Could you easily turn $2,100 seed money into double or more, through some type of real estate investment?

Question

If you only had $2,100 seed money, could you easily turn it into more seed money, through some type of real estate investment?

And if so, how would you do it?

Elizabeth Colegrove · Answer

Personal property is 3.5% or less if you can use a 3% conventional, 0%, USDA or VA. In our case we were able to get into our first house with a $2,000 ernest money despot which we got all but $500 back :)

If you have roommates you can even live for free or little out of pocket while they pay all your expenses. There are lots of ways to get started. We are buy and hold investors.

Ralph E. · Answer

Thanks for that info! I didn't know about using mortgage brokers.

Elizabeth Colegrove · Answer

I have found my best "Deal" have been through mortgage brokers not banks! Good luck! definitely ask around.

Elizabeth Colegrove · Answer

Earnest money is due pretty much for any deal. I have only worked with agents. I am not sure the exact process but it gets placed in a trust account. So its basically in "limbo" till the deal goes through.

If you buy a house as a personal property you are required to live in it for 12 months.

I know many people who have bought a personal and rented out rooms. Great way to live free or close to it while continue to save money for another rental! USDA loans are not available everywhere. The key is to go to your local broker and find the best loan for you!

Ralph E. · Answer

@Elizabeth  Colegrove @Matt Slakey I talked to a loan officer from a local bank, who I found out about from a realtor I found on Zillow. He said that I would need a 620 FICO score. I was hoping it would have been 580, like I read about. Now I think I should look for some other banks that maybe aren't local, that might be able to work with my credit score.

Ralph E. · Answer

@Matt Slakey Thanks for your reply!

Ralph E. · Answer

@Elizabeth  Colegrove So you gave your earnest deposit to a real estate agent who owned the house? Sorry, I am tired, and have a cold.

I was looking into getting an FHA loan for a 2 - 4 plex if possible, to try to live rent free, or possibly have a positive cashflow. I read that I would have to occupy for a year before I could move out.

So, you mean it would be better for me to try to get a USDA loan, and rent out rooms?

Thanks for accepting my colleague request

Elizabeth Colegrove · Answer

A personal property is a home you "live" in. Therefore it has lower "downpayment" requirements than a home that is bought a "pure" investment. Meaning you would immediately rent it out.

There are different types of loan and they have different down payment requirements.

The ernest money is given to the private owner the real estate agent (I have only worked with an agent) and held in escrow. This is your "skin" in the game, to close. Some house want $500 and other significantly more. It just depends on the area.

Matt Slakey · Answer

Just recently went through the same kind of scenario.

1. 3.5% or less down payment of the sale price- applies for a FHA loan. There are certain criteria one of which is that it has to be your primary residence, not an investment property. Our lender was going to count this new place as an investment even though we would be moving into it because we would be gaining an income property (our current house that we would not sell). The unfortunate situation for us was that the lender has a mortgage insurance premium that would be added onto the PITI that raised the monthly payment so much that the property was not really a deal. The mortgage insurance premium payment was based on how much less than 20% down we paid. And you continue to pay it for the life of the loan (even after you have 20% equity). There are grants to get refunded some or all of the down payment. To qualify for those you have to have a certain debt to income ratio, good credit, and make less than 40k (I think) annually.

2. Conventional loans have higher down payments generally.

3. USDA loans have a higher loan to value ratio so you get more bang for your buck. You can check out the USDA loan website to check out if a property qualifies as "rural" by just putting in the address.

Ralph E. · Answer

Thanks for your help in advance.

Could you easily turn $2,100 seed money into double or more, through some type of real estate investment?

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