Minimum amout for starter investment?!?

Question

Hi, My name is Haiden, and I'm looking to purchase my first residential investment property within the year.

I am in University and have my Real Estate License and am planning to work part-time as an Agent once I pass my exam to make connections and to keep learning about my San Jose/Santa Clara Market (plus hopefully increase my income).

I am saving all I make at my current job and am trying to understand at what point I can start looking to buy my first Property.

Do you think I should focus on finding a partnership? What is the Minimum amount of capital I should have before I start looking for a property? Would I have trouble finding a loan? Should I focus on out-of-state investing? Am I better off focusing on doing a flip or wholesaling rather than doing a buy and hold?

I'm relatively new to real estate so any advice or insight means a lot.

Thanks in advance!

Theresa Harris · Answer

If you want to buy and hold (eg long term rental) and you aren't planning on living in it, you will need 20% down. What that 20% translates to in dollars really depends on where you are buying. You will also need money for closing and an emergency fund.  As for getting a mortgage, you will need reliable income and some W2 to show the bank.

Nicholas L. · Answer

@Haiden Welch

start with a house hack,  period.  everything else makes no sense whatsoever.

Becca F. · Answer

@Haiden Welch

I agree with the previous comments about house hacking. San Jose/Santa Clara will be tough market because of the price points. With the loan, if you're looking at SJ and SC you can get an FHA loan but I think the monthly payments will still be very high. I'd recommend considering the East Bay.

Here are my random thoughts: no flipping unless you're experienced. If the house doesn't sell or takes a long time to sell you're paying a lot of holding costs. If you can walk some properties that local flippers have done they can give you more information. Attend local meet ups to talk to other investors, contractors etc. The wholesaling doesn't make sense to me if you're going to be an agent.

No on out-of-state investing unless you actually fly out to that city multiple times, get to know the area in detail and establish a trusted team - this takes several months at minimum. You need a high risk tolerance to do OOS investing - read some of my previous posts. I've decided to stick with value add to my Bay Area rental and increase rents and take a very long pause on OOS.

With syndications, you usually have to be an accredited investor: minimum $200,000 income ($300,000 for married couple) or $1 million net worth (excluding primary residence). I talked to a few syndications. Their offering memorandums sound good but I don't have enough knowledge to vet who is a good operator so I passed on that.

Feel free to DM me if you have more questions :) It's great to network with another Bay Area investor.

Bradley Buxton · Answer

@Haiden Welch

I'd start with a house hack in the area you want to be.  If is MH or SJ or Santa Clara.  Buy a house that might need some work, and get some roommates to offset the cost. This will give you a good idea on what it's like to be a landlord and own property. Meanwhile, get a W2 job so you can get a loan.  Get your license but focus on either investing or agency. A career in real estate takes a fair amount of capital and time to start making money. Start with a W2 and build up some reserves.

Account Closed · Answer

Yes through real estate events you can meet them

Account Closed · Answer

I would say 25k gets you in the door to many syndications. Just have to do your research! that research process will give you aton of knowledge that in my opinion makes putting a much larger chunk of money to work more palatable

Haiden W. · Answer

This helps a ton. Choosing an area to focus on is great advice. Thanks so much.

Theresa Harris · Answer

For FHA you'd have to live in it. Doesn't mean you can't rent out rooms  You'd put a smaller down payment down, but that means you'd have to qualify for a larger loan (ie 95% vs 80%) and have to pay mortgage insurance.

Andrew Syrios · Answer

It's hard to put an exact amount on it given property values vary so much and there are a bunch of other factors to consider. I would say you would want at least $10,000 in reserves in case there are vacancies, maintenance issues, etc. Preferably more and definitely more in high priced markets.

Minimum amout for starter investment?!?

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