I am 19 years old I live in Virginia. I just recently stumbled upon Bigger Pockets podcasts and Robert Kiyosaki books which completely changed my mindset and sparked my interest in real estate. Any information about how I can work my way up to getting my first deal would be much appreciated. ￼
Without knowing how much money you have saved, it's hard to be specific, but I'll share what works for most, and what's worked for me, as well as what I wish I knew before I started investing.
1. Don't be in a rush to pay off school debt or primary home loans. You'll benefit more from putting energy into asset acquisition than debt paydown.
2. Housing will never be cheaper than it is today. Don't try to time the market or wait for a crash. You'll only waste valuable investing time. Buy at the earliest date you can.
3. Don't be afraid to partner. Brandon Turner says it all the time, and it's true, 50% of a deal is better than 100% of no deal.
4. Create a place for liquid money. I use a HELOC, but if you don't have a home to put a HELOC on, you could look at Whole Life Insurance, credit cards, or high-yield savings accounts. The point is, you don't want to sit on cash. Make cash always work, even if it's not much. Nothing is worse than 0% return.
5. Give. Give. Give. Probably, I should have started with this, but no one likes to see it and they stop reading. Give time, give money, give hope, give answers. If you give, even when it seems not to be paying off in tangible ways, something happens in your core that enables you to succeed, so give and don't doubt it's worth every effort.
Best of luck!
Thank you for your feedback. I have about 8k in savings and just recently started building my credit with a credit card. I am definitely considering partnering up in the future but I just don’t know what route I should take for my first deal.
One thing you can do now is start to find the professionals you will need; Attorney, CPA, Realtor, Insurance Agent, Contractor, etc. Look to Real Estate groups near you, Bigger Pockets, other investors, etc to get recommendations and talk to them. Find out if they have experience with Real Estate Investors, General Contractors, Developers, etc. that may make them suitable to advise you on the process.
Below is some info that I posted in the past. It may be helpful:
Here are some things to look out for from an Insurance prospective:
1. Any in-ground tanks (active or inactive)
2. Any Knob & Tube or Aluminum Wiring
3. If built before 1978, does the building have Lead Safe certifications
4. Any wood stoves or secondary heating units. If so, were permits pulled & were they
installed by a professional
5. Are any of the homes rented to students
6. Is there a flat roof
7. are there asbestos shingles
The Year that the following were updated (either partially or fully) would be good to know:
- Heating systems
Some companies will not write properties with systems that have not been updated.
If the property is solely tenant occupied you will be looking for a Dwelling/Fire Policy (may be called a Landlord policy or similar name) or a commercial policy such as a Businessowners or Package policy.
Most dwelling/fire policies include or can have these coverages added:
1. Dwelling (Building coverage)
The limit should be based on the Replacement Cost of the building (cost to rebuild with
the same kind and quality excluding the foundation)
2. Contents (Personal Property): most homeowners policies give a set % of the Building
limit for Contents. Dwelling/Fire policies require that you request a limit for contents.
3. Detached Structures: for other buildings on the property (ie. sheds & detached garages)
Again, there is normally an included limit of 10% of the building limit. That can be increased
4. Loss of Use / Loss of Rents: Normally, there is a 20% included limit. Loss of use is for
your additional expenses if you can not live there due to a covered claim (ie. Fire). The
Loss of Rents is for the loss of Rental income if the tenants can not occupy the house
after a covered loss.
5. Personal Liability: For claims due to Bodily Injury or Property Damage that you become
Liable for and which is covered under the policy. Companies normally offer limits up to
$500,000 but some offer $1,000,000. Buy the max.
6. Medical Payments: Provides coverage for an injury suffered on the premises. Does not
require proof that you were at fault. Used to keep small loses into becoming lawsuits.
Normally offered up to $5,000 but check to see if higher limits are available.
