Richmond, TX · Member since 2016 · 5 posts · 4 votes
Good Afternoon,
I am a school teacher in the Houston area trying to get into owning rental property. I'm having a difficult time getting my foot in the door. There have been several properties that I was interested in but each one required 15K or more on the deposit, which I don't have on a teacher's salary. Would anyone have any advice on how to get started with little money down? Any advice would be greatly appreciated.
Rental Property Investor · New York, NY · Member since 2015 · 85 posts · 28 votes
9y
Continue to save money while educating yourself via BiggerPockets. Like Rosston Smith said, fha would be a good start or you could starting looking outside of your area.
Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
9y
Welcome to BP, @Jerral Williams. As Sochima mentioned, educate yourself. You need money to do real estate. But sometimes you can substitute your education for other people's money. If you have the know how and can find the right deal, it is indeed possible to use either the seller's money (via seller financing) or lender's money (private or hard money) and get a property with little money out of your own pocket. But these deals aren't easy to find and you definitely won't find them without education.
Houston, TX · Member since 2016 · 103 posts · 33 votes
9y
@Jerral Williams another option is to use Hard Money to finance the first year and rehab cost on the property. Then refinance with a conventional mortgage. Look at all the info on here regarding the BRRRR process. There are some hard money lenders in Houston that will help you minimize your out of pocket expense.
Lender · Los Angeles, CA · Member since 2015 · 278 posts · 78 votes
9y
@Jerral Williams You can Joint Venture with another Private Lender who has the capital to put up the $15k down payment. Make an agreement with the Private Lender that you will give him a set % return or a split of the net profit. I'm sure you can find a Private Lender to align with at your local Real Estate Investment Club.
personally, I first thought about realestate because i saw a late night infomercial about Carlton sheets decades ago (while in highschool) and his no money down plans.. my parents purchased his 'tapes/cd' set i listened to every one. and did nothing withit util years later.
With that stated, he has useful step by step process for getting into the biz
The following table is from here https://www.carletonsheets.com/dashboard/courses/r...
Seller
The seller can be one of your best sources for creative financing by loaning you the monet as a second morgage. Learn more.
Equities in Properties
You could use the actual asset as a down payment, borrow against the equity, or use the property as additional collateral.
Existing Loans on the Property
On some properties, you can assume the loan rather than take out a new one.
Using Notes
A note is your written and enforceable promise to pay. This promise can be sold, collateralized, pledged, divided, or partially assigned. There are many ways to creatively use notes.
Pledged Asset Mortgages
A pledged-asset mortgage is an asset you own and use as collateral to induce a lender to grant a loan.
Lease Options
With a lease option, you, the buyer/lessee, enter into a contract with the seller/lessor, whereby you pay rent and may purchase the property within a specified time period at a locked-in price.
Government Programs
Government housing programs are designed to help people own homes, and many of the programs are geared toward helping specific segments of the population or making certain types of property more attractive to purchase.
Your Services and Skills
Sometimes you can use your own services and skills to reduce or eliminate the down payment that would otherwise be required to purchase a property.
Property
In some cases, you can use the property itself—even before you own it—to generate funds that can be used for the down payment.
Promissory Notes
Promissory notes are agreements between you and another party whereby the other party agrees to loan money to you in exchange for your promise to pay a specified amount of interest, and to make a specified number of regular payments to pay off the loan.
Investors
Third-party investors can be useful sources of funds for no-down-payment investing. Keep in mind that investors usually expect to receive a high rate of return on their investments.
Equity Partners
Equity partners can be invaluable as sources of funds for your real estate investing career. For more information about partnerships, see Phase II, Lesson 6, Working With Partners. You can also get more information on partners from our Real Profit$™ With Partners course.
Tenants
You can use the credits you receive at closing from the tenants' security deposits, last-month's rent, and/or collected rents to reduce or eliminate the down payment the seller requires to sell the property. Learn more.
Real Estate Agents and Brokers
You may be able to borrow a portion or all of the broker
Rental Property Investor · Centerton, AR · Member since 2014 · 54 posts · 28 votes
9y
Jerral Williams set up BiggerPockets keyword alerts for "Houston" and start connecting with people in your area. Schedule a meetup with other Real estate professionals/investors. Be trustworthy, grow your network, and funding will get easier when you find a good deal. Good luck!
Rental Property Investor · Phoenix, AZ · Member since 2016 · 19 posts · 9 votes
9y
John Rockefeller said "I'd rather control everything and own nothing". Ownership comes with liability, higher costs and more headaches. I feel it's better to control the properties you want to invest in than to own them. You can do that with seller financing, lease options and contracts. If your goal is monthly cash flow... there are plenty of methods for that without owning property.
Investor · Phoenix, AZ · Member since 2015 · 191 posts · 152 votes
9y
There's a difference between a deposit and a down payment. Sounds like what you're talking about is down payment. Assuming you are:
In the Houston market I've always told new investors that 50k in liquid cash is the minimum you want to have to flip 1 home using standard hard money (assuming in Houston the avg rates are 12% and 3 pts and theyre lending 70% of ARV.) Even 50k is barely enough, and you probably wont be too comfortable in the loan.
Unless you have an awesome private money lender that will lend a higher % of ARV...like 90% or better....then don't get sucked into doing a hard money loan with only 25k in the bank. Be patient, save up enough for cushion and then invest.
Real Estate Agent · Fort Collins, CO · Member since 2016 · 183 posts · 72 votes
9y
Welcome to BP @Jerral Williams! You are definitely in the right place! A lot of the articles and podcasts on this site are about sourcing financing. I'm not expert enough yet to advise but working on getting there - best of luck!