Real Estate Broker · Greensboro, NC · Member since 2022 · 6 posts · 6 votes
Hi! I’m a 36 year old single mom and I’m a real estate broker. I know how to buy an investment property but I’m having trouble figuring out how do that with my financial situation. I would really love if you guys could help me figure out where I should pull money from or if I should just continue to save and not take out equity. I own a home and owe about $300,000 and it’s worth around $425,000. I have a small amount of money saved as well. What would you do in my situation to make the money work for you?
I would probably keep saving money. Cut discrentionary spending and do 1 or 2 side hustles to increasing savings. Use Excel or Google Sheets to do some what-if scenarios on how long it might take based on certain assumptions being met, and then make those assumptions part of your goals.
Hi! I’m a 36 year old single mom and I’m a real estate broker. I know how to buy an investment property but I’m having trouble figuring out how do that with my financial situation. I would really love if you guys could help me figure out where I should pull money from or if I should just continue to save and not take out equity. I own a home and owe about $300,000 and it’s worth around $425,000. I have a small amount of money saved as well. What would you do in my situation to make the money work for you?
Your primary home does not leave you much to work with as far as borrowing from it. Usually have to leave about 25% of the value of the property in the house. (Said another way you can borrow up to 75% of the value of the house). 75% of $425,000 would be $318,000. But with $300,000 owed on the original loan there’s only about $18,000 worth of equity you could pull out in a cash out refi. Then after accounting for closing costs, you probably are only going to get $10,000 if that. Then, on top of all that, your interest-rate would be way higher on your new loan. So there’s no good path there that I see.
Continuing to save seems like the next best choice.
@Daniah Koujak, I think that depends on what kind of investment you want to purchase and what kind of investment strategy you want to employ.
You could be looking at a house hack, BRRRR, a flip or something else entirely.
I was desiring to do a long term rental or an airbnb if I went for a small property on the coast. I do need to figure out exactly what I want to do so I can set some clear goals.
@Randall Alan Yeah I was thinking about how the interest rate is going to affect my efforts. I see so many guys in my area who are real estate brokers buying property after property and I really want to stop wasting time and do this for myself. Like I said in my reply to Kevin, I'm going to have to just get my goals set and keep saving. Thank you for replying.
would flips be an option for you? you can start out and do 3-4 flips in a year to help capitalize your rental purchase? something like flip four homes, keep the 5th. Your real estate work exposes you to tons of contractors.
I would probably keep saving money. Cut discrentionary spending and do 1 or 2 side hustles to increasing savings. Use Excel or Google Sheets to do some what-if scenarios on how long it might take based on certain assumptions being met, and then make those assumptions part of your goals.
@Joehn B.I would be interested in flips but i'm so intimidated by them. I know tons of contractors but they are all booked out (the quality ones). I think part of my issue with jumping in is the unknown of a flip and the amount of capital I would need as opposed to buying a (almost) move in ready home to rent out long term.
you could always partner on the first few flips with another investor. you put in the repair money and they do the managing, but you tag along to learn the ropes and help out where you can? Flips are fun for me, I struggle more in the "finding property" stage.
Also, not sure if it posted earlier, I tried to update my prior comment to suggest house hacking your house if you have a spare bedroom to a female roomate. lowering your spend gets you a lil more savings as well.
@Joehn B.Yes! I think partnering With an investor would be a great option and would feel a bit less stressful for me. I do have a roommate (my sister) but my expenses in this house are so high. For example our HOA is almost $800 a year (we have no amenities). They say it's because I have a septic field that has to be mowed twice a year. Part of me wants to sell this house, take the money and run but I love the area. I can't find anything to move to in this area so I'm staying put for right now.
Hi! I’m a 36 year old single mom and I’m a real estate broker. I know how to buy an investment property but I’m having trouble figuring out how do that with my financial situation. I own a home and owe about $300,000 and it’s worth around $425,000.
One thing we did was buy a primary with an ADU 15 years ago. We have kids as well. Its a slight inconvenience but the steady rental income is worth it. Is there a feasible way to build or buy a home with an income suite? I've been work-free for years, mostly because we never had an expensive dwelling that brought in no income.
@Steve Vaughan I don't know that that would be a good option for me right now but I like the idea! My sister already lives with me at my place and I can't add on. Buying something in this area with an additional unit wouldn't be in my price range right now.
@Daniah Koujak the safest way to begin imo if capital is tight (sounds like it) is to turn your current property into a rental (might need to get creative to make it cashflow; ie rent rooms out or midterm rental, etc) and buy another primary residence to move into and house hack. Ideally multiple units. This gets you in at a low down payment and with the best financing. This is a very efficient method to start your portfolio. Do this every 1-2 years. Rinse and repeat. Find a way to house hack. It’s the strategy with the highest likelihood of success, ie the lowest risk. Good luck on your journey!
Get a direct deposit from your credit card and pay zero interest. That and your savings should get you close to buying a SFR all cash. Then if you want you can cash out re-fi or just keep it the way it is and enjoy all that cash flow!
You can also partner with someone for rentals as well. For my own personal experience I'm limited with what I'm financially able to do as well. For example I have capital for a down payment to do a DSCR loan for a rental I wanted to do but one of the requirements for the loan was to show a history of making payments on a house which I don't have. So perhaps you can do a partnership deal with someone who doesn't have the requirements from such loans that you already have. You have both the steady income from being a broker and the history for paying a mortgage. Find someone with the capital and maybe you can do a Rental Deal that way. Hope that helps.
I'm in the Greensboro area- we should totally connect! Find me fixer upper deals and I'll give you a double dip commission. We can continue to hone our processes and eventually fix and flip a deal together!
Hi @Daniah Koujak - I would check with lenders regarding the amount of a HELOC you could take. Someone mentioned 75% but I've regularly seen clients of mine and other investors take up to 90% against their primary. I'll add the caveat that these loans can have multiple risks, but if that's the way to get into a great cash-flowing rental, than you take the parachute off and jump. Love the idea of getting an STR by the coast. Could either use a second-home loan to get a better interest rate, or if you aren't able to qualify for it due to DTI or other reasons, plenty of HMLs that use STR income projections to do so. I've got 2 properties in Wilmington that do very well. If you go that route, a little hack I always recommend is using an airline miles/hotel points CC to purchase all of the furniture and then pay off the card...might as well get as many benefits as you can.
Finally as a friendly reminder, you don't need 100 doors like others to be happy to make some side cash flow. Comparison is the thieve of joy. Put your blinders on and build your portfolio your way.
Hey @Daniah Koujak, I am local to Wilmington NC and cover the coast over here! If you ever have questions about specific areas / strategies I mainly work with investors so please feel free to shoot me a message anytime!
I wouldn't re-fi your primary. You don't have enough equity. So basically your situation is that you only have a small amount of money saved and you want to buy an investment property. My advise is to work a lot of overtime and save up to 150K. The remaining money needed to can be acquired from credit cards or hard money or family and friends.
Agree with the post above. Hit the streets hard to find deals for your clients and network. Take the commission and either partner for equity or debt. Right now is a good time to buy in the triad.
It may be time to sell that home. Move into a rental and then invest. You will have to sacrifice something to become someone.