Ready for first deal.

[Shaun Dockery]

Hi everyone! 

Here is my question: I have ~ 20k saved up ready to make my first deal. I live in the metro east area of St Louis and there are deals to be had at 100k, but I was wondering if it would pay off to save more and buy a bigger deal or to go ahead and buy now. Whats you opinions on getting started with this amount?

Stay Hungry! 

Shaun Dockery 

[John Leavelle]

Howdy @Shaun Dockery

There can be a wide verity of responses to your question.  You have narrowed the type of properties you are interested in to small multi family (2 - 4 units).  Good!  Now you need to figure out what strategy (ies) you want to use to start acquiring the properties.    Each strategy may require a different amount of cash needed to initiate the deal.  Examples:

Conventional loan purchase requires 20 - 25% down payment.

FHA Owner occupy (House hacking) requires 3.5 - 5% down payment.

Creative financing methods could require anything from 0 - 20% down.  This includes Hard/Private Money Lenders and Seller carry-back notes (Seller financing).

If you want to get the most bang for your buck then you want to use as little of your own cash as possible.  Use other people's money!  In other words to get the best Cash on Cash Return on Investment (COCROI) you must leverage your money.

So is $20,000 enough to start?  Yes it is (I started with a lot less).  Do you need more?  It depends on the strategy you choose and the amount of leverage (debt) you are comfortable with.

Good luck.