Thinking about buy and hold with no money? Read this.

General Landlording & Rental Properties
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Thinking about buy and hold with no money? Read this.

Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes

My friend runs a site called BudgetsAreSexy.com. He dabbled with real estate investing himself for a bit, and has now sold his rental and his primary residence and rents a property instead.

While I don't agree with his stance on home ownership, this recent post reminded me of the other side of the coin - the landlord's point of view. The landlord is now facing quite the repair bill. 

If you're buying real estate and have no money for repairs - you're playing with fire. Or in this case, water and mold...

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
9y

I'm pretty familiar with J Money as he lives in my area. Had he not sold his house when he did, his balance sheet would be about $125k higher now. That's the argument for owning your house, and an argument for owning in high demand east/west coast cities.

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  • Andrew SyriosPro Member
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    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    9y

    The BRRRR method is great, but I just don't think it's realistic to buy and hold with no money whatsoever. You have to have something for a rainy day.

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  • Robert MotchPro Member
    Investor · Holmdel, NJ · Member since 2015 · 53 posts · 23 votes
    9y

    @Andrew Syrios - I couldn't agree more. 

    Any buy and hold investor needs a reserve fund of some kind and you need it from day one. The damage in the story could happen in the first month of ownership of a property before an investor has had an opportunity to build up reserves. 

    Another option is either getting a HELOC on your primary residence or a business line of credit on an investment property. Any repairs or mortgage payments during vacant months could be paid for out of the line of credit. Then your monthly vacancy and repair reserves out of the rents received each month could go towards paying the line of credit back down. In this case you don't have cash laying around in reserves doing nothing for you. Instead any excess cash once the line of credit is paid down to 0 can be used to purchase new properties.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    9y

    I'm pretty familiar with J Money as he lives in my area. Had he not sold his house when he did, his balance sheet would be about $125k higher now. That's the argument for owning your house, and an argument for owning in high demand east/west coast cities.

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  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    9y

    I wanted to reply and say yeah- well what if you have 35 houses? How would you feel about that, J? LOL At least he's not completely against homeownership for all.

    All of my compression plumbing appliances have vinyl under them that goes up the sides. Most kitchen sinks, too. Easy to do and avoids the hidden leaks that go undetected forever. Cheers!

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