How much liquidity did you start with?

Question

Hello all! I think the topic of this discussion is simply the subject line, how much liquidity or CASH did you start with when you purchased your first SFH? I am looking for my first property sub 90k and thinking I need around 25k to safety start. 16k-18k for down payment and the rest for remodeling and reserves.

David Chwaszczewski · Answer

Account Closed I didn't put any money to buy my first deal (except the 1K i had to come out of pocket during rehab). I was able to get a deal from a mailer that the LTV was low enough that my private lender was ok with what i was asking him to lend.  House was in good shape, owner needed to move and i offers a quick closing.  This is my best deal so far.  The others i did I just looked to borrow enough to purchase and renovate so i could get my capital back out and repeat process.  I am looking for monthly cashflow in the end and not banking on appreciation in the long run.

Joshua D. · Answer

Account Closed

We had about 20k total when we bought our first live in duplex. We put 9k down and redid the whole place for about 5k (crazy amounts of work ourselves) left us with about 6k in reserves that we quickly built back up to 10k for our emergency fund.

i think that your numbers sound quite conservitave. Not a bad thing.

David Chwaszczewski · Answer

Account Closed Bough my first rental 0 down.  I bought a property for 23K from marketing mailers sent out, borrowed 30K private money at high interest . After closing costs i had about 5K for remodel work. Went over 1K so that is what i put into it.  I rented the unit for $800 a month and ARV on refi 6 months later was 70K.  I took cash out refi (75% LTV) at 54K, paid the 30K back and bought another property.

Account Closed · Answer

@Luka Milicevic sounds like your first rental was a good deal!. What is the ARV of the rental?

Account Closed · Answer

@David Chwaszczewski I guess if I wanted to avoid the private lender route, I would need more money down payment for a conventional loan.

Account Closed · Answer

@David Chwaszczewski

Can you please explain more on the 0 down for first rental? Also, 23k for a property? What kind of shape was it in?

Rhondalette W. · Answer

Had $50k cash used 1/2 of it on first purchase.

Thomas S. · Answer

Bought my first one with $100,000 down (25%) from my HELOC and used the remaining $100000 in the HELOC as my operating funds. Still use the HELOC for purchases and operations, never use cash for anything. Rents go in, expenses come out. HELOC is also used in the same way to do flips.

Gabe G. · Answer

Not much. Used home equity on primary residence to buy 1st one. Then got a heloc on that one, and bought second one, then got a heloc on that one and bought 3rd. Then from there I bought 4-10 on cash flow from the first 3 and W2 income.

Justin Fox · Answer

Paid my first home off and converted it to a rental (was ready to move a little further away from the in-laws).  Cashed out on the rental later for ~87,000 (spent 91,600 to build it originally) and built another 3/2 rental and came in 1,400 under (including land).

At the time we moved to our new home and converted the old, I had ~25,000 in savings.