A newbie during COVID19

45 Replies

Originally posted by @Evelyn Castillo :

Hey BP! Im in the stage of

Investing in my education. I always hear how if you wait for the perfect time to invest, you will never make it happen, which makes perfect sense. However, given that I am a newbie do you think it would be wise to purchase a property with the whole COVID-19 situation going on? My niche is house hacking via multi-family properties. I am making sure that I am moving forward daily; ie. attending webinars, Podcast, Asking questions, and doing research on hard money lenders and investor friendly agents but I know the time needs to come to take action...Is it wise to make that time now? Or should I wait for this to blow over and just keep going hard on my education? I appreciate you guys. Thanks! 

The best education is to participate in the market. Get your lenders & agent in place  Continue to study but be prepared to move on a deal. A deal may not come up in your market but if it does and you're not prepared you'll kick yourself later. 

@Evelyn Castillo

A secured credit card works like this:

1) Apply to the secured credit card of choice. I applied through the mail, but you can also get them online I believe.

2) Pay a deposit on the credit card account, which secures the account. You will probably only be able to put down $200-500 for the deposit, which will be your credit limit. You may or may not have a annual fee and your interest rate may be sky high, but we are not talking about alot of money here in the grand scheme of things.

3) Buy small inexpensive things like gas and make regular payments.

Here's a link that I found that maybe helpful.

https://www.creditcards.com/secured/

@Dustin Mathenia Thanks for your insight! At this point, I am investing in education and saving more than half of my pay (I'm a part-time employee) so I can have some skin in the game. But yes, I know there is a lot of money required for this thing so I am just searching for ways to fund deals while investing in myself and in my bank account. I am having that same issue with trying to build my credit up. They denied me for GAP and other cards that I applied for. I plan to get a personal loan and pay it off as well as get a secured credit card as you mentioned. Just out of curiosity, could is profitable to use hard money lending for the long term? Or are they better for fix and flip deals? 

hard money  will work ,but wait now ,prices will coming down in 3 to 6 months.in mean time learn about arv.because down the road ,if you find a great deal.the money will find you.partners will come out of the woodwork if the deal is good.maybe partner up on first deal ,or use hard money and refinance down the road.there are many ways to come up with down payment,and it just  takes one bank to say yes.realize their our  certain banks you should be going to.not all banks the same.

@Evelyn Castillo

Hard money loans are are short term interest only loans and are made for short term now you can use them and the same lender can give you a long term loan as a refinance around 7% and if you find a good enough deal you could still cashflow. I would suggest learning and looking for private money should be easy to find in the near future .

Unfortunately, hard money lenders and investor friendly banks are SUSPENDING lending to investors as we speak which is gonna make things difficult. Save your money over the next few months (hoping things cool off) and use it for down payment. If you are looking to do a Duplex house hack go FHA (owner occ) for best rates and income stream to get started. I personally would NOT touch a fix and flip or BRRRR at time very moment. Reason being it my hard money lenders just jacked their RATES up substantially but the housing prices are still the same and not seeing the market reflection as of yet. Dangerous time if you are financing at a high rate and buying at peak of market (my opinion)

@Evelyn Castillo you've gotten some great advice so far.  My two cents... I'd house hack right now... be it getting a home and renting our rooms, or a small 2-4 unit and renting out the units (and maybe getting a roommate).  By doing this, you can significantly reduce or eliminate your housing bill (and accelerate your savings).  Once you are ready, you can then move onto the next project... 

Now... getting the loan. You may qualify for an FHA first time home buyer loan fo 3.5%. This will require a strong credit score, reserves, and W-2 employment. There are ways you can impact your score significantly now even during a pandemic (PM me if you want to know more).

Going into a multifamily could work now...  But I would study this more for sure and make sure you are investing from a position of strength.  Now is not the time to be overleveraged.

@Joe Seegers  

hard money will work ,but wait now ,prices will coming down in 3 to 6 months.in mean time learn about arv.because down the road ,if you find a great deal.the money will find you.partners will come out of the woodwork if the deal is good.maybe partner up on first deal ,or use hard money and refinance down the road.there are many ways to come up with down payment,and it just takes one bank to say yes.realize their our certain banks you should be going to.not all banks the same.


Which banks would you recommend? As a new investor i'm curious how to find the best banks.  

Thanks so much

Grant

try using your local small community bank.most of the time they will lend easlier then the big banks.also go to your local real estate investors meeting in your area.guys their will know,you is lending for real estate in your area.because most banks do a niche,just like us as landlords.the big banks like to push their credit cards and small business loans.where some banks like to work with cardealers and fiance their cars.you just have to find you pushes real estate in your area.start small with that bank and build trust with that loan officer and he will probably let your keep growing.you got to remember banks have to lend money .thats their product.but for maybe the next couple months might be hard to get loans.because banks hate uncertain.and with cov 19 they have no idea ,way market might go .

@Coty Dolan Thanks for sharing. I have a similar concern but its more of the BRRR Strategy. I should be getting a closing date on a cashout refinance of my primary home. I'll have just 70K which the plan was to use for down payments, interest and other carry costs.

Now that I have the money, I'm sure the deals will come through but what about rehab. In my state, they shut down non-essential construction. Even before that, my contractor friend told me he couldn't get inspections and many projects on hold. 

With this in mind do you still think we should be going for it? Keep in mind we are new and don't have other properties to take up some slack. 

@Kelsey Tanner , I'm probably a little ahead of @Evelyn Castillo at this point. I did, and I am still doing the education piece. I took a cashout on my home to put some skin in the game, start construction before the first draw, and have money for interest payments and reserves. If I move on a deal right now, I don't know if I can get the rehab started. 

Experienced investors are saying go for it! The way I see it, they have other properties which they could spread their losses. What would you do in my shoes where I'm essentially putting my home on the line in the midst of this? 

@Keith W. I definitely fall on the conservative side, but I am personally holding off on any new projects right now, so my advice would be the same to others. If you have a significant amount of money for holding costs so that you could make it through 6-12 months of just holding the property, and you really want to jump in, that would make me more comfortable. You could also make sure you have multiple exit strategies- if your rental market is strong, you could buy a house that just needs to be updated, but is livable, and if you are unable to flip for some reason, you could rent it out. I would definitely communicate with the county regarding permitting (can you get permits, do they have a time frame of when things will be back to normal) and find out for sure about what is considered essential construction and make sure both of those are active before getting a deal. 

But as I stated before, if I were you I would hold off right now. 

Lots of good advice and tips here! Im new to all of this as well. Ive been using this time to read many BP books and watch webinars. Currently reading the House Hacking book by Craig Curelop. My initial plan was to house hack a multifamily but the more i read and study, ive changed my direction to a SFH. SFH appreciates in value more and is easier to cashflow. My town is a college town so it wont be difficult to find roommates when the time comes. Good luck to you!

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here