I have 6k cash

15 Replies

I need your help guys.

I have 6k cash and am not afraid to pull a hard money loan too. I want to jump into a duplex and rent out the other side. This ids my first time. How creative can I get with this? Where should I start? I live in the greater Phoenix area. Is now a buyer's market or are the good deals gone?

Plenty of money to start a wholesaling campaign. Attend local rei meeting and see what's good in your area.

I am preparing to close on a two family under FHA 203k loan. It's a lot of work but there are also protections for you.

My deal:

Buying 2 family for $74k,

Borrowing and extra $86k ($75 x 115%) ($43/sqft)

3.5% down, plus PMI & closing costs =~$9k

My mortgage, insurance, taxes & PMI will total ~$1,250/mo

I'll be able to collect about $850/$1000 depending on which unit I live in.

The kicker is that there are historic preservation programs that will allow me to collect 10-20% tax rebates, on the improvements, in lump sum. This will be about what I had in cash starting out. I can use this to refinance and get rid of my PMI, or use it as a start for deal #2.

I talk about this quite a bit - but for an owner/occupier investor the 203 program can't be beat. Definitely one to get qualified for and use it purchase that first duplex....Happy Investing!

Agree with @Andy Luck

You could try marketing to absentee owners who own duplex's in your area free and clear. You can write them a letter advising you are looking to buy there property. Then when they call see if they will carry the note for you(seller financing deal). Many might ot want to sell because they do not want to lose the cash flow. The best way to make this appealing to them is to make them realize that they do not lose any cash flow the benefit to them is that they now still gain a month mortgage payment that you will make to them, a decent down payment & all with out having to attend to the tenants

My inbox was full this morning because you posted 5 or 6 threads on the same exact topic that had the keyword "phoenix" in them.

-Save every penny

-Get educated

-Revisit in 6 months

Scott nailed it perfect in my opinion!

I closed my last 3 purchases (duplex/duplex/duplex and triplex on the same lot) with around $4000 total out of pocket. That included getting the insurance going on them and paying fall property taxes on the 5 unit deal.

So you can do quite a bit with $6k once you have the knowledge base in deal structures!

I would go with what Manny said.

Find a FSBO that needs to sell NOW and ask them if they'll seller finance it to you with maybe only $3-5k down. Only agree to pay the PITI in escrow and nothing extra. This is pretty much a sub2 but a bit different.

Then rent it out for $300 cashflow. Sounds like many moving parts right? Well when you don't have the cash, you gotta get creative ;)

Will it be hard to find a house like that? Maybe, but it really won't be that bad.

Good luck!

An FHA underwriter will want to see that you have money for the down payment and a few months of reserves. Along with a steady job, no money owed on anything pertaining to your credit report. Bank statements should show that the money hasn't been gifted, although that's case to case.
There's always talk about getting in with a small amount of money down, but reality will smack you when you are talking to the lender.
Hard money on a buy and hold isn't cheap.

@Andrew LeBaron

Hi Andrew,

IMO you should be patient and keep developing until you save a bit more $$$

The good deals are always out there so don't worry about missing the train.

Thanks

@Andrew LeBaron - must of us are approaching this as investors and most don't know the 203k loan program. If you've got a 620....sometimes lower, you're in with 3% or a $100 if you find a HUD deal out there. You're going to live in it so it's perfect for you and you can reuse the loan every 2 years...rent each room in the duplex to a different person and max the cashflow & rents while minimizing vacancy. We teach our renters to use this program, after we fix their credit so they can become homeowners....and then rent a couple of rooms to live for free....fun stuff really!

Originally posted by @Andy Luck:
@Andrew LeBaron - must of us are approaching this as investors and most don't know the 203k loan program. If you've got a 620....sometimes lower, you're in with 3% or a $100 if you find a HUD deal out there. You're going to live in it so it's perfect for you and you can reuse the loan every 2 years...rent each room in the duplex to a different person and max the cashflow & rents while minimizing vacancy. We teach our renters to use this program, after we fix their credit so they can become homeowners....and then rent a couple of rooms to live for free....fun stuff really!

You rock! Can I contact you!?

Sure - I love this stuff!

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