Where do I start?!!!!

Question

I am 28 year old with a beautiful wife and two children. We are a single income home, and I have horrible credit. What do I need to look into to start investing in real estate to create cash flow for my family?

My end goal is to create generational wealth for my future family.

Tony Lam · Answer

I started in the same boat as you a few months ago and started listening to the podcasts on the drive to and from work.  One thing that was repeated often is figuring out what you wanted to do.  You know you want to get started in real estate and help your family down the line which is similar to my goal.  But first you have to look at yourself and assess what your appetite for risk and what you can actually spare money-wise to apply towards real estate investing.

I think fixing your credit and looking at your monthly expenses is a good start.  In the meantime you can try to learn as much as you can about real estate investing and figure out what your strategy will be to achieve your goal.

Tim Harwick · Answer

I agree with @Jacob Sampson and @George W. start by building your credit, pay off debit, save money, act your wage, etc. Focus on getting your debit to income ratio as low as possible.

While you're doing that learn as much as you can about investing. Listen to the BP podcast, read, go to real estate meet-ups. Good luck and have fun!

Jacob Sampson · Answer

I would work on cleaning up your credit and while you do that get books on real estate investing and become familiar with your area.  I would understand what homes sell for, what they rent for, and how much cash you will need to build up in order to pull the trigger when you are ready.

Tony Lam · Answer

This should be helpful too.  https://www.biggerpockets.com/real-estate-investing

Jacob Sampson · Answer

I did enjoy Rich Dad.  Although, you don't need to read any of his other books...well actually I liked "Cash Flow Quadrant", as well.  But all the rest of his books are just rehashes of the same thing.

I actually think you would be best served by driving through your local area.  Figuring out which areas sell for how much and then also what a 1, 2, or 3 bedroom will rent for.

The more you do of that the quicker you will learn to recognize true deals in your market.

Caleb Heimsoth · Answer

@Stewart Perez how’s your income level? Typically with threads like this if you have awful credit you probably have lower income too, or you just suck at managing money.  Hopefully it’s because you have lower income.

Who’s the person that works in your family, you or your wife? Whoever it is, I’d say have the other person get a job.  Next figure out why your credit sucks and fix it.  If it’s due to outstanding bills or late payments fix it.

At this point, I would suggest not even thinking about real estate.  I don’t think you’re in a place to consider that at the moment.

Michele Wax · Answer

I believe you can get a FHA loan as low as 520 credit score if your income is enough for the loan.

BUT, Let me say that no matter what you do starting now is have a plan. You say you want  generational wealth then you need to set up land trust for everything you own so that you can keep it in the family for generations.

I would be willing to tell you more about this if you are interested.

MAKE A PLAN

Stick to it!

George W. · Answer

Like Jacob said, clean up your credit, setup a basic budget monthly, learn. Most importantly save as much money as you can. I don't know if you have a budget for yourself but having all the properties in the world won't make a difference if you don't save any money and pay yourself.

Then once your credit is repaired, maybe the best bet is a 3.5% down FHA loan on a multi-family.

Dan Maciejewski · Answer

You already answered one of the first steps -- improving your credit.  You're already educating yourself and starting to surround yourself with experts by joining Bigger Pockets !

Use the calculators, learn, think about what investment strategies feel right for you and your family.  I started by analyzing SFRs and now I live in a small Multi-Family.  You can never tell up front what's going to work!

Save money.  You'll need it for a down payment, repairs, reserves for repairs, cap-ex and vacancies if you're going to buy-and-hold, etc. . .   My CEO just released a report that suggests we start with even 1% for that fund and keep raising it as we get comfortable.  All the way to 10%, even if that takes 2 years.,

Stewart Perez · Answer

@Michele Wax thank you for your response ma’am! The term land trust is new so I would love to pick your brain on it, and get educated more on it.

Where do I start?!!!!

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