Own a home (2 years), equity is about 15k only. This year making an in-law, which should increase equity in home. 0 cash in pocket. The big I have is once I’ve educated myself enough (research, etc), I keep coming back to the same question. If I see a MFH, that looks like a good investment and have 0 cash or very little say 3%, is it recommended to use equity on house we live in to put down on MFH?
Or, do I just need to keep saving my own cash?...which may take longer
I think a great way to get started is to find a local mentor. Someone you can learn from who is already doing what you would like to do.
Cash is not the biggest hurdle to get into multifamily. The biggest hurdle is knowledge and experience. Finding a mentor will help a great deal, and you will avoid many mistakes people make. That's how I started and I'm so thankful I did!
I tapped into my personal network from church, work, and Linkedin to ask around about multifamily. I finally found someone through a mutual friend. I reached out via Linkedin and asked to have lunch. Fast forward two years - I am now in multifamily full time, buying properties from 200-500 units in size.
I know you asked about zero cash down, but I believe the real answer is surrounding ourselves with the right people. Hope that helps!
1. You most likely won't be able to get a heloc on your property until you've paid down at least 20% of the loan balance and then they typically don't like to allow you be leveraged over 80% of ARV.
2. Stuff happens. If you were to deploy all of your capital to get into a new multifamily property, how would you pay for repairs should an AC unit go out? You are going from one unit to three units in one move, so in one day you tripled your chances of a cap-ex expense. You are also going to have a vacancy in at least 1 unit as you move out of one unit and into another. You could get lucky and have someone lined up the day you move out, but that's not always the case.
I always recommend that people have at least enough money left over in reserves to cover at least one cap-ex expense and/or 6 months of mortgage, insurance and tax payments (PITI).
If you haven't read Scott Trench's book Set for Life, he lays out some great tips on getting started from a place of financial strength.
Ok thanks, so essentially I need to build my egg of cash to invest and get the ball rolling, by increasing the EOM cash...paying off whatever else I can (cc debt free), so things like car, etc...
I think a great way to get started is to find a local mentor. Someone you can learn from who is already doing what you would like to do.
Cash is not the biggest hurdle to get into multifamily. The biggest hurdle is knowledge and experience. Finding a mentor will help a great deal, and you will avoid many mistakes people make. That's how I started and I'm so thankful I did!
I tapped into my personal network from church, work, and Linkedin to ask around about multifamily. I finally found someone through a mutual friend. I reached out via Linkedin and asked to have lunch. Fast forward two years - I am now in multifamily full time, buying properties from 200-500 units in size.
I know you asked about zero cash down, but I believe the real answer is surrounding ourselves with the right people. Hope that helps!