Hey everyone, I'm new here. For the record I'm currently 17 years old right now and I'm trying to learn as much as possible about real estate so that when I'm 18, I can start with a plan already set. I've been studying real estate since I was 14 years old, I know a little bit here and there. Anyone who could help me out would be great. I'm mostly into building my passive income portfolio. I look forward to meeting all of you.
Investor · Chattanooga, TN · Member since 2009 · 1k+ posts · 903 votes
16y
Well, you can start building your credit by getting a credit card. Initially, you may have to open a savings account with the bank who issues the card (secured), and later on the bank will let it go to unsecured. Fill you car up once a month using the card. Set the money aside to pay the bill immediately so that you are not running up a balance. After six months or so, you will get a credit history and score. This is important because it will teach you discipline which is very important.
On the real estate side of things, just keep doing what you're doing. Read up, ask questions, and keep repeating that process because you will always be learning.
Also, since I'm under 18 years old I have absolutely no credit. First off I want to build up a bit of capital. But eventually the plan is to buy properties and hold them to make rental money off them and eventually snowball it through 1031 exchanges.
Investor · Chattanooga, TN · Member since 2009 · 1k+ posts · 903 votes
16y
Well, you can start building your credit by getting a credit card. Initially, you may have to open a savings account with the bank who issues the card (secured), and later on the bank will let it go to unsecured. Fill you car up once a month using the card. Set the money aside to pay the bill immediately so that you are not running up a balance. After six months or so, you will get a credit history and score. This is important because it will teach you discipline which is very important.
On the real estate side of things, just keep doing what you're doing. Read up, ask questions, and keep repeating that process because you will always be learning.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
Accumulating $15K is simple, but difficult. Its simply a matter of spending less than you make. Save the difference and its only a matter of time before you have the $15K.
In fact, if the is only one piece of financial advice you heed, its to just spend less than you make.
But, I think you mean how could you earn the money quickly. Honestly, I know of no method to make a quick $15K, so it has to be slow. What are your skills? What are your interests? Find something you love doing, or that at least you find interesting and pursue that. In the mean time, find another job or two. Are you heading to college? Do you have a trade? If not, figure out SOMETHING that will earn more than a minimum wage retail or restaurant job.
@Brian Levredge, I do not have a car and I can't open up any credit since I'm still under 18. And also, once I turn 18, is it realistic to gain 15k capital through flipping at first? What are usual requirements for hardmoney loans? And also the interest rate on them? Getting a job here in NYC is almost next to impossible, especially for someone who doesn't even have a high school diploma yet. One of my best skills, is my people skills. Also how does seller financing work?
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
Rates on hard money are up to six points and 12-18%. Since you're asking about that, I assume you mean fix and flipping and not wholesaling. "Flipping" is used both ways.
To do a fix and flip, you need cash. Don't know what price range of houses you could do, but I wouldn't want to try it without about 10% of ARV in liquid cash.
Takes less to wholesale, but you need to find sellers and buyers and you need to know the laws. So, it still takes some cash.
My my...
I was reading a bit on bird dogging, do you know of it? I'm still a bit unclear about that. Also is it possible to put the downpayment through a creditcard payment? Is there some limits on that?
Huber Heights, OH · Member since 2009 · 120 posts · 15 votes
16y
Seller financing is when you sell your home you care the financing instead of the buyer going to a lender. Their are a number of things to take into consideration such as the buyer credit. Generally it should be 600 or better. You want a down payment of typically of 20% down. You also want to make sure the home you own is either free and clear of loans or enough equity in it that you can seller finance. I would suggest visiting the forum geared toward Real Estate notes for more information. You would do all this with a good real estate lawyer. I would also purchase Eddie Speeds Book "Street Wise Seller Financing"
LeJonR
Any reason as to why I should get a 20% down instead of 5-10%? I mean yeah the monthly payments would be lower, but at the same time, it would usually mean less ROI. Unless there's something else I'm missing? Also with a lawyer, would I need to pay to ask for an audience with them? Or first time advice is usually free? Also how can I filter out the bad real estate lawyers from the good?
