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Cirilo Villar
  • Los Angeles, CA
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22 Years old with zero credit and $4,000 how can I start REI

Cirilo Villar
  • Los Angeles, CA
Posted Jun 27 2019, 00:04

Hey everyone I’m 22 years old turning 23 in December and i want to get started in Real Estate Investing flipping houses preferably and having that return buy me rental properties for cash flow. However, I have never opened a credit card and I always pay for my things straight up even my car. I have zero credit, $4,000, and an understanding for real estate investing but have no clue on specifics. Please direct me the right way to achieve financial freedom by the age of 28 through real estate investing

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Jonathan Hulen
  • Rental Property Investor
  • Torrance, CA
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Jonathan Hulen
  • Rental Property Investor
  • Torrance, CA
Replied Jun 27 2019, 16:52

@Cirilo Villar like others said get a credit card and use it for gas and groceries. Pay it off in FULL every month. After that get yourself a real job and increase your income. Investing in real estate is extremely difficult without solid W-2 employment. I know a guy that is self employed, and makes a lot of money, but can’t get a loan to save his life. Banks prefer to loan to people with W-2 income. Like @Frank Wong said $4,000 really isn’t enough to do anything anyway. That’s the truth. Focus on increasing your income and saving. Once you have $20,000-$30,000 I’d say you’re ready. That’s just my opinion.

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Michael Noto
  • Real Estate Agent
  • Southington, CT
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Michael Noto
  • Real Estate Agent
  • Southington, CT
Replied Jun 27 2019, 17:31

@Cirilo Villar Given the information you provided here is what I would recommend for the next steps:

1. Start establishing credit and make sure to pay off in full every month any credit you use. Use it responsibly. 

2. Save your money. Develop a plan to save the money you are going to need to accomplish your future goals. If that takes working 2 or 3 jobs, do it. You are young and what you have is energy and time, that is your compeitive advantage right now. Take advantage of it. 

3. Get educated on the different facets of the real estate business you think may be a potential path for you in the future. Again, leverage the time you have to learn all you can. For instance, you mentioned purchasing a home with a FHA loan in an earlier post. Read everything you can on the topic and let the forums fill in any knowledge gaps. Do this with any strategy that peaks your interest

4. Learn your local markets. The best way to hit the ground running once you’ve established your credit, saved enough money, and decided on a strategy is to know how best to execute that strategy in your market. There is a lot that can be done behind a computer in this business, but there is not substitute for getting out in the field and learning how what you are seeing online translates to real life. 

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Replied Jun 27 2019, 17:52

@Cirilo Villar Have you heard of Wholesaling Properties? Not sure why no one has mentioned this. You dont need credit to get started. You do need a little bit of money for a course and some marketing material. I know this can be done with less than $1,000. Its a great way to get into real estate, theres free sources like Youtube and Google. Its just up to you man dig for this information. I turned 23 a few days ago and started a month ago. I have a few people lined up for a potential deal soon. Good Luck.

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Rodney Barnhill
  • Specialist
  • Bloomington, IL
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Rodney Barnhill
  • Specialist
  • Bloomington, IL
Replied Jun 27 2019, 18:20

@Cirilo Villar get someone willing to give you the proper legal documents to start assigning contracts. Build a network with cash buyers first. There are many techniques to this. Read as much as you can. Look into low risk low pay out investing like assignments or bird dogging.

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Donald Muschany
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  • Investor
  • Sarasota Florida
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Donald Muschany
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  • Investor
  • Sarasota Florida
Replied Jun 27 2019, 18:27

@Cirilo Villar hey man go to a credit union or try amex or a local bank they are easy going on credit cards. Try to get one with rewards and not a lower % and pay it off every month. This way your not paying interest and you can get gift cards for lowes and home depot to help support your investment. Sometimes you have to get a secure credit card where for example you give the bank 1,000 and then you have a credit card with 1,000 limit (your money) and that's a easy way 100% to get started with a credit card if all else fails.

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Jerryll Noorden#2 Marketing Your Property Contributor
  • Flipper/Rehabber
  • Wilton, CT
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Jerryll Noorden#2 Marketing Your Property Contributor
  • Flipper/Rehabber
  • Wilton, CT
Replied Jun 27 2019, 18:30
Originally posted by @Frank Wong:
Originally posted by @Account Closed:

@Cirilo Villar great 4 U. Secured card is best. Yes slow down with the applications. Too much "new" credit will hurt you too. If you are an authorized user on a parents card that will help score quick but do NOT spend on that card. ONLY use that score. 

Start wholesaling/flipping and assigning to increase your income and savings/liquidity. Earn and learn. 

@Frank Wong OP was asking for advice. He is not wasting his time. He IS learning REI and that is pretty quick return. This is your opinion and that is OK. Don't tear down someone's vision for success. What works for you does not work for others. He can flip with no money and no credit. I did !  I still do (but I have credit now)! 

