Raising Down Payment Money

[Kyle Deboer]

I am 18 years old with very little credit history and little capital. I am eager to start but can't get around the glaring issue of not having initial capital so I was wondering if there are any methods you guys would use to raise capital if you were in my shoes or is it just time to put my head down and put in long hours?

[Nicholas L.]

@Kyle Deboer

the latter - just save it up.  house hack as soon as you can.  good luck.

[Rene Hosman]

Have you read Start with Strategy by Dave Meyer? I'd highly recommend this as Dave was young and had no capital when he started as well. He lays out in the book that people bring three things to a deal: time, capital, or skill. If you have no money you can try to earn equity in a deal with your time (finding deals, managing the property, etc), or skill (learn a trade, get your GC license, etc) 

I read that book in Sept and wished I had read it sooner! 

https://www.amazon.com/Start-Strategy-Design-Portfolio-Long-... 

The book is on sale right now it looks like!

[Jonathan Greene]

Just earn solid money. You are 18, you shouldn't be ready to buy a property yet. You don't want to be so focused on getting into the game that you leverage the start of your entire life just to do it. Learn as much as you can. Make friends with investors. Be an asset to them. If you go to meetups, you will find friends and future partners. Don't rush it, but it's great that you are focused on doing it.

[Carter Trombley]

Quote from @Jonathan Greene:

Just earn solid money. You are 18, you shouldn't be ready to buy a property yet. You don't want to be so focused on getting into the game that you leverage the start of your entire life just to do it. Learn as much as you can. Make friends with investors. Be an asset to them. If you go to meetups, you will find friends and future partners. Don't rush it, but it's great that you are focused on doing it.

 Could you expand upon "leverage the start of your entire life"? 

Much appreciated!

[Nathan Gesner]

Quote from @Kyle Deboer:

I'll jump on with everyone else. The BEST method for real estate investing is very simple: increase earnings, reduce expenditures, save, and invest from your own funds.

You should focus on increasing earnings and learning how to manage your budget. In 1-2 years you could save enough to purchase a home to house hack. That puts you in the top 60% of Americans. Do it again two years later and you'll be in the top 10% of Americans. By the time you are 35 you could be financially independent and wealthy.

Too many Americans, particularly young Americans, want everything now. They see a 60-year-old man driving a new Corvette and don't realize that guy drove the same Honda Accord for 20 years while saving and investing. Good things take time.

[Julia Lyrberg]

If I were in your shoes, I’d focus on building up some capital first. It’s definitely worth putting your head down, working hard, and saving as much as you can. In the meantime, you can also work on building your credit score, which will help you get better financing options later. You're still young so I'd focus on learning and saving as much as I can!

[Jonathan Greene]

Quote from @Carter Trombley:

Quote from @Jonathan Greene:

Just earn solid money. You are 18, you shouldn't be ready to buy a property yet. You don't want to be so focused on getting into the game that you leverage the start of your entire life just to do it. Learn as much as you can. Make friends with investors. Be an asset to them. If you go to meetups, you will find friends and future partners. Don't rush it, but it's great that you are focused on doing it.

 Could you expand upon "leverage the start of your entire life"? 

Much appreciated!

Yes. Incurring debt before you have sufficient earnings to support that debt. It's like putting your life into net negative before you are trending enough into financial positive.

[Min Zhang]

@Kyle Deboer, you need to be financially ready first before jumping into real estate. Aside from downpayment, you want to have a solid emergency fund in place, something that can cover unexpected repairs, vacancies, or any other random costs that pop up.I’d also recommend saving more than you think you'll need and keeping a close eye on your expenses. Monitor your spending habits to make sure you’re consistently putting money aside for both the short-term and long-term costs of real estate. Hope this helps!