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
Investor financing right now requires 25-30% down payments. Getting just 5-10% down on investment property is impossible right now.
But you were talking about flipping, now you're talking about buy and hold.
Bird dogging is finding out information about a property and passing it along to someone who actually does the deal. Might be good for a few hundred per deal.
Generally you cannot put the down payment on a credit card for the simple reason that taking out a big chunk like that will wreck your credit rating and make it difficult for you to get the loan.
To get an investor loan for a buy and hold property, you must have good credit and steady income. You'll need gross income about 3X or 4X the PITI payment on the property you're buying. Sorry, but this doesn't sound like your situation.
Real Estate Investor · Pasadena, CA · Member since 2008 · 7 posts · 1 vote
16y
Never mind saving money...or blowing 21% credit on cards you cant get anyway. By the time you are moving ...it will be to late in this market. all that traditional advice is...a waste of time. Find a partner ...whoever ...who has money and no time. Partner with them (only one). They provide the capitol. YOU provide the work. You find the project....bring them the analysis and a contract and you put in the labor. Start with a small forclosure flip or a duplex you can manage and split the income with him. HE puts in the cash your put in the labor and smarts...this is a perfect deal for one with youth and energy and no money and many will and should jump at the chance. AFTER you come through...you have a reputation and some money from a 50/50 split. You can do it again or invest your money. Another great way is to do the above and get a contractors license so you can do larger deals with subcontractors. Again...with OPM....other peoples money...forget the credit cards etc. Its a bad way to go.
Huber Heights, OH · Member since 2009 · 120 posts · 15 votes
16y
The more your buyer puts down the more likely he /she will not walk away from the deal. Say they put down $5,000 on a $100,000 home. The LTV would be 95/5 or 90/10 it is not secure. You want to make sure they think twice before they walk away from the home. that's why you typically want a LTV of 80/20. Not to many people want to walk away from $20,000 if they don't have to. Also you have to perform your due diligence, and check their previous rental history, job situation (make sure their company does not plans to skip town in the next year) this all is covered in the book I mentioned.
I apologize what I meant to say is a good experienced lawyer. I would simply ask them if they have ever dealt with seller financing.
LeJonR
Never mind saving money...or blowing 21% credit on cards you cant get anyway. By the time you are moving ...it will be to late in this market. all that traditional advice is...a waste of time. Find a partner ...whoever ...who has money and no time. Partner with them (only one). They provide the capitol. YOU provide the work. You find the project....bring them the analysis and a contract and you put in the labor. Start with a small forclosure flip or a duplex you can manage and split the income with him. HE puts in the cash your put in the labor and smarts...this is a perfect deal for one with youth and energy and no money and many will and should jump at the chance. AFTER you come through...you have a reputation and some money from a 50/50 split. You can do it again or invest your money. Another great way is to do the above and get a contractors license so you can do larger deals with subcontractors. Again...with OPM....other peoples money...forget the credit cards etc. Its a bad way to go.
If your in SoCal, Id work a deal with you.
So do I split the capital gain or the rental income or both? Also do you know any sites on where I can find such investors? Right now, I know little to nothing on how to find properties and even less about determining if it's a good investment or not. Any resources you know about on how I can find the knowledge necessary on how to do such things? Also, usually how much does it cost to hire a someone to inspect the house to check if it's in good condition or not?
Also, should the first property I deal with, should I or the person who puts the money down, put the property under an LLC? Or should I wait later for the next properties, or just do it if I plan to rent it out?
