What deals/ prop types should I be looking for?

Question

Hi all,I'm a brand new prospective real estate investor. Caught the bug and have been listening and reading all I can, but haven't pulled the trigger. Primary problem is liquidity. What do you recommend for a newbie with no proven track record and low cash?

The plan at the moment is to buy a foreclosure and fix it up to LIVE in it, and then rent my current house (an 800sq ft single family in Bristol, CT). Is that going to be my best foot in the door to starting this journey? Did anyone out there start with very little money? What did you do?

Thank you all so much in advance!

Shayan S. · Answer

Hey Stephanie,

From what I've read newbies shouldn't really buy a foreclosure as their first property unless they really know what they're doing or can partner with someone who has experience. Have you considered house hacking? Perhaps you could look into the idea of selling your home and purchasing a duplex, triplex, or 4plex that has some cosmetic issues at a discount. You could then fix it up a bit, live in one unit, and rent out the rest. Also if you have significant equity in the property, you could cash out refinance and purchase the next property. Good Luck!

Jaron Walling · Answer

You need three things: deal, money, or knowledge. If you have 1 or 2 of these the other will fall into place. Take money for example. How much equity do you have in your current home? How can you leverage it to purchase another property? What are the cap rates for your market?

You made a point about "loving house hacking but my husband doesn't". I've seen people talk like this before. Something has to give so you can agree on the investment otherwise you're just wasting time.

Stephanie Fritz · Answer

Hi Shayan,I do have a real estate attorney friend who is helping me learn about foreclosures, but I still don't know what I don't know, so I appreciate the feedback. I love the idea of house hacking, but unfortunately my husband doesn't. We're homesteaders so we need at least 2 acres (a little harder to find with multifamilies) and we also have an anti-social 70lb dog.The appeal of renting our current house is that it's a really great location for a rental and we know everything about the property and know that we would get positive cash flow. I'd rather stay in this house longer (with our low expenses) and save, than move sooner. I'm just so anxious to start building my empire!

Thanks again!

Stephanie