11k saved for an investment prop... NEED A CONFIDENCE BOOST

Member since 2018 · 61 posts · 46 votes

I have 11k saved for my first investment property. I am going to house hack this prop for a couple years (with an FHA loan). I can save up a little more while on my journey of searching but I need a little confidence boost. Has anyone started out in this situation before? Was it worth it? Does anyone have stories, suggestions or ideas that can give me the boost I need before I pull the trigger on a prop? If you do.. PLEASE SHARE. It would be much appreciated.

(Don't try to scare me out of buying a property.. this is a confidence booster post!)

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Kyler Cook

Rental Property Investor · Kalamazoo, MI · Member since 2018 · 117 posts · 235 votes

@Patrick Crehan

20% of Americans don’t save a single dollar a year

Over 40% of Americans have less than 10k saves for retirement

56% of millennials have no retirement saved, not a dollar

Two thirds of Americans couldn’t cover a 1k emergency without using debt

50% of Americans save less than 5% of their DISPOSABLE income.

Here’s your confidence booster. You aren’t normal. You’ve done what a majority of people never will already. Play slow and steady and your great grandkids will feel the effects of your life. Don’t try to do everything, just one thing at a time.

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Steven Ko
Sunnyvale, CA · Member since 2018 · 191 posts · 178 votes
7y
@Patrick Crehan I am new myself but I found that having more money helps. I bought property in CA and in order to increase/force my cashflow, I did a bigger down payment. It makes covering repairs and saving money easier. Do you listen to the podcasts? I would read the books your constantly hear in the final four: rich dad poor dad, 4 hr work week, never split the difference, etc. before you make any investment, you should invest in yourself. No deal is better than a bad deal. You saved 11k once, you can do it again! Currently I am scouring the forums on being a property managers. I am also ready Brandon’s book on property management. I assume the ultimate beginners guide is a good book to read also. Good luck out there homie. You’ll get there eventually!!
12 Reply
Frank Geiger
Rental Property Investor · NC · Member since 2018 · 776 posts · 776 votes
7y
My only hint of advice is to be confident in your numbers. I know how stressful it can be spending the only 11k you have to your name. Allow yourself to make a mistake or two during your first property. Build a little room into your numbers and always add in unexpected repair costs and you'll do just fine!
12 Reply
Brit Hale
Real Estate Agent · Joplin, MO · Member since 2018 · 112 posts · 96 votes
7y
@Patrick Crehan sounds like you could buy something up to about 300k (300k x 3.5% downpayment= $10,500) if you roll the closing costs into the financing. Not sure what your market looks like, that goes pretty far here in Southwest Missouri.
That would be pretty encouraging to me! Do you have a property or price range you’re already considering? If so, what do the rough numbers look like?
8 Reply
Brit Hale
Real Estate Agent · Joplin, MO · Member since 2018 · 112 posts · 96 votes
7y
@Sarah Doogle I like Dave Ramsey for my personal finances, I operate a little different on the rental and flip businesses, though : )
What type of numbers/scenario would you be interested in? Would you be comfortable with an investment property with 20% down or would it have to be an all cash deal?
6 Reply
David Pere
Rental Property Investor · Springfield, MO · Member since 2016 · 1k+ posts · 890 votes
7y
@Account Closed What market are you looking at?
I bought my first duplex with an FHA loan (less than $4k down on an $81k duplex) and it has repaid my down payment in cash flow every year for the last 3.5 years. I would call that a success!
12 Reply
Patrick Crehan
OP
Member since 2018 · 61 posts · 46 votes
7y
@Brit Hale
I am in Cincinnati.. the market here is fairly forgiving. An average property (let’s a duplex -triplex where I live) will run between 110,000–150,000.. that’s not hard to afford... I have also heard of people buying single families and turning them into duplexes?
4 Reply
Brit Hale
Real Estate Agent · Joplin, MO · Member since 2018 · 112 posts · 96 votes
7y
@Patrick Crehan personally, I would go with an existing duplex or triplex. Usually the SFR that get turned into duplexes are old, "chopped up" floors plans, and the cost to add a wall, kitchen, and second hvac system (or things like that) might be a hassle or require more cash than you'd like to lay out. I do believe you could achieve a higher ROI this way, but having the immediate cash flow and setup of duplex/triplex would have my attention first.
5 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
7y
@Patrick Crehan You can do this. Make sure that you can pay for the house even if you don't rent any rooms. Buy a house where the numbers make sense for your home and for a rental later on. Good luck!
6 Reply
Aziz Wali
Member since 2019 · 10 posts · 3 votes
7y
@David Pere : Hi david. A quick question i am new into real estate and trying to get my first deal. I have 40k cash but my credit score is 630. I dont know if bank will give me anything but lets say i get a property just like yours but how can i get a second property after that becuz i will be paying mortgage to bank and will they give me more loans?
2 Reply
Patrick Crehan
OP
Member since 2018 · 61 posts · 46 votes
7y
@Aziz Wali
I believe in Ohio, FHA allows you to move out after a year to be able to get another FHA loan if you want to house hack another prop.. but I'm sure there is a limit on FHA loans you can have. Might only cut out at 2 loans until you have to throw the 20% investment on your third prop
0 Reply
David Pere
Rental Property Investor · Springfield, MO · Member since 2016 · 1k+ posts · 890 votes
7y
75% of your gross income counts against your debt payment on the first property...so if your mortgage is $600, and it brings in $1000 gross...the bank will count that as $750 - $600 = $150 income monthly...so it won't hurt you. 630 is plenty to get a loan, just won't be the best interest rate on the market.
2 Reply
Michael Weaver
Rental Property Investor · Phoenix, AZ · Member since 2018 · 1 post · 1 vote
7y
@David Pere
Don't you generally have to have 2 years of landlord experience for them to count that rental income towards your DTI?
1 Reply
Patrick Crehan
OP
Member since 2018 · 61 posts · 46 votes
7y
@Michael Weaver
My friend was in a similar situation. He just closed on a 300k duplex that the lender initially stated that he needed 2 year landlord experience to implement rental income for his finance.. but somehow he got by that.. I should ask him how he did it. Could just be the lender?
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Patrick Crehan:

