Only $5,000 cash how can I start with a rental property !?

63 Replies

I agree with what the first person posted. I've looked into investing with limited funds and it's very difficult, not impossible but difficult. Also, there are always surprises that come up in REI so you always want to have a financial cushion. Some options might be looking at very inexpensive markets like the rural south or partner with someone you trust with experience and money where you could put your 5k into a deal then get a percentage out of it. A good starting place might be to decide exactly what your objectives are then call your bank or (my preference) credit union; tell them exactly what you want to do and ask them what you need to do to get there. A good agent will give you lots of useful information, a bad one won't. So don't hesitate to talk to a few different people.

Don't rush to get into the market if you are limited for funds.  Do your research, find out how much you can borrow and save up to buy a rental in a good area.  When purchasing there are extra costs that can quickly add up.

Depends on your market. Looks like you are in NYC, so that is going to make things pretty tough without bringing in someone else or someone else's funds. Like @Jesse Stein , said, I'd take a look at some cheaper markets. If you're actually able/willing to move, there is always the house hack. This is such a great strategy for so many reasons. Specifically, with regard to the funds, assuming you can take out an FHA loan because you are actually living in the property, you can get a 100-140kish MF and won't need to put more down than that 5k. This excludes closing costs, future repairs, etc., but you get the idea.

5k won't go very far in this business.  If I was pressed to use the 5k, I would spend it on marketing, getting my RE licensing and building that piggy bank via selling houses as a Realtor or wholesaler.

@Cesar Gomez how is your credit score? I am not an expert but I think you need to save some more. What are you looking to buy a fixer upper? I personally had to house hack when I got my 5000 house at the auction in my city. Hope this help a little.

Keeping working that day job and save every penny until you have money to invest AND a comfortable emergency account.

Are you a homeowner? If not then I suggest that your first investment be in a principal residence. There are a lot of benefits including better financing, possible down payment assistance, first crack at some foreclosures, etc. Ideally its a multi-family that will cashflow, but even if its not I guarantee that in the long run, if you maintain it properly, it will grow your net worth.

@Cesar Gomez we'll get a business license in real estate to get more funds I doing that know . You have access to money and options . I learn and got 5 vendor net 30 accounts paid . the sooner you pay the higher my credit was know able to get America express business account with high credit limits of 40,000. I just got chase .

@Cesar Gomez no ask what your credit score was you can go far with 850 just have to make a decision that allows you to have a large capital gain and pay on time bank and lender trust that .

Your going to have repairs here and there and need more savings if buying a stand alone property. If you want to get started with very little money can go for a condo do an owner occupant low down mortgage. For condos your area may also have various programs/grants that pay your down payment costs for first time buyers.

@Cesar Gomez ,

$5K won't take you very far with real estate, the absolute best and easiest option would be for you to buy a primary residence, preferably a duplex or a triplex and house hack.

If you live in it for a few years, make sure everything is good, rent it out, and buy another house,  do the minimum 5% down for your next house,  live in it a few years... rent it out, buy another one.. rinse and repeat, it's the most inconvenient strategy  because you're always moving, but it's going to the best and easiest for someone with limited funds!  Owner occupied loans are SIGNIFICANTLY easier to obtain vs. regular investment property loans where it's the white glove treatment.

If you can handle the risk and willing to learn the short term rental (STR) market, laws and ordinances in your area with a little luck and a lot of knowledge you may be able to squeeze into the STR arbitrage space.

Search around these forums and other resources to understand what this entails. Its not for everyone but some folks have had success in this space for very little upfront money. If this doesn't work for you then stick with plan 'A' , get more money and more knowledge. Good luck

@Cesar Gomez that is a big chunk of money in Arkansas. You are rich here!

I do RENT TO OWN Deals here in the ex “land of opportunity” and the minimum to start is $5,000. A lot of people don’t have that here.

I just sold a nice 3br, 1 1/2 ba house for $75,000 via RENT TO OWN and all the buyers had was $5,000! Their payment is $815/m for only 15 years!

$815/m That is an awesome return on $5,000 down! I don’t think u can get that kind of return in any bank in the USA!!

Plus the house is going to be about $150,000 in 15 years with the rate of dollar devaluation and real estate appreciation!

One element I believe that has been left out of the equation here is whether or not he will qualify for a loan; any loan. He didn't mention anything about his income and how it would relate to qualifying. I have been in a similar situation where I had substantial savings, a cash flowing rental property, and excellent credit, but because my W-2 income was inconsistent and sometimes low all the banks/credits turned me down for a loan.

If others who have commented in this post have thoughts and suggestions I would like to hear them for myself as well.

I'm concerned that all his available cash will be used up during the transaction, and he will be left with nothing should there be repairs or vacancy.