Newbie advice needed for rental property

6 Replies

Hello, I am a 24 year old looking to purchase my first rental property here in Florida. I have been listening to podcast as well as doing a lot of research online about purchasing my first rental property. I have a full time job, along with good credit but my problem is that I have little funds to put down on a property at this time. What options do I have as far as getting a rental property with little funds for down payment? I feel that everyone(banks, hard money lenders, etc) wants you to put down 20% as a investor or 3.5% for fha loan but if I do a fha loan I believe I am required to live in the property for a year before I rent it out. Can anyone please provide advice or partner with me to help me on my first rental property without bringing a bunch of money to the table? I am more than willing to take any advice to get my portfolio started. 

@Steve Vaughan has given some great advice. Most people fail to make the sacrifice to cut their spending. When you cut out things that arent a necessity it frees up money to invest or work toward your dream. It takes hard work and sacrifice. Once you get going it may get easier but the hard part is getting going! Taking action will help with that. It sounds like $$$ is your biggest barrier so I suggest networking with other investors. Picking their brain or offering to do some work with or for them to get hands on training. Wholesaling is another option but not easy because there is virtually no barrier to entry as a wholesaler. Also states are cracking down on wholesaling because so many people dont know how to do it and give a bad name to real estate investors. The local library probably has some books you can check out for free to read and gain some knowledge. There are online blogs & videos to help also. Go to a local REI or REIA meeting. Maybe find some deals that the owner is willing to do seller financing, etc. ...just a few suggestions.

It comes down to how bad do you want it!  

Hi @Josh Williams

Do you own the home your living in now or renting? If you are renting, why not terminate your lease and go the FHA route? Or even better check into the HUD rehab financing program known as 203(K). You can live in the home while you do the rehab yourself. Some folks call this house-hacking. I call it a great option for a young guy with ambition just starting out. Once you have it fixed up, you can either continue living there, rent it out (while you move into your next rehab house), or sell it for the profit.

Whatever you do, good luck!  And I also reiterate @Steve Vaughan's comments.  Making your own refried beans at home is a lot cheaper than Taco John's.

@Josh Williams ,

The best advice I can offer is to buy a duplex or income property and live in it. This allows you to go the FHA route and rent it out so your mortgage is next to nothing or even a go for a profit instead of renting or purchasing an apartment or single family home. This offers you a bunch of options. It allows you to get in with minimal money down through FHA and it offers you the ability to own your first investment property. This also means you can listen to @Steve Vaughan when he explains you need to look at money like a means to an end not an end. In other words, like Gary Keller explained in The Millionaire Real Estate Investor, you need to become a person who looks at cash earned as added capital and not as something that offers more ability for you to consume things. At your age I was more interested in which bar I was going to and how I was spending my salary instead of how many hundreds of thousands of dollars I could have in real estate now. So take our advice and focus on how you can create capital from your full time job not how it can buy you nice or fun things. House hack and create cash flow or the ability to jump from one property to another as you gain experience and more capital to buy a second. Live under your means to create wealth sooner then later. And finally keep talking to people who have been there and learn from their mistakes so you can avoid years of wasted opportunity. 

Good Luck!

Hi Josh,  Many great ideas from fellow members.  Let me add one more.  Look for help from the seller.  Many sellers are willing to help with down payments.  For example, you purchase a $100k property.  You finance $80k.  You have $5k.  You ask the seller to loan you $15k on mutually agreeable terms, e.g., $100 per month until paid in full etc.  Don't forget to be creative.  Another option may be to offer the seller something in trade.  Could they use a service that you would provide for free to them for a specific period of time?  One more idea is to skip the bank and ask for the seller to finance the purchase.  If there property has been sitting for sale for a long time they may be ready to just move on.  Be their solution.  

Good luck.  Teresa

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