@Brit Hale
I am in Cincinnati.. the market here is fairly forgiving. An average property (let’s a duplex -triplex where I live) will run between 110,000–150,000.. that’s not hard to afford... I have also heard of people buying single families and turning them into duplexes?
thats fine for house hack.. undercapitlized for stand alone rentals.. buy that househack first and foremost.
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6 Reply
Anthony Rosa
Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
7y
Originally posted by @Patrick Crehan:

I have 11k saved for my first investment property. I am going to house hack this prop for a couple years (with an FHA loan). I can save up a little more while on my journey of searching but I need a little confidence boost. Has anyone started out in this situation before? Was it worth it? Does anyone have stories, suggestions or ideas that can give me the boost I need before I pull the trigger on a prop? If you do.. PLEASE SHARE. It would be much appreciated.
(Don't try to scare me out of buying a property.. this is a confidence booster post!)
Save some more this way you can make a downpayment and do capital and general improvements to get the duplex move in ready and almost maintenance free with big ticket items. IMO, put 20% down on a duplex in a solid B/A- class area since you will live there. If the rental numbers work, maybe you can go with 10% down. If one of the duplexes can cover your monthly expenses you're golden.
1 Reply
Henry Kaldenbaugh
Verde Valley Arizona USA · Member since 2018 · 115 posts · 98 votes
7y
@Patrick Crehan : You may have some difficulty finding a house hack in California within your budget, especially a duplex or triplex. Keep looking and run the numbers. Also, start talking to local lenders including credit unions and community banks. Your best bet might be a small 1200-1400 sq ft starter home in a C neighborhood. You may qualify for a first time homeowner FHA credit.
0 Reply
Alex KhanPro Member
Specialist · Southeast Michigan · Member since 2015 · 300 posts · 244 votes
7y
@Patrick Crehan get started before someone else swoops in and get the property. You should be fine as long as you have consistent income coming in.
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Patrick Crehan
OP
Member since 2018 · 61 posts · 46 votes
7y
@Henry Kaldenbaugh
I am in Cincinnati. 11k can be a down deposit for a B property here I believe
0 Reply
Henry Kaldenbaugh
Verde Valley Arizona USA · Member since 2018 · 115 posts · 98 votes
7y
Excellent, I thought you were in California, possibly the worst real estate market for beginners in the world. If you could house hack a duplex-fourplex in Cincinnati, you are golden. Go for it.
1 Reply
Account Closed
Real Estate Agent · Cleveland, OH · Member since 2019 · 359 posts · 295 votes
7y
@Patrick Crehan hi! sometimes its not always the perfect situation and thats ok. i owner occupied a duplex that i bought with my now husband while i was in college. COLLEGE, i was broke. i did not even have 11k lol. i got an fha, put down exactly the min, and lived in a dump for 2 years as we slowly renovated everything ourselves (minus some things here and there). i would do it all over again if i had to.
6 Reply
Tanner Marsey
Rental Property Investor · San Diego, CA · Member since 2017 · 439 posts · 578 votes
7y
Just do it. You’ll be happy you did. House hacking is such a safe bet. I’d be into that thing for as little as possible, Monetarily speaking.
I’ve never understood putting down a huge down payment to “increase cash flow”. Everything out there will be a great deal with that logic.... just put down 70%!
Good luck.
5 Reply
Keith N.
Investor · Raleigh, NC · Member since 2015 · 189 posts · 102 votes
7y
@Patrick Crehan yes, I started with about exactly that much in my bank account when I was 23. I house hacked a duplex.... tons of others on biggerpockets have also started out with basically no money and 3% down on their first property. You really shouldn’t be worried as long as it’s a good deal. Owning 1 house with low cash isn’t very risky at all. The average first time home buyer scrapes together money and overpays for a house and they turn out fine..... Now, if I owned 6 houses and only had access to 11K, then I would be worried
4 Reply
Patrick Crehan
OP
Member since 2018 · 61 posts · 46 votes
7y
@Keith N.@Account Closed
I am 24 years old and I am in my second year of college... I have scrounged every penny I could to eventually buy a property... I live with my girlfriend, and she is with me every step of the way with this, even though I am putting myself in a "Great savings, but broke living" situation ... And I do believe 11k is enough.. Thanks to you both for your posts! I knew there were other people out there in my situation. Really good confidence booster replies
5 Reply
Patrick Crehan
OP
Member since 2018 · 61 posts · 46 votes
7y
@Tanner Marsey
I am confident I will now.. And yes my plan was to stay in there for a couple years.. renovate the place overtime, leave and refinance . Should give me a little better cash flow when I move out.
0 Reply
Aaron Metthe
Rental Property Investor · Syracuse, NY · Member since 2018 · 5 posts · 3 votes
7y
@Patrick Crehan
Bought my owner-occupied 2 family with about $13k down in Central NY. Purchase price: $120k. Didn't even know what a "drill gun" was back in 2011 when we bought it. Best long term life decision hands down. I enjoy the 2 hours a month of work on the property while pulling in $1k per month in rent per the one rented unit. I have learned a ton, and would say that ignorance of all the what if questions, was bliss.
Best of luck!
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