Is it possible to start investing with only $100k in this market?

[Jeff G.]

Is it possible to start investing with only $100k in this market? I keep looking at potential BRRRR properties on Zillow and thinking "the numbers just aren't going to work." Most of the wholesalers I know have suspended their direct mail campaigns until sanity returns to the market. Admittedly, since I'm in CT I'm in an expensive and high tax market. But, even so I should be able to acquire something workable to rent out and refinance.

I'm reticent to BRRRR out-of-state for my first deal — but, if I have to, I have to. I just don't want to get burned. I just want to get the ball rolling in the next few months because properties just aren't going to get any cheaper. I'm just really frustrated. I would be extremely thankful for any suggestions as to how to get started. I'm reading David Greene's BRRRR book right now, but I don't want to get myopic if I have other realistic options to get started investing I'm open to them.

[Shane Ward]

Quote from @Jeff G.:

@Shane Ward, can you explain a bit more about how that works? How did you find the HM lender and convince them to work with you on your first deal? How did the first deal work out?

My first deal was what they call a twin in pa. It’s like a duplex but both sides have their own deed. There where what a lot of people would say where big problems with the property. Tree branches had broken off and penetrated the roof, large front porch was rotted etc. I learned from one of the early BP podcasts that big problems can be better than small ones. You can identify them easily, estimate the costs easily and usually get them fixed in a short amount of time. So I needed a roof 10k, two furnaces 10k, a front porch 8k, etc. The asking price was 50k for one and 60k for the other or 100k for both. I had taken a HELOC on my primary to start my journey into REI but understood early the advantage of leverage. I took a shot and offered 70k for both units at 3pm on a Friday and by 5pm the offer was excepted. Turned out that the guy hated landlording and lived two hours away. I had found (luckily) a local HML and had walked into their office about a month before and explained what it wanted to do and that I was new but would be happy to take any help they could give me. I also used some advice from other BP podcasts about what “to” and “not to” say. Do Not tell them you will do all the work! Let them know that you will hire licensed pros and get the proper permits etc. they told me that I was the kind person they loved to bring on board but to start the points and rates would high (3pts @ 13%) they fund 90% of purchase and 100% of the rehab. I brought them the deal, they looked it over and said we need to get an appraisal for the ARV and we’ll go from there. They appraised for about 105k each (ARV) and my rehab budget came to 48k. I finished the rehab and started the refi process (the worst part of it all to me), ordered a new appraisal and came back at 112k each. The deal cost me $9500 to start and $1200 a month for 9 months after the refi I pulled out 24k and was cash flowing $800 a month with an 8.27% rate on a 5/1 arm. I’ve done 7 similar deals and 3 flips using this method. I’ve gotten better rates after that first one. Im setting up a deal this week with the same lender and will use about 7.5% as my refi rate to estimate my cash flow.