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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Andrew Beaver
Malden, MA · Member since 2016 · 112 posts · 63 votes
7y
@Sarah Doogle I don’t think one could say more money is needed without knowing where he’s looking to buy... I have not placed money down on an investment property to house hack but I have done a rental for Airbnb and the overall process is great and easy! Money flowing, taking care of most of not all of my rent. Of course there are downsides to it but what opportunity is perfect! I don’t think you can go wrong with a low down payment house hack!
2 Reply
Brendan F. Nagle
Member since 2018 · 104 posts · 94 votes
7y
I am almost done with my 2nd house hack. It is doable. Good luck. Find a 2-4 plex fixer upper. Bundle both loan and construction loan together. Make sure that fits your numbers and buy it. Confidence boosted.
Then comes the harder part. Don't live in the nicest/biggest unit. Fix up the units as quickly and cheaply (you putting sweat equity) as possible. 1, 2, 3, & 4. You always living in the not finished parts. Put a clock on yourself. You find the best tenants. Maximize your cashflow. Use the cashflow and W-2 income to pay the PITI and fund a reserve for Cap EX and Maintenance. Clock is ticking, Once you are fully rented and stabilized, then start looking for your next hack. Be ready to jump once you have finished the residency requirements for the first one. Good luck out there.
1 Reply
Will C.
Rental Property Investor · Richmond, VA · Member since 2016 · 279 posts · 133 votes
7y
@Patrick Crehan
Try and spring for a 5% down conventional if possible. IMO much better than FHA.
1 Reply
Travis Watson
Property Manager · Portland, OR · Member since 2015 · 23 posts · 10 votes
7y
@Patrick Crehan definitely look into duplex up to quad... I wish I'd done it years ago. You learn the ropes and are on your property in case anything gets fishy from tenants. Check your numbers and the area the home is in first and foremost... Then pull that trigger! Your future will thank you later
0 Reply
Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
7y
@Patrick Crehan I had much less than that when I started and now have 20 units
[email protected]512-888-9122
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Kate J.
Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
7y
@Kyler Cook these numbers should be way off. 2/3ds of Americans have less that 1k insavings? Now way...
1 Reply
Matt Garner
Member since 2019 · 4 posts · 2 votes
7y
@Patrick Crehan
You can do it, “Because you’re good enough, you’re smart enough, and doggone it people like you!”
Pep talk courtesy of Jack Handy
2 Reply
Andrew Cornstubble
Rental Property Investor · Sedan, KS · Member since 2016 · 125 posts · 92 votes
7y
@Joe Frank
He also says cut up your credit cards. I did that when I had a credit score in the 400s. The smartest thing I ever did was fork over the money for secured credit cards after.
1 Reply
Andrew Cornstubble
Rental Property Investor · Sedan, KS · Member since 2016 · 125 posts · 92 votes
7y
@Patrick Crehan
Any time bud! And just fyi, if you have more time than money most small home improvements can be handled in a weekend with YouTube and 16 trips to a home improvement store.
1 Reply
Jacob Sampson
Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
7y
Your first purchase is likely to be your riskiest, because of a lack of experience. With that in mind if you're going to make a mistake make it small. Meaning buy as inexpensive as possible (don't go into a war zone, but you also don't need to max yourself out).
Remember the only mistake you can't recover from is the one that takes you out of the game. As long as you stay in the game you will eventually recover.
That level of bankroll doesn't allow you to buy much. I would have to agree with @Account Closed, in the end you probably need more cash. $11k would be pretty tight even here in Topeka, KS and we are a total bad *** rental market.
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Kyler Cook
Rental Property Investor · Kalamazoo, MI · Member since 2018 · 117 posts · 235 votes
7y
@Kate J.
Weird that you would single me out and basically call me a liar without looking into my stat.
https://www.google.com/amp/s/www.cnbc.com/amp/2018/01/18/few-americans-have-enough-savings-to-cover-a-1000-emergency.html
Just do a general search next time. There’s tons of articles out there on the internets.
