Hello there dear investors, real estate professionals. Let me ask a completely silly question. I am a 33 year old man. I only have about $5,000 saved. I do have a decent credit score of 740. Not a great score but not bad. Is there a chance for someone in my situation to start investing rental properties?
I don't know where to start, I don't know if I qualify for getting a loan, or what kind of loan I should get?
My goal is to buy and rent out and accumulate properties over time.
I am not trying to ask for a Mentor but if you know someone in Colorado, I would be glad to speak with them. Also, please note, I am just trying to ask for some words of wisdom. So, any advice would be highly appreciated.
Welcome to BiggerPockets! Where to start is not a silly question at all. Which part of Colorado are you interested in starting to invest in? Are you familiar with house hacking and would potentially want to go that route?
I would recommend https://www.biggerpockets.com/... which will help guide you along the way. As I like to think, you began investing in Real Estate the moment you took interest and started along the road of investing in your first property.
Is it plausible in your market to find an investment or primary home were grants, FHA loans, can be leveraged to make the $5,000 stretch out, I do not have that answer, but some research surely can answer it for you
Myself being new on the adventure of real estate, my advocacy is learning the market I want to continue to invest in, analyzing deals, and becoming an expert. Welcome again to bigger pockets, and congratulations on starting your journey.
@Ramin Kamal Hey Ramin - your best bet would be to chat with a lender to see if they have any loans that fit your need. There's always a chance for someone in your situation to start investing, and sometimes you just need to be more creative to Mae it happen. Have you thought about what kind of strategies you'd want to do? Have you considered house hacking?
Talk to a few loan agents to see where you are in the process. Good first step
Not a silly question at all. One factor you did not mention is your income. If you have a high income, you might qualify for some loan products since you have a good FICO score.
Thank you everyone for your support and care with regards to the question I asked. Mr. Stephenson, I greatly appreciate that you took the time to write back to me and to answer the question for where I would be interested in Colorado, I want to say mainly around Cherry Creek Area because I want to make this a rental property and am assuming that the rents in this wealthy area can be stretched out to its fullest potential for the first investment so that I can pay off the loan faster.
As far as house hacking, I must say just heard the phrase from Mr. Stephenson and Ms. Wang just now. So, I believe this would explain how much I know about it. :D
But I will definitely look into it and try to learn more about house hacking. Also Ms. Wang and Mr. Aleman, I appreciate the idea of speaking with a lender. I agree with both of you sir and madam and do believe that you're guys are right about me needing to speak with a lender because at the moment, I have no idea what I even qualify for. But just a quick follow up question if I may ask please:
Let's say I am trying to get a loan with my.... heh $5,000 down payment if you were in my situation, what kind of lending options would you consider? like would you consider hard money lenders for example? Also what percentage of interest would you hope for? Lastly, may I ask what kinds of questions would you ask the lender?
Sorry for the lengthy series of questions I asked. But any help on these questions would be greatly appreciated.
Thank you all for your kindness and willingness to help. I wish and hope for a very successful career for you all.
Hi @Ramin R kamal ! Wanted to jump in on the conversation! First of all, welcome to the forums and welcome to REI. I 100% agree with the comments above about preliminarily chatting with a lender, as what you can qualify for is going to be the biggest hindrance for your purchasing. I would stick conventional, and consider house hacking as some of my colleagues suggested above. The biggest bonus of it will be the utilization of a low down payment loan as you are buying the property as your primary residence. You could also look into using some sort of DP grants or first-time homebuyer programs, as for example, Bank of America runs a grant for using them, that can add up to about 18k towards downpayment and closing costs. Which can get you into a home much quicker, than saving for the DP. If you go any other route, as in buying a strict investment property, you will need to put down at least 25%, instead of the 3-5% with a primary residence loan.
Hard Money won't help you much, as they still have the same requirements and worse rates. I don't think anyone else asked, but what is your current living situation? Do you own your current home, or are you renting? If you do own your home, then you could look into pulling out some of your equity in the form of a HELOC or Refinance and use that to invest in real estate. If you don't and you are renting, then I would push you even further towards house hacking, as then you will get the double benefit of eliminating most, if not all of your living expenses, which in turn will greatly increase your savings rate.
Other options could be, find a partner who has the capital, and you do all the heavy lifting of managing, and handling the property. There is always a way to invest in RE and sometimes it just takes a second set of eyes to find it! There is no one size fits all solution :) Feel free to reach out with any further questions!
One more option outside of what has been mentioned already is creative financing. It's a little bit harder to find deals like this, but you can find deals that require little, if any, money down. Lease options, subject-to's, etc.
@Ramin Kamal house hacking and down payment assistance is an amazing way to get started. Make sure you use a realtor that can help you walk through how to cash flow your property and have a good exit plan in case you want to scale.
If you want a ballpark of what mortgage price you could qualify for. Take your gross income divide it by twelve and multiply it by 0.4. That is the monthly mortgage payment you could most likely qualify for. Assuming you don't have other debt.
Congrats on taking the leap @Ramin Kamal . A key piece of missing information is income. If it's strong, and based on other details you've provided, there are certainly low-down payment options.
I would find a lender (or two!) to start those conversations. Keep us posted.