So here's the situation:
I have a house (mortgage), good credit, and a job- and big Faith! :)
I figure I need $30K to start investing... I know about the no money down deals but new and it will be a challenge to get funds that way, right now. So my question is, How would you try to generate that kind of money? I thought about line of credit, home equity loan, personal loan... But are they really good options. I would like to flip a property or buy a duplex or townhouse to rent out. I realize making money in RE investing is work but I do believe I can do it. I just need to get that first deal under my belt. Any suggestions?
Thank you all in advance.
PS - give it to me straight, if my thinking is off let me know! Thx!
I use a HELOC, so I don't pay interest in between deals and also have a unsecured personal LOC for extra funds when needed. I would start with a smaller marketing budget around $200-$300 per month and try to find a deal you can wholesale to raise extra cash for a flip.
You have a great start @Teresa Miller ! A home, a good job, good credit. Congrats on what you've done so far!
The smartest way to acquire $30k? Earn more and spend less. Brew your own coffee, brown bag your own lunch. Don't go inside a Starbucks, restaurant or mall unless it's to go to your 2nd job. Got a fancy car with a fancy payment? Sell it and get a beater!
A clearly defined goal can be accomplished so much faster than you think when you get radical. Just sharing what I did. Think of the why! Best wishes!
It depends where you can pull that money from. Just have a good backup plan if things do not go as planned. My wife and I actually reviewed our budget to see where we can make cuts and started saving money that way. We used some of it as a down payment and some was saved on the side to help with extra expenses.
prosper.com or upstart.com or lendingclub.com if you don';t have home equity to do a HELOC. Call all your relatives for IRA cash, that you'd offer to pay them 8% interest, by moving to a self directed IRA custodian (google).
Steve Vaughan thanks, great advice! I'm on that path....
Jeremy S. & Curt Smith Im not familiar with HELOC but I will look into it. I think I will focus on wholesaling and build a cash reserve. Im cutting a lot of corners already as it pertains to spending... You gave me some valuable options. Thanks for sharing.
Chue Vang I appreciate you sharing... Smart!
Save it. Do you have cable? Cancel it. Do you eat out and go to happyour hour? Cut those from the budet.
If you're comfortable, get roommates in your current house. Extra income is great. Just screen well.
@Teresa Miller HA HA! sorry, I'm excite, this is my first time correctly tagging someone...
I am not sure if it will help you but I will tell what I am doing, and I hope it helps...
Because I look at REI as a business I first formed a LLC for my REI business and I found a company that is helping get a business startup/ working capital loan. They are writing my business plan and gearing it towards what banks look at, so I will have a plan in writing to help me get many loans in the future as well as now. If you are interested in checking out the company I am using it is called Central Business Funding, and here is there link if you want to check it out http://www.centralbusinessfunding.com/
Another option if you want is to use LendingClub, https://www.lendingclub.com/ this place is investors loaning to others, just as a creative note you might even be able to network some at this site or others like it... also if you haven't read it Rich Dad poor Dad, by Robert Kiyosaki, I have found gets my brain thinking more creatively... like you could try selling somethings on Ebay, or pick up some other passive income gigs online,
http://digitalsynopsis.com/tools/200-legit-ways-to-make-money-online-from-home/, found this after I read "The 4 hour work week" by Timothy Ferriss, both books I mentioned are available on YouTube as an audio book if you are to busy to sit and read but can listen as you work . These are all ideas to help stir up some money to get the ball rolling with your REI Business. I hope that helps you...
God Bless, and happy Investing :)
@Chin P. im thinking about the roommate thing, since I have empty rooms.
@Amanda Reynolds hey Amanda you are on your way! Im gotten a lot of great feedback on this topic. Thanks for sharing I will definintely listen to the audios as I work.
Thanks again for the info.
Originally posted by @Teresa Miller :
...I think I will focus on wholesaling and build a cash reserve...
"Line of credit, home equity loan, personal loan" are all sensible under the right circumstance ie. when you find a smokin' deal! Deals so good that even if you can't find a Buyer, you don't mind, because you WANTED the deal for yourself anyway. Deals so good that you will stop even looking for Buyers!
If you don't find such deals, how will you succeed as a Wholesaler anyway?
Just asking. All the best....
@Brent Coombs You're right... Ma'ma aint raise no fool. Sometimes you have to do what you have to do by any means necessary, lol! (Providing that its moral and within the law, of course :). )
Hi @Teresa Miller ,
I'll wholeheartedly vote for the roomate option, especially since you have extra rooms.
My wife and I have been doing that for two years and have virtually zero regrets. We did it to pay down her student loans, but it's also opened us up for investing as well.
She is in a graduate school program. We started by renting to another student in a different program. It opened our eyes to just how transformative this could be; so we added another, completely covering our mortgage. The first month with our mortagage fully paid for was a truly wonderful feeling. We shifted some things around and now have a couple living with us as well, which covers 100% of our house related expenses—mortgage, remodel loan, city, energy and cable & internet. Grad students have been awesome tenants because the school administers background and drug tests during the application process, they're ultra-motivated to be successful in school, and have financial aid: so they know where rent will be coming from all semester.
Our next move is looking at a triplex that we would move into for one year in order to do FHA financing and only have to put down 3.5%. Meanwhile, our current home will be fully covered (and then some) by our tenants and building equity.
For us, generating additional income has been way more enjoyable than living like total peasants to save. We still have a lean budget, but we cut mercilessly on things we don't love so we can spend extravegantly on things we do love. For instance we actually upped our eating out and coffee budget some so we could go out and offset the effects of losing some of our privacy at home.
Best of luck and keep us updated as you start formulating a plan.
You might want to consider short term unsecured credit as a financing alternative. I have a partner that does up to $150K unsecured financing @0%. Only need a 680 fico. If interested, I can tell you more about it and put you in touch with him.
@Michael Prout I may take you up on that, would like to try some other options to increase cash flow first. Thanks!
Hi @Teresa Miller
I strongly recommend the roommate idea as well to really get the ball rolling on your REI. Then consider renting out you home to someone and buying your new investment as a owner occupied property utilizing the low down payment requirement. Also I would consider a MFH instead of a SFH just my preference. Good luck