Initial Investment Property

[Josh VanAusdale]

Hello everyone,

Seeking opinions on initial entry into the real estate market. I’ve been researching the past 6 months or so and I feel like I’m ready to make an attempt. I wanted to get an opinion from anyone who would be willing to offer one. I’m looking for houses in the 35k to 50k range to be used for a rental because I currently will be able to cover the 20% down in that price range. Anything higher is out of my range right now. Some of the properties I found do have tenants in the building, although they are month to month. I’m looking to get my foot in the door at this point as I work full time and then eventually want to progress into adding more properties.

I guess my question would be is if this would be a good strategy for starting out kind of slow? Would I be able to quickly parlay equity from an initial property into a second one or will that be a bit time consuming? Also, what is anyone’s opinion about a land contract? Is that an option when down payment funds are not huge? I’m okay on the credit side but slightly limited on the 20% down payment end. That’s why I ask.

Any advice or pointers would be greatly appreciated.

[Andrew Johnson]

Josh VanAusdale Start calling banks now. Most have a minimum mortgage amount between $50K and $75K. If you're putting $7K down on a $35K property, you won't meet the threshold. The same goes for $10K down on a $50K property. Also, realize that if you do get a loan costs like an origination fee and an appraisal are often fixed. Consequently, you could end up paying 5% of the loan amount (easily) just to get the loan which doesn't take into account your share of the closing costs. I don't want to be discouraging but line up actual financing for the expected loan balance before making offers.