For me, I could never be an agent because that is too hard and frustrating. 

We are here to give advice good and bad but not squash on someone. No that is not the truth, only your opinion. Thanks. 

 Hi Barbee,

 I am not here to tear anyone's dreams down, I am actually here to help people. Just read through my posts that is the last thing I want to do.  I am giving someone advice which he asked for. Maybe it's not the advice he wants to hear but its a high probability play from my side. The exception doesn't make it the norm.  If I was 22 and I went on a public forum asking for advice, I would want everyone to give me their personal opinion and the truth.  In life it's not all about cheerleading and saying "woo hoo" to everything. The real world doesn't work like that. I want to know the reality and give me the truth and I can then take all the advice and decide for myself. 

No offense but you are very wrong even if it is just your opinion or advice. You can do something very serious with 4K. In fact what he should and can do with 4K is the most important thing you could ever do in REI.

You invest in a website and you do SEO for that website.

This is what you can get if you take SEO seriously from now this point RIGHT now.

And you certainly do not need 4K to get this.

I don;t think you really get this Mr. Wong!

LOOK!!

This is what EVERY friggin investor would kill for.

FREE super highly motivated seller leads.

This is what I spent my first and only 3K on when I just started. and yes this CAN BE A NORM.

You just have to go and DO IT.

Never give anyone advise based on your personal limitations.

4K is totally fine to start REI!

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Frank Wong
  • Real Estate Broker
  • Bay Area
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Frank Wong
  • Real Estate Broker
  • Bay Area
Replied Jun 27 2019, 19:23
Originally posted by @Jerryll Noorden:
Originally posted by @Frank Wong:
Originally posted by @Account Closed:

@Cirilo Villar great 4 U. Secured card is best. Yes slow down with the applications. Too much "new" credit will hurt you too. If you are an authorized user on a parents card that will help score quick but do NOT spend on that card. ONLY use that score. 

Start wholesaling/flipping and assigning to increase your income and savings/liquidity. Earn and learn. 

@Frank Wong OP was asking for advice. He is not wasting his time. He IS learning REI and that is pretty quick return. This is your opinion and that is OK. Don't tear down someone's vision for success. What works for you does not work for others. He can flip with no money and no credit. I did !  I still do (but I have credit now)! 

For me, I could never be an agent because that is too hard and frustrating. 

We are here to give advice good and bad but not squash on someone. No that is not the truth, only your opinion. Thanks. 

 Hi Barbee,

 I am not here to tear anyone's dreams down, I am actually here to help people. Just read through my posts that is the last thing I want to do.  I am giving someone advice which he asked for. Maybe it's not the advice he wants to hear but its a high probability play from my side. The exception doesn't make it the norm.  If I was 22 and I went on a public forum asking for advice, I would want everyone to give me their personal opinion and the truth.  In life it's not all about cheerleading and saying "woo hoo" to everything. The real world doesn't work like that. I want to know the reality and give me the truth and I can then take all the advice and decide for myself. 

No offense but you are very wrong even if it is just your opinion or advice. You can do something very serious with 4K. In fact what he should and can do with 4K is the most important thing you could ever do in REI.

You invest in a website and you do SEO for that website.

This is what you can get if you take SEO seriously from now this point RIGHT now.

And you certainly do not need 4K to get this.

I don;t think you really get this Mr. Wong!

LOOK!!

This is what EVERY friggin investor would kill for.

FREE super highly motivated seller leads.

This is what I spent my first and only 3K on when I just started. and yes this CAN BE A NORM.

You just have to go and DO IT.

Never give anyone advise based on your personal limitations.

4K is totally fine to start REI!

Cool Story!  I base my decision on statistics and the percentage for failure is very high investing with $4k.  I am happy it works for you and you are able to make money and scale a business.  I am sure you can help others. I'll keep doing what I am doing and play the high % plays but I appreciate your perspective. 

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Phillip Vera
  • Rental Property Investor
  • Augusta, GA
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Phillip Vera
  • Rental Property Investor
  • Augusta, GA
Replied Jun 27 2019, 19:36

I'm going to go a totally different direction than everyone else...

Work your butt off.  Live on bare minimum.  Pick up side jobs, increase your income.  I currently own 4 rentals, all paid for cash.  Certainly leverage is the ideal scenario, but if you don't have credit, don't let that limit you from buying.  Cash is king!

Investing your $4k into a wholesale business is a great start.  Use this income to continue building and saving and you could get to a point to purchase a rental within a few months depending on your commitment level. 

The real estate market is strong, but don't rule out owner finance opportunities also.  They are still out there.

Good luck!

