BRRRR Srategy for first deal??

36 Replies

I'm 20, have a 750-760 credit score. What strategy should I go for with investing in my first property? Will hard money lenders or banks lend to me being that young? I was thinking BRRRR strategy or maybe house hack? Any suggestions would be helpful:) thanks in advance!

It depends on your goals :)  Personally, I like house hacking because the financing is cheaper, and then upgrade from there. 

@Xavier Hamblin I would highly recommend starting with a house hack, considering you have a good credit score and a stable source of income. I wouldn't be to worried about your age as long as you can prove to the lender that you'll be a worthy borrower. One of the biggest benefits to purchasing a primary residence for your first property is the ability to use an FHA loan, which typically only requires 3.5% down. You may find it harder to secure hard money without a track record or any previous experience to show for. However it's definitely possible but you'll end up paying much higher fees and take on a lot more risk. What do you currently do for your main source of income?

@Cody Barna thank you very much for the advice. Right now, I work at walmart 30+ hrs a week and I am a full time college student. On top of all that I currently am in the process of getting my real estate license and have already been guaranteed a spot at Coldwell banker for a agent position upon the passing of my state test:) I know I don’t bring in a lot but I have a lot of drive and motivation and I wanna start on the right track.

@Xavier Hamblin That's great to hear, it sounds like you have a good plan. Honestly I wouldn't worry about purchasing a property just yet, focus on getting your license and learning the business. Two years from now you'll be in a great place financially and in your real estate agent business, at that point a lender will be happy to work with you. Most banks will want to see 30-60 days of pay stubs as a W2 employee or 2 years of tax returns if you're self employed as a 1099. It's possible you could qualify for a loan now with your current W2 income, however it probably wouldn't be much. In addition to that, you'll add a lot of extra financial stress being a brand new agent. The first 6 months to a year can be tough financially, so having a large amount of living expenses saved up can reduce the pressure of needing to sell a home to pay your bills. Hope this helps, good luck with your RE exam!

@Xavier Hamblin no worries! I recommend joining a team initially, this will help you learn the ropes and also give you more credibility when speaking with potential clients. Try to find an office that is going to provide you the most amount of resources that can help you build your business. Do some research on the agents that work in your area and find the brokerages that have a lot of top producers, you don't want to be in an office with agents who are lazy. As of recently many of the top agents are switching to EXP which is a cloud based brokerage, that's another option you could look into. The final thing I would suggest is creating structure in your day, for example if you get to the office at 8:30am...make calls from 9-12... shadow/ go on appointments from 1-4 etc. that way you're focusing on activities that will help you generate leads and future business.

I would recommend a house hack it's what most of my early 20's buyers do as their first deal. You can slowly rehab as you live there and eventually refinance to pull cash out or open a HELOC on it to get cash for next deal.

@Xavier Hamblin you have it backwards bud. If you buy a property for investment purposes your going to have higher interest and have more down payment tied up. If you buy someone thing for primary residence you will have lower interest rate lower down payment which would allow for more cash flow in the future. Best of luck

@Xavier Hamblin

It appears you have goals and are driven for success. You are positioning yourself well to succeed by attending college full-time, working 30 hours/wk, getting your real estate license and having a good credit score. 

At your age, I would first consider house hacking and let your tenants pay for your mortgage. Being a first time home-buyer will allow you to put up less of a down-payment and get you a lower interest rate versus having an "investment" property which would most likely require a minimum of 20% down payment at a high interest rate.

Stay focused, execute and best wishes. BiggerPockets has wealth a of information.

@Xavier Hamblin Im pretty new to the community also but this is how i would consider doing it

1) house hack to start with so your mortgage is free and keep working to save money in the meantime.

2) as soon as you have the money for a deposit use the Brrrr technique to get you on track to setting up another deal.

As far as i understand you should be able to do this for up to 4 mortgages before you'll have to find another means of money to invest.

But in theory you are living for basically free (some repairs on buildings) and collecting income from 3 doors. So the repairs shouldnt be too troublesome either

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