much until you start doing deals ;)
the 0% deal was a VA loan, so to learn more about that talk to a recruiter
3.5% FHA however is quite common and offered by most lenders
Investor · Tacoma, WA · Member since 2017 · 10 posts · 2 votes
9y
Hi,
I'll give you my spin....I have bought and sold 10 single family houses, and when I had good credit, I pretty much got in for "Nothing Down" which is to say, I borrowed most of the down payment from other sources, ie, credit cards cash advances, short term loans from friends, refinanced my car to get cash, etc.
That is just one strategy...does not work for everybody. It always helps to have some cash in the bank, but I find the ability to borrow is the most deciding factor. Have a pat answer is tough as it depends on your marketplace that you are investing in. I don't know if they still existing, but I also have gotten 80/20 loans where you borrow both the down and the remaining balance, however, that is a slippery slope as you have to make sure (if you are keeping it as a rental) that you have sufficient cash flow after debt service.
Springfield, IL · Member since 2017 · 3 posts · 0 votes
9y
Going further with this chain of questioning...
We are planning to buy our first rental property strictly through a conventional mortgage with 20% down. We are not eligible for any of the loans mentioned above (as far as I know). We plan to remain in our own primary residence, we are not veterans, not rural, etc... So, I guess my question is how to take the cash flow we will receive from our first property (300-400/mo) and turn that into our next downpayment. I would love to purchase a multi-unit property but have no idea how we will save the 25% down required for a conventional mortgage. Thoughts? Thanks!!
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
9y
Hey @Melissa Hostetter- most people in your situation (which is also my situation) just move equity around. What I mean by that is if you have equity in your current property, do a cash out refi and use the proceeds as a down payment on the next purchase. Even better, if you have equity in your primary residence, use a HELOC to pay cash or make a down payment on your next property. There are lots of ways to do it, tons of info on these boards. Good luck!
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
9y
@Myles Christian- there's really no such thing as "no money down," with very few exceptions. When people say that, they really mean borrowing money from somewhere or someone else, but it's still takes money. When you are starting out, you can house hack and buy a multi with an FHA loan at 3.5%, those loans are readily available and it's really an excellent way to get your portfolio going. Best of luck!
Have you considered private lending? This avenue can partner you with an experienced real estate investor who can lend you the funds. They could use their personal funds, but some investors prefer to use a self-directed retirement account to make the loan. You would then have an experienced investor who may be willing to help you learn the ropes.