Rental Property Investor · Fresno, CA · Member since 2018 · 40 posts · 31 votes
Hello, I bought my home two years ago with cash that my father had left me. I have a job that does not pay well but I don’t have any debt except for a few hundred bucks on my credit card. I have good credit and a decent savings account.
It’s all a little overwhelming the different routes I can take to start my journey in rental properties (I’m very thankful to be in this position)
Any ideas on how I should get started?
My goal for now is to create good cash flow as well as buy and hold.
Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
7y
Hi Emily,
I would start by getting pre-approved by a local lender. See what you can afford with your current income and savings. You have your house paid off which is a great accomplishment. You don't want to risk putting that house as a risk by cashing out.
Real Estate Agent · Fresno, CA · Member since 2014 · 367 posts · 174 votes
7y
Hey Emily, congrats on getting started. Yes, it is a bit overwhelming when you think of all the different strategies you could do. My best advice is go ahead and try the one that feels the most comfortable to you and see how you like it, if that doesn't work, move on to the next one. most investors I know only use 1 or 2 strategies that they get really comfortable with, it's just about finding the right one. I'd be more than happy to talk through any options with you and let you know how some of my clients have had success, feel free to message me if you'd like to talk more. good luck!
Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
7y
@Emily Hill go for a low priced, very high cash flow rental property that's already occupied at or near market rents and in pretty good condition. All of those boxes should be checked to get you confortable with relatively safe, stable first investment for you as you become acclimated to the business.
Not saying buy turnkey, per se...the returns usually aren't great on those. I would look for a 70-100k property that has at minimum, a 10% cap rate AFTER making sure to include all actual expenses + a 10% maintenance reserve and a 5% vacancy reserve.
Try to buy with financing first- My commercial lender gives my investors and I 80% LTV... so you'd only have to come to the table with 20% down. If you don't qualify for financing, I would try a HELOC on your paid off home and use the credit line to "buy cash" and just pay down the HELOC as you would a loan.
Just reallllly make sure the property cash flows enough to account for those first year surprises that a lot of investors encounter when they take over a property and you should be pretty safe.
After you get a feel for this property and it seems to be going well, take another look at your finances and consider your next property, which I would recommend is similar to your first in type and performance. Don't take on turnaround or upside projects until your portfolio generates consistent income and your financial position has some good room for error