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Bjorik Mutize
  • Real Estate Broker
  • Minneapolis, MN
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Bjorik Mutize
  • Real Estate Broker
  • Minneapolis, MN
Replied Jun 27 2019, 19:37

Agree with @Frank Wong The little/ no money down business is a great podcast story but,

Remember you need to purchase a property/operate a property/sustain it/hedge against faults/hedge against anything else. 4k isn't it.

Learn and gain more capital. Or partner and learn under those with more capital. 

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Cirilo Villar
  • Los Angeles, CA
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Cirilo Villar
  • Los Angeles, CA
Replied Jun 27 2019, 21:06

@Michael Noto

I agree with you but I’ve heard different stories of people only needing like $10,000 or less when they started flipping houses or wholesaling.

But I completely agree with you and i will try to find real estate investor meet ups or get togethers in order to gain contacts

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Cirilo Villar
  • Los Angeles, CA
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Cirilo Villar
  • Los Angeles, CA
Replied Jun 27 2019, 21:07

@Sergio Ramirez

Thanks man! Yea I was looking into wholesaling I’m going to read up more on that topic I just want to get started so I can make enough to then flip houses and buy rental properties for cash flow. Let us know how that deal goes! Good luck!

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Cirilo Villar
  • Los Angeles, CA
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Cirilo Villar
  • Los Angeles, CA
Replied Jun 27 2019, 21:10

@Donald Muschany

I went to Wells Fargo today and applied for just that! The secure credit card should arrive soon however once I’m able to get better cards I will because Wells Fargo charges an annual fee as well as minimal payment besides the money i put in

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Cory K Bente
  • Lender
  • Everett, WA
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Cory K Bente
  • Lender
  • Everett, WA
Replied Jun 27 2019, 21:10

@Cirilo Villar get a credit card asap. You may open a secured credit card.

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Zachary Steidl
  • Rental Property Investor
  • Honolulu, HI
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Zachary Steidl
  • Rental Property Investor
  • Honolulu, HI
Replied Jun 27 2019, 21:11

@Cirilo Villar

My two cents.. capital one has really good cards and acceptance rates with no annual fee. I’d apply for a quicksilver or venture one credit card if I were you. My very first card was venture one. They also have a very modern user friendly app for checking your balance and making payments!

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Jim K.#3 Investor Mindset Contributor
  • Handyman
  • Pittsburgh, PA
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Jim K.#3 Investor Mindset Contributor
  • Handyman
  • Pittsburgh, PA
Replied Jun 27 2019, 21:13

Come on, people. No credit, $4K in reserves, and a limit of six years is what the OP came up with. He wants to know "the right way to achieve financial freedom" in six years starting at 22.

@Cirilo Villar

Get some skills, get a job using those skills, get your financial life together, know what you're spending versus what you're making. Starting from $4K, the credit card credit-building segueing into flipping and wholesaling is a longshot for anyone. I'm not saying it's impossible. I am saying it's a longshot no matter how dedicated and hardworking you are. There's only so much you can do to swing the odds in your favor with that kind of play.

You've got time, but you're in a hurry. That's likely to hurt you.

I've heard all kinds of stories, too. And I've seen things.

When I was 19 years old, I saw a guy jump a cue ball from one 9-foot table to the neighboring table and pocket the nine ball in the corner pocket of the second table. He had six tries to do it in. The first five tries he completely failed in. On the sixth, the ball took a weird bounce on the corner of the second table and went straight up , bounced on the rail straight down once, twice, fell exactly right to knock the corner ball in, and jumped off the table. The ball never touched green before it hit the nine-ball. Dude won $1500 on that prop bet right there. I have no clue what he did with the money, but I'm pretty sure his magic winnings didn't end up in real estate.

The people who I've actually met who have made a significant chunk of change and managed to hold on to it in this business are disciplined in their habits, well-grounded, calculate risk effectively, and don't risk everything on a wing and a prayer because they've heard stories. Listen to @Frank Wong. I think he's said some valuable things here.

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Ronald Starusnak
  • Property Manager
  • Syracuse, NY
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Ronald Starusnak
  • Property Manager
  • Syracuse, NY
Replied Jun 27 2019, 21:34

@Cirilo Villar

Find someone to do a lease option for you. Someone that is trying to sell their property but they can't afford the holding costs. If their costs are $600/month and you can rent it for anything over that then you're making money. Hop on zillow and sort by for Sale by owner.

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Trevor Emmett
  • Residential Real Estate Broker
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Trevor Emmett
  • Residential Real Estate Broker
  • Portland, OR
Replied Jun 27 2019, 22:19

@Cirilo Villar if you really love real estate I would suggest looking into becoming an agent. It is no joke and a lot of hard work, but I wish I started when I was your age. If you do go that route I suggest that you find a successful realtor that you can learn from and be their assistant, buyers agent or something that provides value. If you want to go out on your own, use that 4,000 as seed money, but It goes fast if you don’t sell a home.

