$5,000 question

10 Replies

Ok so i have been doing alot of reading a some research lately. I have $5,000 to start my real estate investing. Is there anyway i can make this happen? What would be the best move starting with that little money? I'm in the philadelphia area and a licneces realtor if that helps. Please give me some ideas so i can start my path to financial freedom.

My mentor encourages our investors to do everything possible to invest with as little down as possible and in fact sets the number out of pocket per property to be $2k. He suggests to set that as a goal and do everything possible not to stray from it.

To do this, you'll need to spend time gaining understanding of different types of seller financing, concessions, and/or options. If you do this correctly, you should be capable of using your $5k well, but good comps, solid analysis and a good team will be essential to say the very least.

Do you have any credit or equity lines available?

Originally posted by "landchasers":
My mentor encourages our investors to do everything possible to invest with as little down as possible and in fact sets the number out of pocket per property to be $2k. He suggests to set that as a goal and do everything possible not to stray from it.

To do this, you'll need to spend time gaining understanding of different types of seller financing, concessions, and/or options. If you do this correctly, you should be capable of using your $5k well, but good comps, solid analysis and a good team will be essential to say the very least.

Do you have any credit or equity lines available?

Nah i don't own property right now so no equity line... all i have is credit cards and i really don't want to use them for anything. i know how bad debt can be.

Find out from city hall what crack houses they are about to shut down. Pull title and phone owner. Offer owner $1 to take over his headaches. Put $4,999 into fixing up and flipping it. Repeat over and over untill your a millionaire. I'm surprised as you're a realtor you can't get your buddies to help you!

Not all realtors are investors and not all investors are very knowledgeable. With you limited funds I would look for a multifamily that cashflows. If you can find a duplex in an area of single family homes that has been taken care of and is occupied with long term tenants that is a great thing. I would go a multi to get started because if you have a vacany at least some money is coming in.

Your 1st Offer:

75% First Mortgage
35% Vendor take back (second mortgage)
=110%
You get the property, and cash money at the time of close.

If your first offer doesn't work:
75% First Mortgage
25% Vendor take back (second mortgage)
=100%
You get the property with no money down.
=================================================
Save the $5000 for closing costs such as lawyer fees or other expenses that might arrise.

Find out from city hall what crack houses they are about to shut down. Pull title and phone owner. Offer owner $1 to take over his headaches. Put $4,999 into fixing up and flipping it. Repeat over and over untill your a millionaire. I'm surprised as you're a realtor you can't get your buddies to help you!

Hello, I'm a new guy here. I don't mean to hijack the thread in anyway, but this quote leads me into my opening question...

If I bought a rental house and I unknowingly rented it to some dope-heads, and the cops were called in by the neighbors to take care of these dope-head renters, is it possible for the police to seize the property and I lose it??? If so, thats a bit scarry.

I have been interested in RE for many years, but have never gone beyond purchasing my own home. I have about 100K equity in my personal residence with 10 years left on the mortgage, fantastic credit, and zero debt to get me started.

Thanks,

GlassJockey

Also when he says "crack house"...I think he means they were just junkies living there doing it, not meaning buy former meth labs. If you buy a meth lab you won't be able to legally rent it out unless it can actually pass a clean health inspection.

Glassjockey, not that this isn't something you want to think about, but as a new investor I would be focused on more relevent issues.

New investors have the tendency to focus on all the reasons why NOT to invest. Now don't get me wrong there are risks and you should accurately assess what probable and possible problems might come up, but in order to actually do this you will need to focus on WHY you should be investing and not necessarily why not.

In reference to a police raid, the government is not going to "take" your house. The actual house is not evidence. If it becomes a health hazard from a meth lab then the city would require you to clean it up before you rent it out.

Keller in reference to starting with $5,000, I would recommend that you focus your efforts on building more capital first with little or no investment. Wholesaling, bird dogging, lease options, subject to's, and owner financing are a good way to start with little capital. If you have good credit you might look into some 100% financing, and if you don't have good credit look into hard money lenders.

Glassjockey, not that this isn't something you want to think about, but as a new investor I would be focused on more relevent issues.

Ryan, thanks for your response. I agree I should be more focused on the "why I should" aspect of investing in RE. A co-worker brought it up at work so I thought it might be a good question to post on the forum.

My RE education continues...

Thanks,

GlassJockey