Buying first rental property at 23
Hey everyone!
This is my first day on BiggerPockets and I've already learned an amazing amount in the two hours I have been on the site, but I figured the best way to learn would be to ask the knowledgable and experienced BP Investors.
I just moved to Los Angeles after graduating with a real estate degree. I am currently looking to buy my first rental property, but am struggling to figure out how to start investing with just $5k saved up for a down payment. A couple financials:
I am making $56k a year
Paying $1,100/month in rent and utilities
Saving $700/month
Currently have $5k saved
I am aware of FHA loans, but it is pretty tough to find a multi family house around Los Angeles for less than 500k that is in good shape and that I would want to live in. A property just under $500k would still require at least $17k as a down payment.
If an FHA loan can't work in the Los Angeles area, what would be the best strategy to begin investing for someone in my situation? I am very interested in flipping houses, but I think for someone with my experience and little capital, rehabbing a house would be very risky.
The midwestern cities seem to have good price to rent ratio, what do you think about a buy and hold strategy with a multifamily property? Would that property have to be cash flowing already to get a loan? What are some hot midwestern rental markets that have more affordable housing that someone like myself could invest in? What midwestern market do you see on the up over the next 10 years?
Any help or advice is greatly appreciated.
Thank you in advance.
If you are in the Los Angeles area and would like to get together to meet and discuss real estate investing please let me know. Even if you aren't in the Los Angeles area feel free to reach out as well.
Most Popular Reply
Ryan Bassinger
I am in a similar situation as you, but I will be moving back to Ventura county with a VA loan that I will be able to use next summer. I have around $5000 saved currently as well, but will have roughly $20K saved by the time I transition back to civilian life.
If I were you I would save, save, save. Learn as much as you can and pay off all your debt or close to debt free as possible. If you're single and don't mind living with roommates you could get a SFR and rent rooms out.
CA doesn't seem to have too many MFR in that area or my area for that matter. I'm used to seeing big homes that are upwards of $600-700K that are nice, but nothing out of this world.
Investing in the mid west and/or other good cash flowing markets could be a beneficial move as long as you have the proper teams in place. I've thought about using an in House TurnKey company, but the more I think about it the more I'd like to be near my investments.
Since I can't pull any triggers at the moment I am now educating myself as much as possible, debt free, and building my bank roll as long as putting reserves away for a rainy day.
Good luck to you! Also, practice analyzing deals on the BP calculators. I try to do 3-5 per week just to get used to crunching the numbers and seeing what purchase price would make a deal good for my standards.