0 Reply
Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
7y
Originally posted by @Patrick Crehan:

@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
You are limited to one FHA loan at a time, unless you are moving out of the original property for a job more than 50 miles away. You would have to get a conventional loan for the subsequent properties until you refinance out of or pay off the FHA loan. Also, FHA with less than 20% down pays MIP (FHA equivalent of PMI) for the life of the loan - you can't drop it after you've paid down 20% in equity.
If conventional is an option, look into it.
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David Mussaw
Real Estate Agent · Torrance, CA · Member since 2018 · 33 posts · 27 votes
7y
I suggest sticking to your plan of being out in 2 years and having the financial ability to carry through with the plan. I bought my first house hack property 8 years ago with the intentions of converting the house into a rental property. I'm barely following through with my initial 2-year plan due to mainly family health-related issues. Have confidence in your plan and execute it. Life is going knock you on your *** at some point in time regardless of where you at on the journey so just do it. If something goes wrong, get back up and learn from it.
0 Reply
Kyle Wells
Realtor · Lake Stevens, WA · Member since 2018 · 122 posts · 91 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!)
Do your research and ensure you have excess cash for repairs that come up. Don't overstretch yourself financially. Good luck!
0 Reply
Eric Carr
Real Estate Broker · Los Angeles, CA · Member since 2017 · 658 posts · 293 votes
7y
@Patrick Crehan
Great job saving $11k!
Here's the confidence you need. Keep saving, even when that money burns a hole in your mental pockets and it seems like it's all for nothing. $11K is a great start, and might or might not be enough for a solid beginning in RE investment.
Learning builds confidence, as does having a basic plan, and the absolute belief that you're going to make it. Keep saving. Look at other investments methods to help that 11k expand faster - maybe index funds (or crypto - yes it's volatile, but over time... wow...) The point is do your own investigation, leave emotion out of it because if you buy with paper thin margins, no reserves, and high payments, you arent setting yourself up for the best results. Pull that trigger when YOU are educated enough that you feel good about the decision and don't need a boost. So I'm not talking you out of it, or into it per se. You must do it. But keep saving until the plan comes together for you, and that will al be based on knowledge. It will grow inside your mind.
1 Reply
Tom Hastert
Topeka, KS · Member since 2017 · 27 posts · 1 vote
7y
- I want to househack a 2 or 3 plex. Most say use FHA, but you can only have one FHA at a time so I would have to refi it off when I buy my second small plex. This is another expense to save up for.
- I want to figure out my 2nd purchase at the time I do this first one. I heard conventional financing will also allow owner purchase on 2-4plexes.
- why not get the conventional loan instead of FHA, don't they allow more than one loan and also low down for owner occupants, then I won' have to refi off the FHA?
  8:27 PM
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Roger Fonseca
Member since 2019 · 12 posts · 2 votes
7y
"Good luck is when opportunity meets preparation, while bad luck is when lack of preparation meets reality" - Eliyahu Goldratt
But seriously, my two cents is just to run the numbers, have confidence and trust in yourself. All the best!
1 Reply
Clarence Johnson
Real Estate Agent · Inglewood, CA · Member since 2015 · 295 posts · 150 votes
7y
@Patrick Crehan I started in a house hack, best decision I have ever made. It allowed me to save for the next investment and obtain hands on management experience as I scale. @Aziz Wali FHA will allow you to purchase another property in 1 year start with a 2-4 unit, then purchase a condo, then purchase a sfr that can possibly be converted into a duplex. Your concern about then not giving you two mortgages is usually not an issue when your filing the rental income on your taxes.
1 Reply
Olena M.
New to Real Estate · San Diego, CA · Member since 2013 · 101 posts · 78 votes
7y
We bought our first condo in CA on FHA loan with about as much money as you have now. We did a live in flip ourselves and sold the property after two years which gave us some starting capital. It was tough living in a construction zone for a while but that's what you do when you don't have a trust fund waiting for you after you graduate college. It will be difficult to buy a duplex in CA with 11K. Perhaps you could try doing what we did. Or buy a house and rent out rooms? Either way, house hacking is a great way to get your feet wet and to learn managing your tenants. It's also relatively low risk because you actually live on property. Good luck with your first investment property!