The most important thing is to invest in your self and be patient.

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Mitchell Frisby
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Mitchell Frisby
Pro Member
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  • Akron, OH
Replied Jun 27 2019, 22:24

@Cirilo Villar

Hey! A great way to build your credit is finding a place to have a secured credit card through. If you can get an unsecured credit card that is great too but be careful with store credit cards. Those can sometimes be less helpful to your credit than others. At the end of each month make sure you pay down the card to at least below 30% of the limit, any higher hurts your score. It’s actually beneficial when you have no credit / low credit history to leave a balance on your card to “show you’re using it” instead of paying off the full amount. With that being said I would recommend leaving a dollar. I hope this helps you get to where you want to be!

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Cory O'Dell
  • Rental Property Investor
  • Dayton, OH
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Cory O'Dell
  • Rental Property Investor
  • Dayton, OH
Replied Jun 28 2019, 00:53

House hack!!! 

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Jason Goretzki
  • Daytona Beach, FL
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Jason Goretzki
  • Daytona Beach, FL
Replied Jun 28 2019, 02:36

Start evaluating deals while you get your finances straightened out.  Listen to BiggerPocket podcasts for different ways others found success in the market.  Continue evaluating properties every day until you know what types of deals you are looking for.  Then evaluate more deals.

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Irina Belkofer
  • Real Estate Broker
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Irina Belkofer
  • Real Estate Broker
  • Cleveland, OH
Replied Jun 28 2019, 02:54
Originally posted by @Cirilo Villar:

@Geordy Rostad

So I applied for a few credit cards such as Discover IT, Macy's, and Sears I was declined by Sears and I haven't heard anything back from the others later today I will go to my Wells Fargo bank and open a Secure Credit Card. Someone once told me that i can buy a house with an FHA loan it will only require me to put in 3.5% -5% of the total cost as down payment is this true?

Also thank you for the advice I appreciate it!

 Stop applying for credit cards - you’re hurting your credit!

Every inquire takes 5 points off and stay on your history for 2 years.

Apply for secured credit card - put your $4K to good use. Don’t pay it randomly: when you get statement, pay off 2- days before the due date. Each card is different and don’t coincide with the calendar month. Don’t use what you can’t pay right away.

For FHA loan you'll need income, credit and good DTI ratio. Lear the game first - then apply.

You’ll need income $35K to buy a $100K house. You live in CA - is there such houses?

House hack would help (live in one part and Rent out other), but if you do have debts - it decrease your purchasing power.

Credit history is the key but it takes time. You’ll need 4 credit lines in good standing for 7 years. There is nothing good happens fast: everything takes learning, experience and persistence. That’s why it called history - you can ruin it overnight but not build....it will take time.

$4K it’s one months reserve - to get a mortgage, you’ll need to show bank that you have few months reserves to pay that mortgage and won’t foreclosure on it.

If I were you, I would get a solid job, preferably with license (plumber, electrician, HVAC) and Learn about credit, money, real estate all the time you’re not working.

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George W.
  • Investor
  • New Jersey
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George W.
  • Investor
  • New Jersey
Replied Jun 28 2019, 03:22

I think your first step should be to setup a good monthly budget. Always save a good part of your paychecks. You should aim to have more savings. Get a credit card so you can build a score. If you have a tough time saving you may need a new job. Learn a valuable skill that helps you invest in real estate. 

Realistically you're not gonna flip a house with 4k unless a private lender lends you the cash for it which to them there would be a lot of redflags. You could certainly try wholesaleling but I think it's illegal in some states. If you decide to go the wholesale route you need to learn more about that process. 

If I were in your shoes I'd save up some more and when I had a nice Chuck of money saved up do a FHA loan on a duplex or triplex. Another thing to remember, is that there are closing costs when you buy a building. It's not as simple as putting 3.5% down on a place. You will need to save more if you want to buy a place legitimately.

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Cirilo Villar
  • Los Angeles, CA
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Cirilo Villar
  • Los Angeles, CA
Replied Jun 28 2019, 04:33

@Trevor Emmett

That’s what I was contemplating as I walked to my car I should become a real estate agent get to know the business as well as make money in it and buy my own properties

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Cirilo Villar
  • Los Angeles, CA
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Cirilo Villar
  • Los Angeles, CA
Replied Jun 28 2019, 04:39

@Jason Goretzki

I listen to the podcast religiously which is why I believe I could probably do something with what I already have :o thanks for the advice !

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Cirilo Villar
  • Los Angeles, CA
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Cirilo Villar
  • Los Angeles, CA
Replied Jun 28 2019, 04:40

@Cory O'Dell

Hell yea! But then again I need credit in order to buy a property to house hack to begin with :(