Should I pursue this property or wait?

6 Replies

Hello, BP community! I am always on the website learning and researching, and I finally have a question so I decided it was time to make an account and engage with everyone! 

Anyways I am graduating college this year, and I will start working right when I do. Currently I do not have very much money saved up at all (less than 2k). My uncle has had a property for years, and he knows how much I want to get into investing so he told me he will cut me a great deal when I am ready & able to start investing. So I have a couple thoughts going on in my head I was wondering if everyone could help me with. 

I do not know the actual value of the home or how much he is going to sell me it for, but the first thing that comes to mind is to do the BRRRR method especially since its a fixer upper (nothing super crazy), using Hard money. However, my thought process is if I use hard money, once I fix it up and refinance it I will just have to pay the hard money lender back then I will be back to square 1 with no money. I know I will have a property, that is cash flowing $200 a month atleast (hypothetically speaking), but if I want to invest in another property I will just be using HML again?

Second thought, is just starting at my job, and saving like crazy then use my own money. However, even if the house is only 80k that will take a very long time to pay for, and if I plan on doing the BRRRR strategy that means I would be paying the full cost of the house before taking out a loan. Right?

I know I have a lot to learn, and I hope everything I said makes sense. With all that being said, what steps would you take with this opportunity?

Have you read the BRRRR book? If not, listen to BP Podcast #327, then consider getting the book.

That said, The whole point of BRRRRing is that you do it if you don't have a ton of money using PML or HML. So this sounds like a good strategy for this situation.

You could also do seller financing if you're not comfortable with the HML. Either a land contract or a similar creative financing vehicle with your uncle where you come to an agreement that he lets you do the rehab with HML and when you refi it is when you pay him. 

Good luck. let us know how it goes. Cheers.

@Account Closed

1. Thank your uncle

2. Understand the deal. Ask your uncle what is he thinking? Are you getting a deal on the purchase price, on the financing on what. Are you getting a deal?

3. Determine highest and best use of the property / situation. May be you can just flip it, or fix and flip, may be you can fix, get it financed and rent, may be you can rent rooms out to your friends - analyze a pros and cons of a few options.

4. Based on 3, create an action plan

5. Execute

Good luck 

Never buy anything unless you know the value. Never pay market value for anything. Forget about your uncle's house. It's just a house. There is one on every corner. Your primary source of income is your new job. Get good at your job, keep learning about real estate investing, and invest when you find a good deal. BRRRR is not a new concept. I know people that were doing it in the 1970s. It just wasn't called BRRRR back then. We are in the most expensive real estate market in history. This is literally the worst time in history to get started. Learn and by the time the next recession happens, be ready with money and knowledge to take action.

Originally posted by @Richard Davis III :

@Anthony Dooley Land Contracts are extremely common in WI for investors to use and there are a lot of them out here making a ton of money on them. They differ state to state. Plus I also specifically say "Or a similar creative financing vehicle". 

Ok, so a lot of people are engaging in risky activity, so it's all good? Have fun with that.