Birmingham, AL · Member since 2018 · 34 posts · 3 votes
I am 18 and would love to begin investing in real estate, however, I am too young to get a credit card to use to build credit. Since I can't build credit I can't get a conventional loan from a bank. The only other option (that I am aware of) is private lending. I looked on Zillow and Bigger Pockets and can't seem to find a private lender in my area (Birmingham, AL). Is there any other options of lending out there? Thanks! You guys are awesome!
Property Manager · Birmingham, AL · Member since 2014 · 37 posts · 36 votes
7y
@Nicholas Tanner, first of all, congrats for getting in the business so early.
If I were in your shoes, I'd track down a mentor and study under them. They could easily (now or in the future) give you access to capital to do deals.
Spending the next 6-12 months working for free for someone will give you tons of future value to your future investing self.
Don't be so quick to try to go at it alone. Slowing down and working for someone will make you MUCH more money in the long run - provided that someone is a savvy investor.
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
7y
private lenders refer to anyone who is willing to give you cash outside of traditional lenders.
for instance: friends, family, or friends through networking.
it's common that you won't know any at your age, don't be discouraged. There are absolutely private lenders in your area, you need to do 3 things:
1. spend a lot of time networking
2. practice finding GREAT deals
3. prove (not promise) that you are a reliable and responsible caretaker of other people's money
the road uphill is certainly worse for beginners because how can you prove 1 & 2 when you've never done a deal? this is the burden all investors must face. You need someone to take a chance on you, which is not always so easy.
there is always hard money loans, but I'm personally not a fan to recommend this approach. Hard money provides the bad combination of easy debt, little skin in the game, and high costs.
Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
7y
Paying cash for a deal (which means you have to get a hard money loan), is not the only way to purchase a property.
2 things you need to do:
1 start trying to track down properties that people NEED to get out of(find a deal).
2 learn more strategies on how to buy properties. No one ever said that you have to buy a house and pay off the owner when you purchase the property. Owner financing, sub-to, lease option, partner on the deal, contract for deed and a combination of those.
It might be a good idea to get involved in a Real Estate Investor Association(REIA) also. You will find many other local, like minded people to learn from.
Dont make excuses why you can't do something, figure out how you CAN do it.
Real Estate Agent · Circleville, OH · Member since 2008 · 633 posts · 488 votes
7y
Try your local REIA and talk to the investors there, even if 1-2 hours away, REIAs tend to have alot of people with good local connections to money. It might take some while to find the right people there, I know it did at mine but after a while it's amazing what doors can be open.
Property Manager · Birmingham, AL · Member since 2014 · 37 posts · 36 votes
7y
@Nicholas Tanner, first of all, congrats for getting in the business so early.
If I were in your shoes, I'd track down a mentor and study under them. They could easily (now or in the future) give you access to capital to do deals.
Spending the next 6-12 months working for free for someone will give you tons of future value to your future investing self.
Don't be so quick to try to go at it alone. Slowing down and working for someone will make you MUCH more money in the long run - provided that someone is a savvy investor.
Investor · Columbus, OH · Member since 2015 · 625 posts · 601 votes
7y
@Nicholas Tanner Your to young and inexperienced to get money from a private lender. Like the other guy said, a private lender is a private individual you know through your network who has money. They did something to get this money and for the most part they aren't dumb so they want to lend to experience and a good track record not an 18 year old trying to do his first deal. Actually now that I'm thinking about it, lending to someone with your profile would be about as risky as it gets for this type of loan.
If I were you I would start hitting up a few REIA meetings and get to know some of the players around you. From there network and get into an assistant/mentee role or something with one of them. This will be how you can get started, after you make a good account of yourself and get some experience behind you you'll have a good network of investors as well as a good idea who the private lenders are around you. After a few years of that you can find a deal and either take it to a private lender you know from your network or partner up with an investor you have met from going to REIA meetings and bring it down. You could do all of this and still be owning property before your 21/22. Good luck.
Lender · Miami, FL · Member since 2018 · 28 posts · 14 votes
7y
Nicholas, you are in a great position; you have "YOUTH" to go along with intellectual capital and the desire to achieve your goals at a young age. I applaud you. As a Mortgage professional, here is my recommendation to you (without having to go to a hard money lender):
1) Don't become discouraged! Remember that, often, achieving your RE goal means being patient while you build up what is necessary to achieve it.
2) Keep focused on your goal. Plan, quantify what you need, then take the steps necessary to get there (one step at a time).
2) Start learning about how to build up your credit: (assuming you have at least a part-time job) Applying for a MC or Visa Credit Card. Capital One is a good card company to apply with. Even with a $500 credit line, this is progress. Keep your balances under 30% of your overall limit, and pay at least your minimum payment on time monthly. Within 3 to 6 months, you would have an established credit score. This works toward persuading lenders that you are a good risk.
3) Start either saving for an initial down payment or get gift money from your family members if possible, for a down payment and closing costs on a purchase. If you are willing to live in the property that you want to buy, you could obtain an FHA loan and only have to pay 3.5% for closing cost on a residential property. Supposing you found a Quadriplex (4 unit property) priced at $400,000. You would only have to put a down payment of $14,000 toward the purchase!!!
4) By buying a 4-plex, at least 75% of the FUTURE rent collected in the other 3 units will be counted as part of your income. The key is to have enough collected rent to pay for the loan and still have money left over. So if you earn $20,000 per year, but the rent collected in 3 units is $3,000 per month after RE taxes and insurance, then the lender may treat it as $27,000 additional income for you; i.e., $47,000 total annual income, to factor if you qualify to get the loan.
5) Learn as much of the details as you can between now and when you're ready to make your first deal. Don't be hasty and make decisions without first knowing what you're doing or working with a trusted knowledgeable source. I just gave you a few tips to help you get there. Even if your plan takes you two years from today, you are in an envious position for most people. BEST WISHES AND GOOD LUCK! George
Flipper/Rehabber · Worcester, MA · Member since 2016 · 179 posts · 113 votes
7y
@Nicholas Tanner buy an owner occupied multifamily property, get paid to learn the ropes. Go to REIAs in your area, find investors who need help and work for them to build up your down payment savings. You will learn, meet and network with their contacts too.
Flipper/Rehabber · Worcester, MA · Member since 2016 · 179 posts · 113 votes
7y
@Nicholas Tanner but to your question, private money is at REIAs. Go to as many as you can, offer equity for money, "I'm looking for equity partners" us the phrase you should use.
Rental Property Investor · Lindale, TX · Member since 2019 · 37 posts · 9 votes
7y
@Nicholas Tanner You are 18! Man, I’m proud of you. If you are already thinking along those lines, someone will notice your enthusiasm and desire to get into real estate. My son works for a large landscaping company and is trying to get funds for a startup from his boss. Keep grinding!