Property Manager · Mount Vernon, NY · Member since 2020 · 22 posts · 15 votes
As I learn more about creative financing and other ways to fund a deal, I admit I’m lost in how one broaches this topic with someone. If you were able to start your journey without your own money , I’d appreciate it if you could explain how you got there. I have so many questions to help me get over my own mental block on the topic. I feel if I can find a way to feel less awkward about it, I can get over the mountain and actually begin investing much quicker.
Omaha, NE · Member since 2020 · 611 posts · 665 votes
6y
This weekend I put an offer on a single family home for $125,000 cash. I don't have that kind of cash, even close. But I knew the ARV for the property was between $180,000 and $190,000, meaning anyone who partnered with me on the deal would make out with a lot of cash.
If you find a great deal, someone will always work with you because the asset collateralizes itself. Don't try to buy turnkey with no-money-down. That could be a disaster, and be confident in your numbers. Best of luck!
Omaha, NE · Member since 2020 · 611 posts · 665 votes
6y
This weekend I put an offer on a single family home for $125,000 cash. I don't have that kind of cash, even close. But I knew the ARV for the property was between $180,000 and $190,000, meaning anyone who partnered with me on the deal would make out with a lot of cash.
If you find a great deal, someone will always work with you because the asset collateralizes itself. Don't try to buy turnkey with no-money-down. That could be a disaster, and be confident in your numbers. Best of luck!
As I learn more about creative financing and other ways to fund a deal, I admit I’m lost in how one broaches this topic with someone. If you were able to start your journey without your own money , I’d appreciate it if you could explain how you got there. I have so many questions to help me get over my own mental block on the topic. I feel if I can find a way to feel less awkward about it, I can get over the mountain and actually begin investing much quicker.
Real estate is an industry built on good reputation and trust. It might take you awhile to build both, but its very important for the future. Do what you say youre going to do and always be honest.
When I started out I asked my grandma for $15,000. That deal ended up netting me $80,000 cash back and $1800/ month in CF. All it takes is a small start and someone who believes in you.
Real Estate Agent · Clarksville, TN · Member since 2020 · 12 posts · 5 votes
6y
I would suggest Seller Financing. There are a lot of owners who do not know what this is so always explain how this benefits the SELLER. Once they see the benefits its a no brainer!
Property Manager · Mount Vernon, NY · Member since 2020 · 22 posts · 15 votes
6y
@Jody Sperling Thanks for sharing! So the key is to find a screaming deal and have a network of people that could be willing to JV with you? Did you JV with someone early on to get your feet wet with real estate investing?
@Steven Foster Wilson I appreciate you sharing. Would you mind expanding your first deal a bit? How did you achieve that success? Did you BRRRR and pull out the equity that you forced? I imagine a successful deal your first deal is like putting lightning in your veins.
@Jody Sperling Thanks for sharing! So the key is to find a screaming deal and have a network of people that could be willing to JV with you? Did you JV with someone early on to get your feet wet with real estate investing?
@Steven Foster Wilson I appreciate you sharing. Would you mind expanding your first deal a bit? How did you achieve that success? Did you BRRRR and pull out the equity that you forced? I imagine a successful deal your first deal is like putting lightning in your veins.
I was brand new to real estate, didn't really even know what a lease was. But my realtor was a good friend and investor, he showed me an an MLS deal that was pretty average, but was on OSU campus. Bought for $305k. Removed all tenants, added 2 bedrooms and a bathroom overall, redid kitchens / baths / flooring, all on a 0% apr credit card.
Rented out to a new group of students for $4500 for the entire building, refinanced at a new higher appraised value. A ton of lessons learned during that time! How to rehab, how to rent, everything!
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
6y
@Billy Archer If you're new to investing say away from anything "creative". It just another word for RISK. When I started out I lived below my means, saved cash, and researched the s**t out of my market for 2 years.
I choose the live-in flip strategy because it's LESS risk and at that time I was stuck in the rat race and paying $800 in rent to do it! I knew the numbers before making offers. Anything B+ class or higher rarely cash-flowed and fixers were better for flips. We found a motivated seller and I got my first deal. It took time and money.
Nothing good in life is free. There are sacrifices to achieve your dreams.
Property Manager · Mount Vernon, NY · Member since 2020 · 22 posts · 15 votes
6y
@Steven Foster Wilson I have heard about 2 schools of thought regarding college rentals. Some investors love the rent-a-room model. Others don't like the problems associated with renting to college students in general. I have done some searching in my alma mater's town and I see potential for upside, but I recently drifted from there to out of state multifamily. It's hard to argue the margins you point out if they could apply in my market. Do you still own it? What would you say is now (or was) your biggest stress point over it? Also, do you think the BRRRR you did would be possible as your first deal without having an investor friend that was able to guide you through it?