7. Deductible: This is not a coverage but rather your portion of a claim. Most better policies
will not have a deductible for either the Liability or Medical payments coverage. It will
apply to the other 4 coverages. You can select the amount of the deductible, usually
ranges from $500 to $5,000. The higher the deductible the lower your overall premium
but get quotes on all the deductibles you are interested in. Sometimes the incremental
savings from $1,000 to $2,500 or from $2,500 to $5,000 are too small to make the higher
deductible worthwhile. ***depending on how far the house is from the coast, you may
also be required to have a separate Wind or Hurricane deductible. Most times, the
deductible will be 2% to 5% of the building value. That is a significant amount
(on a $500,000 building that comes to $10,000 for 2% or $25,000 for 5%). A policy
with a higher premium may be a better deal if it does not have a wind deductible.
There are many endorsements that are available on the homeowners policy. Without
knowing the details I can not suggest which would be right to add on.
Several you should pay attention to are:
- Ordinance & Law: Provides additional building coverage to deal with rebuilding cost
Increases due to changes in Zoning or Building laws
- Personal Injury Liability: Libel, defamation of character, wrongful imprisonment, etc.
(normally recommended, especially if you are a landlord)
- Water Backup: For water damage due to the backup of Sewers or Drains.
Good Luck & feel free to PM me if you have any questions.
Thank you very much for the feedback. I will start contacting different agents and people. I have been wanting to locate different REIA meetings I just don't know how to find them.
@David Gatlin . Suggest you look at what's called "House Hacking" on BP. probably find many articles. Briefly, it's a concept in which you would buy a property - Single Family (SFR) Or Multi-Family (MFR), and you would rent rooms to other folks in the SFR or live in one unit and rent the other units in an MFR. Either one should reduce your housing costs, and you can turn this savings into a stack of cash over time that you can use for new investment purchases.
If you use an FHA loan, you'll need at 7.50% Of the Sales Price to cover your down payment and closing costs. So depending upon what part of Virginia you are located in / want to purchase in will determine how far your $8K will go
Good luck and you are starting on the road to Financial Independence and possibly wealth.
Thank you sir, much appreciated. With the FHA loan do I need very great and established credit in order to get said loan?
Welcome @David Gatlin if you are in Northern Virginia we have a meet up every month in Springfield/tysons area. You could bring all your questions and we would be happy to share all the knowledge there is in the group.
@David Gatlin . You will need reasonable credit to qualify for FHA. However, FHA is considered to have easier qualifying criteria than conventional loans. Part of that is FHA is geared to getting people into homes they can afford with smaller amount of funds available.
Best course of action is to talk with several Loan officers - find one you are comfortable with and lay all your cards on the table. A great Lender will help you layout a plan for homeownership.
Let me know what other questions you might have.
Thank you Jim. I did some research and i saw it said that you can do it with a credit score of 580. Also that It’s better for people with scores lower than 700 or so, but as of now my credit score is 690. I am an electrician apprentice and have been doing this for about a year now so I only have about 1 year of a stable income to show the lender. So with that information do you think, given my age and work history that I could qualify for a loan?
Welcome to BP! You are already on the track by reading books and listening to podcasts. I would join a meet up group and learn new ideas related to investing. Since we are in Northern Virginia, you will have to learn to be creative with your financing and finding deals because it is very competitive and highly priced.
John Skeaks Freaks mastermind, I'm 18 and it has helped me out a ton.
I’m not far from Tyson’s, on the Maryland side.
Is it a VA exclusive group ?
It's a slack group that does online meetups every week. DM me and I'll give you more details
@David Gatlin . I would think so. But Lenders abide by the "Golden Rule". That is He who holds the Gold makes the rules.
That among other reasons is why I suggest you visit with a lender to see what they say about your overall situation. Some people have a somewhat incorrect view of Lenders. Lenders WANT to lend you money - it's how they make Money. They get paid to lend money . NO Lending - NO Payday. Now there are guidelines and directives that Lenders have to follow. Getting yourself Pre-Qualified and Pre-Approved doesn't cost you anything and is good for about 6 months.
So get on the phone and find a lender you feel comfortable with and lay all your cards on the table and see what the y have to say.
GO for it!
I appreciate the help thank you. I will start my searching.
I just started too but a few things i can say is your
best time to start is now.
Get that pre approval n keep it pushing.
Your next step is your best step.
Also know what kind property you want either single family, duplex, triplex etc. And what kind of property works best in your market.
I don’t have much but i hope it helps you man.
Do you have to tell your banker that the pre-approval loan is for property investing ?
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