Novice Investor

3 Replies

Hello,

My name is Chelsey. I am 26 years old and I live in the West Valley of Phoenix, AZ. I am new to real estate investing and I am interested in knowing what amount of money is thought to be reasonable to use as a novice investor? Meaning, is starting small reasonable to do?

Hi Chelsea.  Welcome to BP.  I lived in AZ for 5 yrs and look forward at my next opportunity to visit again.  I am a novice investor myself and I'm sure there are potentially hundreds (thousands?) of members on here who are more savvy than I about the topic, but I thought I'd offer my two cents to give a fellow Arizonian something to think about.  

You might want to consider how much capital you have to invest at the moment and begin your research from that stand point.  Your starting capital will probably define which markets you can invest in.  If you're considering conventional financing, remember that the banks will ask for a significant down payment (minimum 20% in most cases).  There are other more creative options, however, such as seller financing, in which case you might secure a property with a much smaller down payment (do a search on here for "seller financing" or "owner will carry" for more information on this topic).  

Also, you'll want to keep a cash reserve for extraneous costs of ownership and don't forget closing costs.  How much cash reserve one should maintain is up for debate but, from my experience, most investors agree a minimum cash reserve of 5K (emphasis on "minimum") after closing, which you should budget 5k for. 

If you're brand new to this industry, I suggest taking time to 1) educate yourself about the different aspects of real estate investing (which I am still doing) and 2) begin networking and connecting with people on here.  After you are in contact with a few experienced investors, you'll most likely have a better idea of which direction you want to go in.  This website is a solid start for any investor and there are some really knowledgeable individuals on here who share their valuable thoughts on a regular basis. 

Good luck and have fun  

@Chelsey Richardson

You may want to talk to a title company in AZ about costs to buy.

Being licensed as an agent helps too.

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