@Ashlee Jankovich After seeing a Trulia listing with "owner financing available" on it a month or two ago, I started to do research on it. I think that's where I began to flirt with the idea of not necessarily having to come up with 20% down to get myself started. Do you encounter this often? What would you say is the best way to shop for deals in this fashion?
@Steven Foster Wilson I have heard about 2 schools of thought regarding college rentals. Some investors love the rent-a-room model. Others don't like the problems associated with renting to college students in general. I have done some searching in my alma mater's town and I see potential for upside, but I recently drifted from there to out of state multifamily. It's hard to argue the margins you point out if they could apply in my market. Do you still own it? What would you say is now (or was) your biggest stress point over it? Also, do you think the BRRRR you did would be possible as your first deal without having an investor friend that was able to guide you through it?
@Ashlee Jankovich After seeing a Trulia listing with "owner financing available" on it a month or two ago, I started to do research on it. I think that's where I began to flirt with the idea of not necessarily having to come up with 20% down to get myself started. Do you encounter this often? What would you say is the best way to shop for deals in this fashion?
Knock on wood ive had no trouble and I have management take care of tenant issues, Ive literally not heard a thing from it! Also yes my investor friend got me into it, but BP helped me through it!
Property Manager · Mount Vernon, NY · Member since 2020 · 22 posts · 15 votes
6y
@Jaron Walling I appreciate your advice especially because you're the first person to offer a different take on it. Your advice sounds like my intuition. I have heard of many people on bigger pockets use private money or creative financing, and to be honest, if I could I would. Of course there is risk in using someone else's money, which is why I have always planned to save $10,000-$20,000 for my first investment. The problem is that you will eventually run out of money if you plan to scale your business. The difference I see between those with a scaled up business and those that have a few units is they are willing and able to channel their risk into reward. Won't you eventually have to come to peace with the notion of fundraising?
New to Real Estate · Hazleton, PA · Member since 2020 · 6 posts · 0 votes
6y
@Steven Wilson that’s awesome
I’m starting to read more and more about real estate
It’s very exciting and still haven’t done my first deal
No money no experience it’s hard to find someone willing to take me on as an apprentice but trying to save to start buying in Pennsylvania since market it’s way cheaper than New York.
@Jody Sperling Thanks for sharing! So the key is to find a screaming deal and have a network of people that could be willing to JV with you? Did you JV with someone early on to get your feet wet with real estate investing?
@Steven Foster Wilson I appreciate you sharing. Would you mind expanding your first deal a bit? How did you achieve that success? Did you BRRRR and pull out the equity that you forced? I imagine a successful deal your first deal is like putting lightning in your veins.
@Billy Archer, I should have partnered, but I always feel most comfortable messing up when it's my time and money on the line. My first rental was a primary residence that I had equity in, and we saved the traditional way to put a downpayment on a new house. I won't do it that way again. Too slow.
As I learn more about creative financing and other ways to fund a deal, I admit I’m lost in how one broaches this topic with someone. If you were able to start your journey without your own money , I’d appreciate it if you could explain how you got there. I have so many questions to help me get over my own mental block on the topic. I feel if I can find a way to feel less awkward about it, I can get over the mountain and actually begin investing much quicker.
"No money down " investing seems very attractive to a lot of investors who are first getting started, but its not always very realistic.
Don't get me wrong, it can be a great investing strategy and there are many BP members who pull it off flawlessly. However, these investors have experience and knowledge in their market and most importantly are NOT using the "no money" approach because they can't afford to put down money for a traditional down payment. They are using the strategy to scale their business and use leverage to maximize their returns.
I would suggest avoid the "no money" strategy until you get a couple deals under your belt and are more familiar with the processes. As some other people have mentioned, no equity brings alot more risk into the equation, which is bad news for a first time investor.
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
6y
@Billy Archer Actually I already ran out of investment money but I'm thankful to have a stable job with no loss of income during the pandemic. If you buy value add deals like I do you can cash-out ReFi to pay yourself back after 6 months. I just completed one about 2 months ago. It's cake walk after you go through the process.
Build a relationship with a good lender! As an investor you want them on your team.
Property Manager · Mount Vernon, NY · Member since 2020 · 22 posts · 15 votes
6y
@Blaine Alger Thanks for the advice. I'm currently acclimating myself and I have been meeting people a step or two ahead of me that can show me the ropes. I'd be interested in learning about that theory of scaling a business, but you're probably right not to consider jumping from step a to c until I'm comfortable with it (and maybe even see it secondhand first).
@Jaron Walling BRRRRing is something I truly want to take advantage of, but I fear I would need double the money for a downpayment and reno, at least in the beginning without equity from another house. Do you have any advice (aside from saving more) to overcome that? Thanks for your responses!