First Real Estate Investment

[Buck Palmer]

Good Morning Bigger Pockets Family, I am from Jackson, Mississippi looking to invest in my first property, preferably a fix and flip since my father has been a painter for 25 years. Because of his experience, he knows plenty of people that he has worked with in the past that I would hire to renovate. I have about 10k and great credit to get started. Any advice? What areas in Jackson should I be looking to start? Should I save more money? Anything I need to be aware of? Please do not hesitate to voice your opinion! 

[Susan Maneck]

Hi Buck! 

The problem you are going to find is getting financing for property as an investor. The houses you can afford given the size of your down are ones banks are not likely to want to lend money on because their costs are about the same as for a big loan. What I suggest you do is something I recommend to most newbies, especially young men. Rather than fix or flip, do something called house-hacking. That's where you buy a 1-4 unit property owner-occupied. If it is a small multi, then you live in one unit and rent out the rest. If it is simply a SFR then you live in one room and rent out the rest. If you do the latter, then you might want to buy something near JSU, Tougaloo, or one of the other colleges in the area, and rent rooms to students. This will allow you to get into a property for as little as 3-5% down. Even though this would also be an equally small loan, banks can't turn those down if your credit is otherwise good because that is considered red-lining which is illegal for owner-occupied loans. But I think you still need more money to pull this off. While the 10K you have will likely be enough to close, where are you going to get the money to rehab the house? I almost always spend at least 5K getting a house in relatively good shape rent ready. However, remembering my own student days I can say that if the rent is right, they are often less picky about the condition of the house they live in, so if you house-hack you may be able to do the repairs at the same time you are renting out rooms.

Best of luck to you!