Investor · Chattanooga, TN · Member since 2009 · 1k+ posts · 903 votes
16y
Originally posted by Scott Sargent:
Never mind saving money...or blowing 21% credit on cards you cant get anyway. By the time you are moving ...it will be to late in this market. all that traditional advice is...a waste of time. Find a partner ...whoever ...who has money and no time. Partner with them (only one). They provide the capitol. YOU provide the work. You find the project....bring them the analysis and a contract and you put in the labor. Start with a small forclosure flip or a duplex you can manage and split the income with him. HE puts in the cash your put in the labor and smarts...this is a perfect deal for one with youth and energy and no money and many will and should jump at the chance. AFTER you come through...you have a reputation and some money from a 50/50 split. You can do it again or invest your money. Another great way is to do the above and get a contractors license so you can do larger deals with subcontractors. Again...with OPM....other peoples money...forget the credit cards etc. Its a bad way to go.
If your in SoCal, Id work a deal with you.
The point, Scott, is more about creating financial discipline than it is about saving money and building a credit record. While it is true you don't need either to do RE investing, the fact is that people who never learn financial discipline to begin with end up not being very good RE investors.
Never mind saving money...or blowing 21% credit on cards you cant get anyway. By the time you are moving ...it will be to late in this market. all that traditional advice is...a waste of time. Find a partner ...whoever ...who has money and no time. Partner with them (only one). They provide the capitol. YOU provide the work. You find the project....bring them the analysis and a contract and you put in the labor. Start with a small forclosure flip or a duplex you can manage and split the income with him. HE puts in the cash your put in the labor and smarts...this is a perfect deal for one with youth and energy and no money and many will and should jump at the chance. AFTER you come through...you have a reputation and some money from a 50/50 split. You can do it again or invest your money. Another great way is to do the above and get a contractors license so you can do larger deals with subcontractors. Again...with OPM....other peoples money...forget the credit cards etc. Its a bad way to go.
If your in SoCal, Id work a deal with you.
The point, Scott, is more about creating financial discipline than it is about saving money and building a credit record. While it is true you don't need either to do RE investing, the fact is that people who never learn financial discipline to begin with end up not being very good RE investors.
What kind of financial discipline are you talking about? Any certain things I should avoid?
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
Spending less than you make. Saving money.
Spending more than you make.
Having a money partner makes more sense Buy and hold is a game for people with money. If you have no money and no credit, do something to make some money and build good credit first.
LeJon, I'm confused by your posts. You seem to be giving advice about selling using owner financing. Are you suggesting that as an alternative to being a landlord? I know some folks are very successful with that strategy, but that still leaves the need to acquire and hold the property.
Huber Heights, OH · Member since 2009 · 120 posts · 15 votes
16y
Also how does seller financing work?
This is what he asked in a previous post so I just gave him some in site on how it works. Along with what steps a FSBO would want to take in order to seller finance. Say you would need to sell that note, Very important that it is marketable to RE Note Buyers, just in case a circumstance comes up. Now I am not saying sell, I would suggest holding onto the note. I would suggest getting professional help when constructing a note from a attorney so you follow all the laws in your area and you get the return you are looking for on your investment.
LeJonR
Real Estate Investor · Atlanta , GA · Member since 2009 · 70 posts · 15 votes
16y
Congrats. Luis for wanting to get in the game early. I would say to know what a deal is is to know your market (most will tell you that is utmost important). See about finding a realtor and even better one that invests themselves and they will be good to help u track the market and even learn from.
The lower you can get from the median price range for your area probably the better the deal. Yes, credit cards, horrible idea. Birddogging, relatively easy way to make money for you and help you learn the market. A good real estate lawyer will be one that does at least half of the practice in real estate and better yet invest themselves (also, make great open minded partners because they are busy)
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
Ah, I missed that. Luis may be asking that from the buyer's perspective. Seller financing, Luis, is a good way to buy property. That's how I bought my first house. The seller acts as both the seller and the lender. They give you a loan for all or part of the amount your borrow. It can be a good way to get a loan with less qualifying and with a lower down payment.