Really need some help/advice

Really need some help/advice

Brandon RibeiroPro Member

Real Estate Broker · Philadelphia, PA · Member since 2016 · 228 posts · 95 votes

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!

Podcast Guest on Show 2 “Cash Flow” Housing Markets That Are On Track for Big Growth

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Member since 2019 · 13 posts · 19 votes

You could also do private money. Or wholesale a few properties until you have more capital

See this reply in the discussion

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Bill Plymouth
Real Estate Agent · Philadelphia, PA · Member since 2018 · 416 posts · 396 votes
7y
@Brandon Ribeiro
Look into FHA 203k loans. They wrap the purchase price in with the rehab loan. The only issue with them is that you have to use a HUD approved contractor. You can't do any of the work yourself. You shouldn't need more than 3.5-5% down. You can even utilize up to 6% sellers assist for closing costs. A major plus of buying a house in this way is that you will have built in equity once the rehab is complete.
Secondly, when it comes to finding an accurate ARV, use a reliable realtor who specializes in your market. If you're looking to invest in Lansdale, find a top producer in lansdale to run comps for you.
Third, if you're looking at properties on the MLS you're going to have a hard time. You aren't in the strongest financial position. You want to make sure that you are the first and only offer a property owner sees. I would look for distressed properties that are off market. You may be more likely to find a deal there.
Finally, have you considered looking properties in auction? That 12k can go a long way in an auction. In Philadelphia tax auctions, you only need to put 10% down the day you purchase the property. Once the property is secured, you have 30 days to come up with the remainder of the funds. You can either bring a partner in with you for the purchase, or you can “sell” the property for a greater price before the 30 Days Is up. I will be actually going to an auction on Wednesday with a friend of mine. We aren’t purchasing anything. We are just going to observe. If you would like to connect, you are more than welcome to come.
Seeing success stories people post is great, but all of those people started somewhere. It may have taken that person years Of study, networking, and market analyzing to be in a position to get that homerun deal.
Don’t compare your chapter 1 to someone else’s chapter 10. That’s a sure way to frustrate and discourage yourself from taking action. You got this bro! Push through the obstacles and you will find success.
Good luck!
2 Reply
Brandon RibeiroPro Member
OP
Real Estate Broker · Philadelphia, PA · Member since 2016 · 228 posts · 95 votes
7y
@Bill Plymouth thank you for the advice!
Podcast Guest on Show 2 “Cash Flow” Housing Markets That Are On Track for Big Growth
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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
7y
@Brandon Ribeiro I highly recommend getting started buy house hacking a small multifamily. It's worked well for me and dozens of people I've helped in Minneapolis. It will work in your market, does anywhere.
[email protected]512-888-9122
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Stephanie P.Pro Member
Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
7y
Originally posted by @Brandon Ribeiro:

@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
Take the FHA with the lower barrier to entry, especially if you're going to refinance out after the work is completed. You will only lose the upfront MIP and won't have to put more money down.
Househacking is the way to go and FHA is the best when you're short on cash for entry and buying multiple units.
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Brandon RibeiroPro Member
OP
Real Estate Broker · Philadelphia, PA · Member since 2016 · 228 posts · 95 votes
7y
@Stephanie P. How would the fha be lower barrier to entry if the conventional is only 4% down as well?
Podcast Guest on Show 2 “Cash Flow” Housing Markets That Are On Track for Big Growth
0 Reply
Michael Ealy
Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
7y
Originally posted by @Brandon Ribeiro:

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!
Brandon,
If your credit score is 720 and above, look into getting a business line of credit. Depending on your annual income, you might be able to get $20K, $40K even an $80K business line. That will help greatly since your capital is too small. PM me if you need help. I can refer you to someone I know who can help line up the BLOC for you.
Now having said that, you should also look into complementing the BLOC with a rehab loan. The rehab lender can provide 90% of the project cost (total of acquisition plus rehab) while your BLOC can provide the 10% downpayment plus pay for the points and the holding costs.
By having a BLOC + rehab loan, you can ACQUIRE properties, and have the cash to REHAB them. Once you buy-and-rehab, then you can rent it out. Once you rent it out, you can approach your bank or mortgage lender and refinance or get a new loan to pay off the rehab lender and the BLOC and then you can do it all over again. This strategy is popularized here on BP as the BRRRR method (Buy-Rehab-Rent-Refinance-Repeat). There's a book being sold here on BP about the BRRRR method. I have not read it myself because I don't need to as I've done it myself many times and not just with houses but also with apartment buildings.
And yes, you need to know how to get the ARV of a property. How do you know that? Maybe buy the BRRRR book and learn. And then apply it in the real world by talking to a real estate agent who will do comps for you so you can get real world ARVs.
1 Reply
Stephanie P.Pro Member
Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
7y
Originally posted by @Brandon Ribeiro:

