im trying really hard to get the ball rolling with my real estate investing passion. the problem is I only really have about 12k to work with.
i am having a hard time knowing if deals are "good" or not because im not sure how to calculate or figure out ARV. i also am not sure how i would even fund the rehab, should i even buy a property.
should i move into a house and just house hack? or how can i buy strictly an investment property, because my lender says i need 30% down...which i dont have.
im just stuck in this circle of not knowing what to do and its really frustrating. seeing all these success stories is great, but i dont know how to get my feet off the ground to start doing what theyre doing as well!
Please help and thank you to everyone in advanced!
Talk to another bank. Typically for an investment you need 20% down. You will also need closing costs. You may be able to get the seller to pay for these as part of your offer.
How much are houses in your area going for?
You could also do private money. Or wholesale a few properties until you have more capital
I want to try wholesaling, I understand the concept of it, but I’m unsure of how much to offer for homes and where to find investors to wholesale to..
I’ve placed 2 offers so far and lost both. 1 offer was full asking with no assist and the other was 9k less than asking with an assist.
The houses within a 10 mile radius of where i live now are going for upwards of 180k. These are property’s In locations I would move into of course. My goal for my first investment was to live in it while I rehab it. Then move out and use the brrr strategy
@Brandon Ribeiro So, wholesaling isn’t super duper complicated. You basically find deals, put them under contract, and sell the contract to someone else for a small profit. The website here (the blogs) have excellent resources on wholesaling.
For investors - go to local REI meetings, network and find the investors in your area. I would bet you anything that most (if not all) will say yes if you ask them if they want to be put on your buyers list. All investors love to not have to do much work and make money.
For pricing - find a good, reliable appraiser and try to find the ARV (after repair value). Most investors try to get properties at 70% of the ARV. So you will try to find the ARV, times it by 70%, then subtract any and all repair costs. That's what you're going to price it at for the investor. Then, you take a bit more off for yourself. It really all depends on the price of the property. If it's a 100k property, you might make 2-5k. But if it's a multi-million dollar apartment complex, you might make a couple hundred thousand.
@Brandon Ribeiro if you’re planning on house hacking you can get away with as little as 3-5% down. Even if you don’t, continue shopping with other banks because it’s pretty standard to only need 20% percent down on your first few investment properties.
have you thought about an fha loan 3.5% down?
@Cole Miller when you say to start wholesaling for capital, what the best advice you can consider one to do? Hypothetically a person that is about to do their first wholesale contract.
Correct me if I’m wrong but a simple explanation would be to persuade the seller to sign the contract agreement and just sell the contract to a buyer (investor); but i think there’s should be more details to it right other than just selling the contract?
@Cole Miller thank you for that!
@Ivan Loza I have my pre approval based on 4% down. But I keep losing to other buyers because they most likely have a stronger position in regards to down payment.
@Kwadwo Boafo I qualify for a conventional with 4%. I want to stay away from fha if possible so I don’t have to refinance out of the pmi.. I’m going to be refinancing anyway after the rehabbing is completed
@Jose Nava Can you clarify what you want advice on? I’m an expert by no means but I know a bit about it.
And yeah generally that’s the idea behind wholesaling, but the details do get a bit more complicated.
@Cole Miller Of course, what i meant was more directed on the details in the process on wholesaling a contract. What part of the details that makes it complicated?
@Jose Nava The actual implementation of the simple process can (but not always) get complicated. Like explaining to someone that you’re not actually buying their property, another investor is. Or that you’re making a pretty penny for just bringing the deal to someone else. Or even why you’re offering them the money that you are. The social aspects of wholesaling make it complicated, even though the principle behind it is so simple.
Read @Brandon Turner 's book, "The Book on Rental Property Investing." When you're done with that one, if you want to, read "How to Invest in Real Estate with No and Low Money Down" (also by Brandon Turner). They are super clear and easy to follow without being condescending at all - they'll teach you step-by-step how to do your numbers, what strategies to consider (including house hacking), and how to finance deals. I've read a lot of real estate books, and these two (especially the first one I mentioned) are by far the most thorough, helpful, and easy to follow in my opinion.
Assuming you don't currently live rent free then house hacking would be a great way for you to get a feel for owning real estate. You could get a duplex to a quad then rent out the other units and even rent out bedrooms in your unit. you could get an idea of what it's like to have renters, deal with maintenance issues, have ownership and let someone else pay your mortgage. I saw a billboard for a local credit union recenly offering a 100% finacing with no pmi for a primary--- i don't know how legit it is but do shop around there might are bank deals out there.
With only 12k and no experience i wouldn't start with a straight investment project.
Hey @Brandon Ribeiro , This is an exact problem I had a few months ago. I found a way around it is to look at other ways to make the deal work. Real estate is a very fluid field and has no set rules so that means you don't "need" conventional financing. You can always go with owner financing and lower the down payment to something manageable for you while still getting the seller what they are looking for at the moment and even give them some monthly income (just like a bank mortgage).
You could try to get a payment plan for a small entry price and flip the house to pay off the remaining note to the seller once the flip is completed. That allows for a higher cash on hand for your renovation budget.
Those are just 2 ways to make it work for a smaller budget. You just need to think outside of the norms to make it happen. I hope something I said helps, if you have any questions please let me know I would love to help if possible.
Good Luck sir!
Hello Brandon, Easy simple way to sort off know (Is simple with simple tools if you dont have acces to MLS) (IS NOT A DEEP ANALYSIS, "disclaimer") But it will help you get the ball rolling and brief idea for the ARV etc... Go to Zillow or Trulia, Search for the property,and only select for sale props and Sold props (on the More Section) select sold in the past 6 month and the select bath and year etc... On the sold ones try to see the pictures and compare and see if the look updated VS outdated sold, that will give you an idea.
That should get you going on analyzing ARV. If you have any other question, feel free to reach out ..
And as far as the 12k, Bro, That's a lot!! you can do plenty with 12k.. FHA Loan. ( get preapproved fisrt) And ask for help.. Search for a good broker ( that also invest in real estate_) tell them what you are looking for. you can find a local RE broker here in BP of just search...
@Tiffany Roberts thank you for the input! I do currently live rent free- moved back in with my parents last year to save money for this exact reason. I’ve been looking for multi- family properties, but I can’t find any at all that I would be able to afford within a reasonable distance from where i work. That’s the only problem I’ve found with that
@Maxwell Fontaine thank you! I’ve also considered that option too- how would I go about finding a seller financed deal?
Look into 203k loans as well. They bundle purchase and rehab all into one loan.
@Brandon Ribeiro call-out
@Sam Sindane call-out?