1 Reply
Frank Maratta
Rental Property Investor · CT · Member since 2019 · 105 posts · 68 votes
7y
@Patrick Crehan
House hacking is the best thing you can do to get started! I wish I did this. Pull the trigger! Buy something that might need a little work but Just make sure the mechanicals are in good condition and you aren’t going to have any major items come up that you can’t afford to replace right off the bat. Put in some sweat equity and over the next couple years slowly renovate the little things yourself, be frugal with personal spending, keep saving, keep educating yourself through the forums and podcasts, and you’ll be surprised where you end up in a couple years. Real estate is not a get rich quick scheme. Get started now! The one regret I have is not getting started sooner.
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Pamela P.
Rental Property Investor · Elmhurst, NY · Member since 2014 · 31 posts · 5 votes
7y
Hey Patrick - happy to help you walk through the numbers before you jump in. Have you run your comps? Money is made in the buy not the reno cost. How are you estimating your reno cost? I'm not a lender or anything like that just a REI enthusiast. Feel free to contact me if you want to chat.
1 Reply
Bryan Clement
Rental Property Investor · Union, ME · Member since 2018 · 161 posts · 104 votes
7y
Dude you need to read Sell or Be Sold by Grant Cardone. If you aren't sure of it you will fail, eventually. Sell yourself that you will be 100% successful on a property, and then do everything you need to to make it happen. Control your own destiny. As Grant says, you are your own biggest sale.
1 Reply
Kyle Sorrels
Biomedical Medical Technician · Scottsburg, IN · Member since 2015 · 10 posts · 6 votes
7y
@Patrick Crehan ,
This is where I started, unknowingly, several years back in 2011. I started at just about the same point you did and purchased an REO for around 15k. I used everything at the time I had to purchase the property. Fast forward to now, and I'm about to move out of this property which is now valued 5-7x more than what I purchased it for and over double what I have invested in it. This live-in-flip allowed me to save money to purchase my first investment property, knowingly. It has also helped me get into a position to where I can BRRRR future properties.
It's been a long road and I've used a high savings rate to help get to this point. It seems like it was just yesterday I was aimlessly wandering around it the dark to position myself favorably for more deals. If you can stay the path, you absolutely will see the fruits of your labor. In the last 8 years I've been able to increase my net worth appx 20x. It almost happens without you knowing it.
As other have said, read books, listen to podcasts, but most importantly, take action.
So yes, Patrick, you should absolutely keep going. The first deal you buy will always be the toughest. Good luck and just keep putting one foot in front of the other until you get there.
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Isabella G.
Member since 2019 · 4 posts · 4 votes
7y
Originally posted by @Account Closed:

@Patrick Crehan what's this house hack going to cost to purchase?
House hacking gave me a free place to live for the last 7 years! I would say it's worth it if the cost of your mortgage after house hacking ends up being a good amount cheaper than your rent cost if you just lived with roomies. Don't worry about the whole "debt paydown thing" for the first few years. It's all interest paid to the bank at first anyways.
Hi, I'm in Sacramento too and wondering how it's possible to house hack in this market given the price of multi family units here. I have found a few good deals and a possible owner financed deal up near Eureka though which is about a 4.5 hour drive. I'm a little wary of trying to be a landlord though from a distance and not being familiar with the rental market up there. And i wouldn't be able to move. Do you recommend or have any experience with seller financing? Thanks
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Account Closed
Rental Property Investor · Sacramento, CA · Member since 2015 · 1k+ posts · 893 votes
7y
@Isabella G. my house hack in Sacramento was an SFR that I still live in, purchase in 2012 for CHEAP. I wouldn't do it again now, prices are way too high for it to make sense. I also do not recommend investing in any rental in this state now. I invest exclusively out of state now & would recommend you do the same, or just wait for things to be cheaper here if you prefer to invest with close proximity. Regardless of where you choose to invest, I strongly recommend finding a good professional property management company and using them.

As for seller fi, it's nice if they require a tiny downpayment of you, or it's a deal a bank won't finance (which i stay away from), but outside of those two perks I don't see a benefit to it. Also, in my experience, when a seller is publicly advertising/offering seller fi, it's usually a crappy deal and they're trying to sweeten it by appealing to people who will do less due diligence than a bank. Not always the case, but look very closely at any deal you see listed online that says "seller financing available". I sell a lot of property and have never even considered seller financing.
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