[Mohammed Rahman]

Hey @Kyle Deboer,

Your eagerness is a great asset! Focusing on building knowledge, credit, and some capital is key. The long hours and dedication will pay off as you learn the ropes and prepare for your first investment. Your credit score will be worth improving to acquire better financing options. BP will be the perfect place to find a mentor or just take notes from others experiences to add to your back pocket. 

[Tim Ryan]

@Kyle Deboer Love your eagerness. Who's asking for the down payment? Just you?

Hmm, that means you haven't built your team yet. Other team members can fill your gaps of experience, lack of credit, etc.

Be ok taking a smaller percentage of "something" rather than chasing all of nothing.

[Jonathan Chan]

Quote from @Kyle Deboer:

I am 18 years old with very little credit history and little capital. I am eager to start but can't get around the glaring issue of not having initial capital so I was wondering if there are any methods you guys would use to raise capital if you were in my shoes or is it just time to put my head down and put in long hours?

 Don't go out and do this on your own. Find someone who's doing what it is you want to do in the market you want to do it in and bring them value to learn. As you gain some experience, your value proposition to others increases, which will then make it easier to raise money for your own deals. Another route is to find somebody who's experienced and raise money for their deals.

[Jason Dumbaugh]

@Dave Meyer had an interesting episode on the BiggerPockets Real Estate Podcast about 3 main resources when it comes to investments: cash, time, and experience.  Sounds like you don't have the cash but you may have the time to do research and get crafty with a small team. Like @Tim Ryan said above - maybe someone else brings the cash to the table. Maybe you help manage the property for them for a small %, or give sweat equity for small cosmetic renovations? Either way you'll learn valuable lessons and gather up experience for your investor toolbelt.

[Preston Dean]

@Kyle Deboer

Everyone is going to want to see some skin in the game. Not that you raised the capital to have skin in the game. I would just continue to grind over the years until you have the ability to pay for the DP yourself. 

[Keisha Clark]

Essentially it is going to take some work. It won’t take as long as you think. if you can wholesale a few properties you can get enough to support you in a small project while learning the ins and outs. Age doesn’t limit you a small mind and lack of creativity does.

[Sasha Fukuda]

Many others on here have said the same thing, but at your age i'd focus on career. Build up job skills, build up savings, and increase your W2 income. Once you've done that for a couple years, you should have an emergency fund and the money for a downpayment. Then you can house hack. This step by step process is all laid out in Scott Trench's book "Set for Life". There are other, more ambitious, risky, and difficult, ways you could achieve the same end goal. However, i've never really seen the logic in taking those paths when you can just take the safe and slow approach. 

[Tim Ryan]

1. Learn all about real estate investing. Know the lingo and the processes.

2. Find a good deal.

3. Beg family and friends to fund it for you.

They "might" do it if they see you've learned a lot and your business plan sounds very solid.

How do I know this "might" work? That's exactly how I did my first two deals...

(saving the money to have your own deal is the worst idea)

[Andy Rousch]

Congrats on getting started Kyle! Either way you will do way. It is a matter of getting out of your comfort zone a little bit but not so much that you will burn out or lose sleep. If you can raise money without stressing out completely, than go for it. If you would prefer to do it on your own than that is fine too and you will just have to grind it out and save like crazy but it will be worth it. I'd be happy to show you around the calculators, I have seen people use the calculator results to bring to meetups and try to raise funds that way 

[Nicolas Martin]

Quote from @Kyle Deboer:

I am 18 years old with very little credit history and little capital. I am eager to start but can't get around the glaring issue of not having initial capital so I was wondering if there are any methods you guys would use to raise capital if you were in my shoes or is it just time to put my head down and put in long hours?

At 18, start with wholesaling to find off-market deals and earn fees without capital. Build savings through side hustles like flipping cars or offering handyman services. Network at meetups, help investors, and learn from them. Explore creative financing like seller financing or joint ventures. Open a secured credit card to build credit and keep learning strategies like BRRRR and house hacking to prepare for future opportunities. Focus on consistent action and saving aggressively.