Brand New - How much do I need?

Question

Hello, I am new to real estate / bigger pockets / etc. I wanted to ask:

How much is a good starting capital for a new investor to start investing in a long term BRRRR strategy? $50,000? $75,000?

I am currently making a career change and thought real estate might help me find financial independence, and feel I need to start making passive income soon since I am currently unemployed / going back to school. I am starting from scratch and have read "million dollar real estate investor." I am currently reading "BRRRR," and plan to read "long distance real estate investor" next. Still a little overwhelming, but am looking for a markets to start (AZ, PA, OH, etc). I have money saved and in the stock market / crypto. I am thinking of selling soon to fund this new real estate venture of mine, or should I wait to let things appreciate more until I get to $75000. Any insight will help.

Also, I had my eyes on long term BRRRR strategy but am now being told that short term strategies might meet my goals better - passive income / financial independence. Any thoughts / insight would be greatly appreciated. Is short term a good route to go or should I stick with long term BRRRR? Which strategy is better to start with my FIRST purchase? Are there books / info on short term rents I should look into?

Zach Norton · Answer

do you own your own home? could you take out a HELOC to fund your first BRRRR home/duplex? the strategy there would be take out the HELOC, purchase your first project with cash, renovate it, rent it, then refinance through your lender. you will have to be spot on on your numbers as the refinance will only get you 75%-80% ARV. you then pay off the HELOC and move on to the next project and repeat.

Nicholas L. · Answer

@Kevin Santos the more cash you have, the less the total outlay on your BRRRR is going to be.  This is because if you borrow money to BRRRR - either for the purchase or the rehab - you will pay both up front financing costs as well as interest to service the debt during the rehab.

Having your own cash eliminates those expenses and lowers your total outlay - lowering the likelihood of "leaving money in the deal."  It also reduces the risk you'll be stuck in a higher interest loan if you have a problem refinancing.

Can you house hack - or better yet, house hack a BRRRR?  This is an even lower risk strategy.

Tyler Burks · Answer

Hey Kevin! Its great that you're diving into the learning materials to get an idea of where to start. Nothing beats getting into the real deal when it comes to learning though! With what you have saved up you can certainly get started with a BRRRR strategy. You'll need to work backwards on what your buying power along with closing costs and that will tell you how much of a property you can buy and how much you can afford for carrying costs during the rehab. Then go out and start checking out properties and make offers!

Karl Denton · Answer

Hey Kevin,
Honestly I think it depends what your passionate about and wanna go for! Fix and flip could be a great short term option, but maybe you want an airbnb. For me I knew an area that was growing where I grew up as a kid, I had about 55k when I started out and I locked in my first deal on a 3 family. Currently I had a tenant move out and I'm renovating the unit and increasing rent. I am currently saving up for my new move to acquire another 3 family. My plans to get a couple cash flowing properties under my belt and form a good system for managing them. Once I get that experience I would like to scale up. Currently my strategy is long term and working out great. My point is do what you know and invest in an area you know. If your passionate about it and well educated you will succeed and if you don't you'll learn and find a way to come out on top!

Tyler Burks · Answer

No problem at all! Keep reading the books and listening to podcasts, etc. but ultimately, you've got to go for it. It'll be scary and there will be a lot of unknowns but you can absolutely come out with positives in some way or another.

Kevin Santos · Answer

Yes Tyler! I agree. I have always learned better by doing, but definitely find myself in between feeling like I need to at least finish my books and asking myself if I am just stuck in "analysis paralysis" phase. I appreciate the response - it makes me wanna just pull the trigger and get in the game lol

Kevin Santos · Answer

Thanks Nicholas. Unfortunately I don't think I can house hack - at least any time soon. I just renewed my lease at my apartment, so I will be here for the next year :/

Kevin Santos · Answer

Thank Karl! I appreciate the insight. Glad to see its possible with an amount that is close to what I am saving towards!

Brand New - How much do I need?

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