How would you use $1k - $5k to start investing in Real Property/Estate

Question

I am under the impression that at a capital amount ($1k - $5k) this low, one is only able to possibly purchase tax liens/deeds.

However, I see YouTube ads of investors who state that $1k in a rural area perhaps, could purchase you a multi-family unit (i.e. duplex) that you may have to live in due to the loan requirements (i.e. rural development loans)

What are you guys thoughts? I have no credit available and $5k cash.

Does anybody know how to invest in real estate without debt products and alternative financing (i.e. subject to, wholesaling, REITs)

Chris Seveney · Answer

@Konnea Mcandrew

Bad idea. How would you fix a $5000 hvac system or do any repairs? Homes in that price range need a ton of work. While some say you can, you are better working overtime or getting another job and saving up.

Bob Stevens · Answer

You are not doing anything with 5k in cash, GET OFF the internet and YouTube, waste of time. Find deals, earn fees, learn , save then go on your own

Good luck

Jose Jacob · Answer

Hello Konnea

Social media is bombarded with so called GURU's who want to sell their courses and make some money. REI is not that easy to make ton of money. It is a slow process not a quick buck game. With your questions, I can see that you are all over the place with lot of outside info in your mind. REI has so many branches(strategies).  It is hard to answer all of your question at once. Let me answer some of it.

If you have no money, your choice of finding a seller who are trying to retire or want to hold a seller financing and negotiate a good deal and rent the house out and keep the difference between the mortgage and rent.  Don't forget to calculate all the other expenses like, insurance, repair escrow, vacancy etc.

You listed your options :

Wholesaling :  This is doable if you know how to it.  The key factor here is to find OFF market deals with a pretty good margin like 40-50 cents on a dollar. If you can't find OFF market properties with deep discount, this method will not work and lot of wholesalers fail due to this reason

Joint Venture:  This method is good for you if you can find good deals which has good margin for both of you (the other investor and you).  JV is that you find a property and partnering with an other investor who has money to do the deal. There are several JVs who would love to work with you including me.

Private Money Lenders :  Not a choice for you due to the lack of your own capital. They only give you 70-80% of LTV and you have to find your own capital to close and renovate, if you choose to fix&Flip and most of them need you to have some experience in the field.

Subject to:  A great way to accumulate rental properties if you can convince the home owner.  If you can target foreclosure houses or absentee or tired  landlords this is an excellent method.

Seller Financed :  This will also work in LTR strategies. Find how owners with 100% equity.

Your question about "why would a seller wholesale a property if they could go through a Realtor to get market value" The answer is Seller wholesale a property if the house is in destress like, the house is in foreclosure, estate sale, probate or houses that need full renovation. A regular buyer through a Realtor may not buy those houses due to extensive repairs.

JV is not similar to private money lending and wholesaling.  Those are three strategies of REI. Explanation is in my answers above.

Hope you got a idea about different strategies of Real Estate Investing.  Let me know if you have anymore questions.  I am glad to help

Konnea Mcandrew · Answer

Where can I find mentors on these topics? Particularly when you're just getting started and you're finding deals, earning fees and learning. Not an online course, but actual mentors like SCORE with the Small Business Administration

Thank you!

Ryan Kelly · Answer

@Konnea Mcandrew as others have said, you should focus on education and building up your cash reserves first. Buying real estate isn't just about the purchase price. There are closing costs, repairs, maintenance, taxes, vacancy, and a whole host of other expenses you haven't yet factored in. This is the time to LEARN and EARN, then you can invest once you have the proper reserves to move forward. Use a lack of funds as motivation to keep moving forward.

Andrew Hill · Answer

Another avenue you could go down is becoming a property manager. They supply the property, you help them find and manage the tenants. This would be no money down, and while it may be hard to gather your first couple clients, you will start to build your network with handymen and investors.

Try to avoid "Youtube Ads" as those are exactly what they say they are, advertisements for their product. Of which they are hoping to gain from you. If whatever they are selling worked as great as they claim, everyone would do it.

Jacob Hood · Answer

Use it to learn. You could get your real estate license with that much. Lots of learning getting the license and learning the trade. Learn to do wholesaling. You could use the money for the earnest money and advertising to get leads. Use the money to raise your knowledge and market yourself.

Konnea Mcandrew · Answer

Hi @Jose Jacob

Thank you for your feedback!

I'd be delighted to work with you as well. I visited your company website and reviewed the services. It seems that you have a focus on residential real estate, that's awesome!

Please feel free to contact me

Looking forward!

Henry Clark · Answer

Your best avenue is to apartment, trailer or house hack rental with room mates.

Another avenue is to seek out zero or very low rent.  House sitter maintainer for elderly stay at home.  With a day job.   You could also do Texas property tax land sales.  Don't buy at the auction. Get their off sale listings.  Make offers within your price range.  Do your homework on issues.  Don’t do houses.  You have to market and flip before the high taxes hit you.  Be strategic in your selections.

As mentioned above you need to build up your cash snowball before going main stream.

If you’re young and healthy join the military.  Get a signing bonus plus once you hit E5 use your BAH money to be a millionaire by the time you’re 45.

Konnea Mcandrew · Answer

Wow everyone, I'm so glad you told me, I appreciate your feedback!

The idea of joint venturing is similar to Private Money Lending and Wholesaling Deals from my understanding.

With Wholesaling, I need to a contract (with the seller I believe), a buyer's list and great deals

What I'm not quite understanding is: why would a seller go through a wholesaler when they could work with a licensed agent? It seems like it's more attractive to developers  or fix and flip investors, but I haven't done a deal yet so I'm not quite sure

What are you guys thoughts on wholesaling, private money lenders and joint venturing? Is it true that it's a great way to get started in real estate with no money down

Do you guys have any resources you could recommend for business models like this (i.e. Private Money Lenders, Wholesaling)

I was looking into Chris McClatchey from the REIA site, but found the site a bit confusing

Any recommendations to get started?

I think my options for no money down investing in real estate are:

* Wholesaling

* Joint Venturing

* Private Money Lenders

* Subject To Deals

* Seller Financed

In regard to Seller Financed, I believe I can negotiate a mortgage and monthly payment with the seller. My idea is to rent out the property to a tenant and allow the tenant to cover the mortgage payments. Is this a reasonable or bad idea?

Where can I find great real estate mentors?

Or should I not be even thinking about real estate until I get more cash?

Sorry if the questions are all over the place, rookie questions :)

How would you use $1k - $5k to start investing in Real Property/Estate

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