Hey guys..after saving up the money after your first deal and purchasing the property, what ever that financial number is to make that work. There is another waiting period to build up the money to get another rental. My question is does anyone know a faster way to get too another property because all the money was spent on the first project. Also, what is a safe realistic number to save to get the first deal started? Maybe a duplex or quadplex between 60k-100k fha?
I can't tell for sure if you're contemplating doing your first deal or if you've already done it - but the challenge of financing and the 'time lag' was something real that we've dealt with. I don't know how helpful this might be as it may sound cliche but definitely try to think one or two steps ahead of your next one.
I think the biggest thing is to be ready to WORK, because even in an up market there is equity to be built by simply being willing to do the work that others don't want to. When you accept what your realtor tells you is 'market' and pay 'full market' you end up waiting a long long time for that $200-400 cash flow to get you anywhere, which I'm guessing is what you're alluding to...
When you look for that first deal, look for something that ultimately you can handle (ie: the risk profile of the projects isn't too much for you) but where you can build a substantial amount of equity just by getting the place to tip top. There's always equity lines, refinancing options etc at that point.
That's of course if you want to go quick. If you are OK going slower, buy in an area with a higher chance of appreciation, and make your payments. Eventually you're in a great equity place and presumably somewhere where you have more time and flexibility with your work schedule to take on the more aggressive projects.
I have bought with intent of sweat equity. This strategy has allowed me to do commercial lending and I have bought 1-3 properties every year. After the 2nd unit I have no money out of pocket for purchases or rehab as I have enough equity in my units to continue to buy as an umbrella effect. However, my units are still individually mortgaged so I can sell individually if needed. I agree with @Jim Goebel that if you are buying fair market value or more turn key that your snowball effect will take a lot longer to save for. Focus on your strong suits and build from there. Find reliable people for a team and scale.
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