Honolulu, HI · Member since 2013 · 43 posts · 0 votes
Hello all,
I was curious if someone could briefly summarize different types of financing for a person who does not have much saved and who doesn't have the best paying job?
I'm currently swarming in student loans and a lot of my money is paying that back.
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
13y
Some of the more common;
Private lenders
Money partners
Subject to existing debt
Seller financing
Lease option (this is financing in disguise)
Option
Wrap
Management in exchange for income and growth participation
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
13y
Some of the more common;
Private lenders
Money partners
Subject to existing debt
Seller financing
Lease option (this is financing in disguise)
Option
Wrap
Management in exchange for income and growth participation
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
13y
Originally posted by Ryan O.:
curious if someone could briefly summarize different types of financing for a person who does not have much saved and who doesn't have the best paying job? . . . I'm currently swarming in student loans and a lot of my money is paying that back.
If you are swimming in debt then why do you want to know how to find more? More debt, even if it is "good Debt" that generates income, is a risky strategy.
No one likes to hear this but if you are not in a sound financial position, the first step in real estate investing is often getting into a position to enable you to invest. Every time you pay off some of your debt you are increasing your net worth - You are building wealth.
Why do you want the financing?
If you want to do renovations to flip forget borrowing. You need cash reserves to do that. However a partner with money is an option. Frankly unless you have experience and rehab skills this is a high risk/poor choice.
Do you want to do buy an hold rentals? Again this takes cash reserves. Financed rentals do not generate near as much cash as people think.
Aaron Mazzrillo gave you a good list of options for financing but financing itself may not be your best option moving forward. If you have little income and current debt, moving forward in real estate can be done but, you should focus on strategies that done require debt or much money.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
13y
Are you in a position where you can buy a house to live in? A personal residence? I got started by accident. I was looking for a house (not investing) and we found a foreclosure. Got a good deal on it, fixed it up, then took out a HELOC. Then I started investing with that HELOC. But like Ned said, debt has it's risks.
Honolulu, HI · Member since 2013 · 43 posts · 0 votes
13y
Bryan L. thank you for your response. In the city/state I live in, buying a house to live in would be difficult. However, I do believe I could purchase my own residence if I were to move to another state.
Yes, I understand debt is risky, but I make weekly payments to cut down on the amount of interest. 7-8% on 50k on a student loan can be scarey.
I think I also need to qualify...I don't make much money, but I still have enough to save and invest in my stocks/mutual funds. Money is tight, but I'm always looking for ways to diversify my investment portfolio.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
13y
In my opinion, you would be better off to put money into real estate instead of stocks and mutual funds. I spent many years in big-corporate America, and it's run by idiots. Don't trust your money to someone else.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
13y
Originally posted by Ryan O.:
Sounds like RE investing or any investing, is only for the rich. Thanks bud!
That is not what I said at all. In fact I gave you some options for moving forward in real estate.
Paying down a 7-8% loan has the same effect on your net worth at investing at 7-8%. Not as good as you can do in real estate but still a pretty good return in today's market.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
13y
I bought a house for 7K one time. A couple of others for less than 20 each. I don't expect that you can do that in Hawaii, but I don't know, maybe you can. You've been given a lot of good options in the thread above. Partners, sub-2, lease-options, etc. or buying a personal residence that needs work and gaining equity that way. And Ned is right about paying off the loans. Guaranteed 7-8% return.
Honolulu, HI · Member since 2013 · 43 posts · 0 votes
13y
Bryan L. It would be very difficult to do that in Hawaii. Studios rent for 1,000+ a month and you can buy a million dollar home and still have to fix it up.