@Stephanie P. How would the fha be lower barrier to entry if the conventional is only 4% down as well?
@albert bui did a blog on this a while back. I linked to it.
What I was alluding to was house hacking units. It's the only way to get a multi family property with only 3.5% down.
If you're going to go units (which I highly recommend as a house hack, not just renting bedrooms in a sfr), FHA has the lowest barrier to entry.
Here are the numbers:
If you've got limited funds to work with and you're in an area where you're going to pay 180K for a property, then your down payment is going to be $6300 and with reserves, closing costs and prepaid taxes and insurance, you're going to hit $10K. You may even have to get a lender credit to qualify. If you go Home Possible 5% down, you're looking at $9000 down and you will exceed 10K before you even get to closing costs. Not sure what you've got but it you're in the 4% range, my numbers should be close.
https://www.biggerpockets.com/member-blogs/4658/54418-5-down-conv-for-2-4-units-is-available-home-possible-freddie-mac
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Heshel Mangel
Member since 2018 · 208 posts · 90 votes
7y
Originally posted by @Brandon Ribeiro:

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!
Brandon, there are so many in the exact same shoes as you so don't feel alone. BP is a great place to network and learn more strategies, connect with great people who can get you off and running.
I'd suggest a few different ways to get involved:
Partner with family and/or friends to flip a couple houses to raise capital - you can get financing from Hard Money Lenders who will fund majority of the purchase and construction.
Partner with said friends/family to buy a small multi-family and rent it out.
Find a great deal and pitch it to your network, offer them a preferred rate of return and profit share. Better a small piece of a deal then no deal.
Show your value in your hard work and effort.. eventually the money will follow. Or so they say ;)
Good luck!
0 Reply
Anthony Rosa
Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
7y
You can house hack and put down about 5%. Do you have good credit and a work history. Banks want to see about 2 years worth of taxes, current income checks, good credit, outstanding debt and down payment money.
1 Reply
Ken B.Pro Member
yucca valley, CA · Member since 2015 · 77 posts · 33 votes
7y
@Brandon Ribeiro
A great way to start out is maybe a duplex, triplex, or quad. Get a fixer at 60-80% and obtain an FHA loan @3.5% includes wraparound for rehab work. Requires you to hack (live in) for a year. Benefit is you'll probably live free maybe get positive cashflow, at least in the 4-plex. Qualifying is fairly easy. A good bigger pockets agent in your area could probably help locate the perfect property in the right location.
1 Reply
Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
@Brandon Ribeiro how long did it take you to get 12k? Depending on that answer, I would say you may or may not be ready to invest.
Real estate has a lot of hidden costs such as title fees, lender fees, appraisals, inspections, so forth.
If you spend 12k to buy a property what are you going to do when your tenant skips town on the rent, and you have to rehab it? I spent almost 5k when that happened to me about 6 months into owning any real estate, and that’s not even really that bad..
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Brandon RibeiroPro Member
OP
Real Estate Broker · Philadelphia, PA · Member since 2016 · 228 posts · 95 votes
7y
Originally posted by @Caleb Heimsoth:

