Rehabbing & House Flipping

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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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Aaron Hunt
  • All Over, USA
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689
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Aaron Hunt
  • All Over, USA
Replied Jun 29 2019, 11:48

@Frank Wong

Thank God someone spoke the much needed truth.

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Marie Fries
  • Whitman, MA
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Marie Fries
  • Whitman, MA
Replied Jun 30 2019, 06:41

@Jimmy Rivera thanks for the information on NACA.COM I didn't understand what they did. Sounds like a great program.

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Grant Delmonte
  • Rental Property Investor
  • Washington
15
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60
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Grant Delmonte
  • Rental Property Investor
  • Washington
Replied Jul 1 2019, 17:00

Credit is super important when you want to invest in real estate. 

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Ian Walsh
  • Lender
  • Philadelphia, PA
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Ian Walsh
  • Lender
  • Philadelphia, PA
Replied Jul 9 2019, 10:28

Build up your credit and some funds by wholesaling or becoming a realtor.

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Account Closed
  • Financial Advisor
  • CA
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128
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Account Closed
  • Financial Advisor
  • CA
Replied Jul 10 2019, 10:39

I bought a condo "subject to existing financing"  I gave $4000 to the seller and started making payments on the existing mortage, total payment amount of $232/month.  I sold this 9 years later for $225000.   The people probably would have sold it to me for $2000.  I just never asked. 

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Deniz M Manisali
  • Seattle, WA
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Deniz M Manisali
  • Seattle, WA
Replied Jul 16 2019, 02:11

Hey @cirilo,  I just got my social security number few months ago, I can kinda relate to credit situation.  pretty short credit history obviously but you can find ways. If you know someone with a good credit score and history, you could ask them to add you as authorized user but you dont have to have the card itself, so there is no risk for them. It will boost your credit score really quick. I had it this way and then bought myself a car for uber, so I also make better money with a car that I'd needed regardless. Had very high interest rate but no issue to pay it down, so it also makes a great history for me. just make sure you actually dont pass %10 of your limit. I know that %30 is what's recommended to not pass but 10 is the best result, speaking from my own experience and research. This is my first post btw, hopefully did some help.

@Cirilo Villar

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Cirilo Villar
  • Los Angeles, CA
28
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Cirilo Villar
  • Los Angeles, CA
Replied Jul 16 2019, 02:32

@Frank Wong I read back this response again today and I love it! I’m learning that to be true

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Cirilo Villar
  • Los Angeles, CA
28
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Cirilo Villar
  • Los Angeles, CA
Replied Jul 16 2019, 02:34

@Mitchell Mims how many times should I repeat that process to build my credit?

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Cirilo Villar
  • Los Angeles, CA
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Cirilo Villar
  • Los Angeles, CA
Replied Jul 16 2019, 02:38

@Jonathan Hulen but what if I get a personal loan

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Ian Walsh
  • Lender
  • Philadelphia, PA
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Ian Walsh
  • Lender
  • Philadelphia, PA
Replied Jul 16 2019, 04:17

Wholesale, bird dog, become a realtor.  Build the reserves and credit.

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Nick Rutkowski
  • Rental Property Investor
  • Ithaca, NY
1,162
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Nick Rutkowski
  • Rental Property Investor
  • Ithaca, NY
Replied Jul 16 2019, 04:24

@Cirilo Villar

The fastest way I know to buy a house is asking your circle of influence for capital to get started. You’ll have to learn the skill of fundraising anyways so learn it now. There is no credit required to buy a house all cash.

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Replied Jul 18 2019, 18:44

Definitely use credit karma. It's quite useful for monitoring and alerts. A lot of great advice for credit building being said. But, I'll add my own. Instead of using the credit card in lieu of actual cash. Only use the credit card when you KNOW you have the funds to pay it off. One of the podcast guests suggested this by merely using it as a proxy to your money. This is also help you hone your budgeting skills as well.  

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Ciro Affronti
  • Investor
  • Scottsdale, AZ
23
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52
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Ciro Affronti
  • Investor
  • Scottsdale, AZ
Replied Jul 18 2019, 19:55

@Cirilo Villar Congrats on starting the journey! Getting advice and learning from those who are already successful investors is a great first step. I bought my first duplex at 24 so I definitely know what it's like to want to start investing and buying properties right away. 

There is a lot of great advice in this post already, but I'll throw my two cents in from my own experiences that helped set me up for success:

-First would be to get your financial house in order and prepare yourself for the journey ahead. Turns out real estate is expensivse! I constantly read financial books and learned proper financial habits. I learned to live off 40% of my income and save the rest, taking advantage of the fact that I was young, single, and flexible. I would recommend saving more money before buying your first property probably closer to 20-30k.

-Get a job or find a way to make a solid income while you are learning and preparing. Build a solid foundation to grow off of while you are so young. Spend that time building up savings to learn about real estate investing, network, and soak up as much knowledge as you can. There are tons of posts and resources on BP for newbies. 

-Look into house hacking as your first real estate investment. That's what I did and I highly recommend it. Not only does house hacking let you get into an investment property with FHA financing (low down payments), it also helps reduce your housing expenses allowing you to save and invest at a faster rate. I bought a duplex with an FHA loan and put 3.5% down, rented out one unit, and got a roommate to maximize income. I actually cash flowed a little bit each month so I had 0 housing expenses. The equity you can build doing that combined with the extra savings potential can be a powerful vehicle for growth.

-Stay positive and keep grinding! Good luck.

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Cirilo Villar
  • Los Angeles, CA
28
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Cirilo Villar
  • Los Angeles, CA
Replied Jul 18 2019, 19:58

@Ciro Affronti

Yes I've been thinking about house hacking but u have yet to build credit in order to get an FHA loan

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Thomas Hundtoft
  • Rental Property Investor
  • Grand Junction, CO
34
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57
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Thomas Hundtoft
  • Rental Property Investor
  • Grand Junction, CO
Replied Jul 22 2019, 19:39

Provide me 4K and I will make it grow. There are so many ways to make it happen. One thing I did was bought a mobile home in a park (FSBO with owner carry) and rented it out. I house hacked it. I cash flowed it at 600/month. Once I had enough for another property, I did it again. I listened to BP podcast with Felipe Mejia (show 329) and he did the same thing in Nashville. There are so many ways to make money. In Dinosaur, CO I bought a mobile home and sold it a couple of years later for triple what I paid for it. One can do a lot with $4K if they are resourceful and work.