At a Standstill

[Samuel Figuera]

Hello, I am a new and aspiring REI. I invested in a home last year, and I am at a standstill. I really want to get tenants in, but I am at a point where I simply do not have enough personal funds to finish. Question: What affordable options do I have to finish my home and get tenants in? I am estimating I need another 18-25k, and I am all set to get tenants. Any advice is appreciated! Thank you.

[Scott Trench]

Quote from @Samuel Figuera:

Hello, I am a new and aspiring REI. I invested in a home last year, and I am at a standstill. I really want to get tenants in, but I am at a point where I simply do not have enough personal funds to finish. Question: What affordable options do I have to finish my home and get tenants in? I am estimating I need another 18-25k, and I am all set to get tenants. Any advice is appreciated! Thank you.

Assuming that you are accurate in your rehab estimate. And also assuming that this is work that you can at least partially do yourself if you need to.

if true, You need to treat this like an emergency. If this place could rent for $1500 per month, and you aren’t collecting that because you don’t have money to finish the rehab, that’s an EMERGENCY.

stop going out to eat. Stop all entertainment expenses. Get a second job. Tend bar if you have to. When you aren’t at the second job, you are at the property, finishing the work yourself. Get a clear and realistic timeline for the work, and put the property listing for rent up 1 month before completion so that a tenant moves in the day it is done.

Your life is going to be miserable until this thing is stabilized - likely the next 3-6 months. Embrace it. Push through it. You are in it and you will likely need to grit this out. 

after that:

Never buy another property again without all of the cash needed for repairs, plus a reserve of $10-$15K after the known rehab expenses.

on top of that, always maintain a personal emergency reserve of 6-12 months expenses. Many can get by with less, but you have run out of cash. 

Build up your credit score. Make sure that you have multiple credit cards and have a high balance (that you never ever use) so that you have access to credit.

Move into a house hack or live in flip. Add value to that one, and keep going until you have access to a large heloc (that you also rarely/never touch except in emergencies)

Open up a 401(k) and contribute significantly to it. Generate the ability to borrow up to $50k against it and never use it, except in the rarest situations.

You are in this situation likely because your personal financial foundation is weak. The remedy to that is no secret. And it isn’t borrowing more. It’s hustle, grind, rolling up your sleeves, DIY mentality, and an extreme sense of urgency.

If that doesn’t sound fun, sell it.