What can I do until I get enough money to invest?

Question

I really want to get involved in REI, but don't have enough money yet.  From what I've read, I should at least have enough for a 20% down payment, so I'm saving up for that.  But what can I do in the meantime?  I'm searching for a mentor right now and reading anything I can.  I'm looking to get involved in rental properties and/or flipping houses in the Baltimore area.

Sam Lewis · Answer

Abigail, contrary to popular believe you do not need a full 20% down to purchase a property.

If you purchase a property with the intent to live in it (i.e. owner occupied property), you can qualify for as little as 3% down. Granted, I am no lender but you should have a credit score hovering in the high 600s and above, a low debt-to-income ratio, and cash reserves on the side for worst case scenarios.

@Bryan Noth brings up a great point about househacking. This is a cross between an owner occupied property and either having roommates or a completely separate unit (i.e. duplex) for renter(s) to live.

This is what I do, and it allows me to pay off my entire mortgage and pocket the rest. Let me know if you have any questions!

Bryan Noth · Answer

@Abigail Rose Grant have you considered house-hacking as a vehicle for an investment purchase?  That can help you jump the hurdle of the down payment issue quickly depending on the loan product you end up using.  Also, the side hustle doesn't have to be real estate related, keep the options open

Michael Thach · Answer

Yeah as some of the other BP members said you don't necessarly need 20%.

Do you own a property now ? If yes, how much equity you have in here. Maybe you can cash out refinance.

If you are renting, maybe is good to save for a duplex or a place which you can buy and than house hack it.

Meanwhile I would recommend to learn the math and analyze a ton of real estate.  I can recommend the book " What every real estate investor should know ... and other 36 key metrics "  ... I think this is how the book is called. Anyway I made a Excel Spreedsheet and put numbers like  projected rent, tax, property management fees, loan amount, interestrate and other numbers and the rest will be calculated by itself. It teach you to see each properties in numbers and teach you what make sense.

Later once you are familiar with the numbers you will become creative and ideas like what happened if I put less down, what if I try to avoid PMI, will it slow me down after 10 years ? Should I BRRRR or should I put 15% down, should I live as owner occupied and cashout refi.... all those question will come and you will buiild a simulator and simulate those scenarios than you come to question yourself " do I want make 10k passive income but manage like 70 properties or is 8k passive income with 32 properties better but takes 6 years to pick up " . Math does not lie and it gives you a rough roadmap for you to go.

Teri Feeney Styers · Answer

@Abigail Rose Grant talk to a lender immediately and learn your options and costs. Explain that you want to look at this as an actual investment; not just a place to live. The lender will give you loan options and a budget. The lender may tell you to fix a few things in your credit or get some stuff paid off - listen to them and get that done. Then you find a Realtor to help you.

Alan C. · Answer

You don't need 20% and you don't even need 3%.

If you get educated about how do creative real estate deals, you really can do deals with no money down. That doesn't always mean "no money" changes hands. It means none of your own money.

I've done it and know many people who do it on a regular basis.

Truly motivated sellers are not as concerned about the purchase price as they are in getting rid of their real estate problem(s). Once you have the education, you can become a "transaction engineer."

The key is finding motivated sellers and having the knowledge to negotiate a win-win situation with little to no money down.

What can I do until I get enough money to invest?

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