Lakeland, FL · Member since 2014 · 91 posts · 18 votes
I am new to the game, as in brand new and I do not have a clue where to really start.
I currently own a house that we plan on living in for at least another 15 years or so, but we are very much underwater still, by maybe 40k or so. So borrowing on the equity of my first home is obviously not an option.
I want to buy a cheap house for a long term rental, I plan on holding on to it for a decade or so before considering selling it. When I say cheap, I mean upwards or $50k, but I have many options in the $30-40k area. Naturally these homes will need a little work, mostly cosmetic, but anywhere from $5k to $15k.
So assuming one does not have much cash on hand, but has excellent credit, what are the options out there? How do people with no money get loans to buy and fix up a property? Thank you very much.
Investor · Chesterfield, VA · Member since 2014 · 93 posts · 11 votes
12y
Im kind of in the same boat as you. Only have about 10% to put down. People on here told me to check out homepath.com which are basically foreclosures owned by fannie mae. Find a fannie mae lender.
Other options I guess would be private financing either from family or friends?
Its hard to find money for buy and hold properties. Im finding it easier to find money for flips but Im not really in to that.
Lakeland, FL · Member since 2014 · 91 posts · 18 votes
12y
Homepath.com looks like a promising deal, I wonder if there is a catch since the properties seem to be way below market value?
I don't want to flip houses, at least not yet, and borrowing money from family or friends is not an option in my mind, to much drama involved. Thanks for the info.
Dallas, TX · Member since 2013 · 311 posts · 94 votes
12y
I don't know about "NO money".....you're going to have to have SOME kind of skin in the game.
I took a part time job to help finance my investing. Why not focus on saving money for the next year and whilst doing so, educate yourself and network as much as possible, especially if you're new to the game.
Go to your local REIA and network with RMLO's that work with investors. Network with hard money lenders. But even with them you still need some money.
Learn about creative financing as well. Ben Leboyvich has some great blog posts about it.
Lakeland, FL · Member since 2014 · 91 posts · 18 votes
12y
How much money would one need? Honestly I can come up with about 10% (5-6k) of what I want to spend. Some of the properties I am looking into are around $23-35k, but I would want $10k on top of that for some improvements and to set aside for emergencies.
I'm not planning on going out tomorrow and doing this, but I do want to jump in before the prices start rising faster then they have been around here.
Dallas, TX · Member since 2013 · 311 posts · 94 votes
12y
There's no cut and dry answer. Every deal is different and every region is different. And if you're buying a property for $35k you can bet theres going to be some repairs.
Just from your own numbers you are giving you already need 15K.
Once again, set a goal for savings (say 15-20K over 12 months or whatever you can afford) and while you are doing that start networking and educating yourself. Go out and look at properties. See whats out there. Network with rehabbers and buy and hold guys in your area and ask how they got started and how much money it took them. Once you do that you will start gaining more clarity and insight as to what it will take for you.
Seattle, WA · Member since 2014 · 307 posts · 170 votes
12y
Hi, You have a good plan but can I be honest? Your a ways off. What sunk this whole industry a few years back was too much borrowing/leverage. You have to be in a good spot with your primary home and have a decent cash wad if you are going to safely stem in IMO. The objective is to make money not risk everything. Some lender will not lend to someone with no landlord experience as well. I wish you the best of luck.
Real Estate Broker · Long Beach, CA · Member since 2013 · 81 posts · 28 votes
12y
Hi Kevin, Here's how I do it...Or should I say we, through group investing.
.
1. Purchase inexpensive homes $5000-$20000 (I have an inexhaustible supply of these kind of homes they are not junk they are totally livable and not in need of repairs. They are not in a war zone there in a good area of the country that I'm from and totally familiar with. with all cash we can close on these homes within days.)
2. We, that is us the investment group resell the homes holding the first trust deed or a land contract...The return on investment is astounding... here's and example:
Purchase Price $6000
Sell Price $30000
Down Payment $1000 (The reason we can sell at this price is the low down and low monthly payments..Cheaper than rent)
Hold note for 10 years 120 months at 11%
Payment $399.48
Yield 95.88% (That's unbelievable)
Months until return of initial investment 12.52
Total payment $47,937.60
Profit $42,937.60
But here's the best part..If we want we can sell the note as follows:
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
12y
@Bill Jones Since you are selling offering seller financing to owner occupants, are the Dodd Frank requirements that went into effect in January changing the way you do things? Are you using mortgage originators? Are you doing the required ability to repay check etc?