@Brandon Ribeiro how long did it take you to get 12k? Depending on that answer, I would say you may or may not be ready to invest.
Real estate has a lot of hidden costs such as title fees, lender fees, appraisals, inspections, so forth.
If you spend 12k to buy a property what are you going to do when your tenant skips town on the rent, and you have to rehab it? I spent almost 5k when that happened to me about 6 months into owning any real estate, and that’s not even really that bad..
for my first property, which i am currently looking for- i am planning on house hacking, so worst case scenario i wont have anyone in the rooms and ill have to pay the full mortgage myself
Podcast Guest on Show 2 “Cash Flow” Housing Markets That Are On Track for Big Growth
0 Reply
Dave Steadman
Fort Lauderdale, FL · Member since 2016 · 22 posts · 8 votes
7y
All my investments so far have been 15 percent.( thank God bc 30 percent would be a lot to put down)
0 Reply
Riyad Qattum
Specialist · Atlanta, GA · Member since 2017 · 26 posts · 17 votes
7y
@Brandon Ribeiro Have you looked into wholesaling possibly?
0 Reply
Storm S.
Real Estate Agent · Santa Barbara, CA · Member since 2016 · 518 posts · 283 votes
7y
@Brandon Ribeiro invest in REIT's while you build up the funds to invest directly in real estate and have enough reserves to survive any problems you may run across.
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Brandon RibeiroPro Member
OP
Real Estate Broker · Philadelphia, PA · Member since 2016 · 228 posts · 95 votes
7y
@Riyad Qattum I have, it’s just not really knowing much about it, that’s holding me back. I want to make sure I don’t get stuck in a corner or overpay for a property and then not be able to find an investor for it
Podcast Guest on Show 2 “Cash Flow” Housing Markets That Are On Track for Big Growth
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Brandon RibeiroPro Member
OP
Real Estate Broker · Philadelphia, PA · Member since 2016 · 228 posts · 95 votes
7y
@Storm S. Have you ever used fundrise? I just looked into it after I saw your comment
Podcast Guest on Show 2 “Cash Flow” Housing Markets That Are On Track for Big Growth
0 Reply
Kristian Conway
Contractor · New Orleans, LA · Member since 2018 · 36 posts · 42 votes
7y
@Brandon Ribeiro
Being relentless and not taking no for an answer is really helpful in starting out! As Robert Kiyosaki said, you have to change the mindset of “I can’t” to “How can I?”
There was also a BiggerPockets podcast recently where the guest recommended asking why all the time. When you get a no, follow with “no but why?” That’s worked really well in my financing. You’ll be surprised how many new options that can open up for you!
2 Reply
Brandon RibeiroPro Member
OP
Real Estate Broker · Philadelphia, PA · Member since 2016 · 228 posts · 95 votes
7y
@Kristian Conway thank you for the motivation! I keep asking myself “how” can I make this all fall together!
Podcast Guest on Show 2 “Cash Flow” Housing Markets That Are On Track for Big Growth
0 Reply
Storm S.
Real Estate Agent · Santa Barbara, CA · Member since 2016 · 518 posts · 283 votes
7y
Originally posted by @Brandon Ribeiro:

@Storm S. Have you ever used fundrise? I just looked into it after I saw your comment
I have not personally, but what I meant is that you invest in public Reit's that are listed on a stock exchange because your only going to do this until you get enough money saved up to invest in real estate directly. I would avoid real estate syndications and private and public non-listed Reit's because they all normally lack liquidity. So you won't be able to cash out when a real estate investment opportunity comes along. When you do find that perfect investment property, you can just sell your shares in the Reit's to fund your downpayment. If stock picking isn't your thing, there are always real estate index funds such as (VNQ). This all assumes that you want to invest in real estate and that you want to become an active real estate investor in the near future. If these assumptions are wrong this doesn't apply to you. Also, please don't sue me this isn't investment advice.
2 Reply
Riyad Qattum
Specialist · Atlanta, GA · Member since 2017 · 26 posts · 17 votes
7y
@Brandon Ribeiro Don't have analysis paralysis, read a couple books and watch some videos I guarantee within a couple weeks you will know it the process is easy finding the sellers is the hardest part, and if the numbers are good the buyers will come to you.
1 Reply
Sam Sindane
Member since 2019 · 7 posts · 1 vote
7y
@Brandon Ribeiro great question I would also like to know that
0 Reply
Sam Sindane
Member since 2019 · 7 posts · 1 vote
7y
@Ivan Loza please brother what is house hacking
0 Reply
Ivan Loza
Real Estate Agent · Dallas, TX · Member since 2017 · 136 posts · 141 votes
7y
@Sam Sindane it’s when you buy a property as a primary residence and live in one of the units while renting out the others. The objective is to live for free or at least at a great discount
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