Rental Property Investor · Spartanburg, SC · Member since 2013 · 253 posts · 56 votes
How did a lot of you buy and hold investors get started purchasing rental properties? I'm speakingainly to those who didn't have the 10k or more sitting around to purchase one? How did you gain the capital at first and roughly how long did it take you?
I'm currently doing wholesaling to gain more reserves and cash flow to purchase my first rental property by next summer/fall. Wasn't sure if I should vamp it up by studying flipping houses and possibly JV'ing a deal with an experienced investor even though I know that raises my risk but would give me the more money at a larger rate. Just let me know what you guys think and how you got being a buy and hold investor if you don't mind!
Thanks!
Atlanta, GA · Member since 2012 · 93 posts · 8 votes
13y
I haven't started investing yet but I have done similar research for months trying to answer the same question. Some investors have recommended the FHA loan to me: 3.5% down. The only bad thing is the PMI the life of the loan. FHA has recently went through some changes that will have you paying more money.
Another way to get the 10k, as you already know, is wholesaling. Alot of investors have recommended this to me. I just started wholesaling.
Alot if invested have told me to buy a multifamily property (4 plex is better), rent it out to tenants and let them pay your mortgage.
Rental Property Investor · Spartanburg, SC · Member since 2013 · 253 posts · 56 votes
13y
@Keela Chambers that's a great plan! I unfortunately made my worse real estate investment and purchased my first brand new house lol. Yea I'm going to do wholesaling and hope to add some capital for reserves and a down payment
Rental Property Investor · Oklahoma City, OK · Member since 2013 · 1k+ posts · 412 votes
13y
Do you have the option of taking an additional job to raise the money to get started? 10K just isn't that hard to earn if you're willing to give up free time for a year. Then it's your money and you're in control. During podcast #26, Joshua Dorkin was talking about the benefit of his family writing a budget - I believe they found $1000/mo. That may be a high-end example but people seem to really underestimate the value of hard work and budgeting as a legitimate way to get started in real estate.
SFR Investor · Irving, TX · Member since 2013 · 1 post · 0 votes
13y
@deborah. That's what I'm currently doing now as a new investor. I am working an extra day and staying out more in my current business rather than coming home when I don't have to so I can raise that first capital and reserves ..
Rental Property Investor · Oklahoma City, OK · Member since 2013 · 1k+ posts · 412 votes
13y
Milton Green - good for you, that's how we got started. Worked our tails off then worked our kid's tail off. Will never forget sitting on the floor of property number 2, so tired after the 7 days and 5 evenings a week that I couldn't muster the ambition to stand up.
Investor · Knoxville, TN · Member since 2012 · 33 posts · 16 votes
13y
Personally, I saved up for several years and cashed out my 401k against the advice of just about everyone I know. However, this might be another option;
I don't know how legal it is so I encourage you to research this idea further & I ask anyone reading this to add to or correct me if this is bad advice, but I've heard from a colleague of mine that the way she started was by buying a fixer-upper as a primary residence, so 3-5% down, she'd move in & live in it while repairing. Then buy another "primary residence" with 3-5% down and move into it while placing a renter in the first one. Rinse & repeat. Good luck!
Lake Jackson, TX · Member since 2013 · 119 posts · 34 votes
13y
Worked hard saved money borrowed from parents and started of with a little 3 bedroom house kept. On working hard paid parents back and got home equity loan bought another one with that money and got another home equity loan on that one so three houses good cash flow and saving money to buy another one ended up getting a personal loan for 4th house paid it off saved money and bought another one 5 houses in a span of 8 years a little slow but I should be paid off by the end of this year and this is where the fun begins or so I hope start buying one a year maybe two depends on deal and pay them off before I go any further this is just the way I done it by far I'm not a professional but I got to stick to plan I know
Rental Property Investor · Spartanburg, SC · Member since 2013 · 253 posts · 56 votes
13y
Deborah B. I have been going back and forth and picking up a part time job in real estate while also cutting back on expenses and saving money as well.
Manuel Gonzalez Nothing beats a little hard work and that's definitely what helped you get there which I like!
Junior Salters,
I noticed that you said you were cutting back on expenses.
Have you ever done a "30 day Spending Diary" to focus on how you might be able to save more money?
Investor · Fort Wayne, IN · Member since 2013 · 14 posts · 3 votes
13y
I haven't started yet but I'm in the saving stage like yourself. About 10 months ago I set up a second savings account and changed my direct deposit at work such that a portion (12%) of my check goes into that separate account. From there it was just a matter of resolving not to touch that money until it was enough for my first down payment. After the first month I forgot all about that money each month and life went on as usual. I'm happy to say that I've now saved all that I need for the down payment, rehab, and the mortgage and expenses for the first six months on my first $60-70k property.
Investor · NW Indiana · Member since 2012 · 833 posts · 197 votes
13y
Junior Salters I am a small time buy hold, but bought my first property with a loan and a family member helped me with the downpayment. Then I just started saving as much as I could. Hope you find what you are looking for :)