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Updated over 9 years ago, 05/14/2015
Help me flip!
Hello Bigger Pockets Community,
My name is Anthony and I currently live in Brooklyn, NY. I have always been interested in real estate. Even to the point where I received my salesperson license but haven't really perused the sales aspect of it. I am more passionate on investing in any way possible (flip, hold properties, commercial, sublet rentals etc. ). I have been reading the forums to try to get some advice. But I am hitting a wall.
The fact that I am 21 with only 10k saved doesn't really open to many doors for me. In particular, the NYC Metro area is expensive and most people want 20% down for a purchase. I am looking for some type of guidance of where I can start with my current situation. I'm not looking to wait a couple of years and save more because TIME is MONEY!
Any advice would be greatly appreciated! Thank you in advance!
-Anthony
Hello,
I am in the same position as you but, I'm a female lol. I am into investing and would like to do flipping, Im 21 Years old with little saved and this week I am taking my salesperson exam. From what I have learned... If you are interested in doing flipping, I would take out a hard money loan. The hard money loan will loan you money to buy a home and flip it. Yet, the downside, you have to pay interest on the loan. Bad part... if you purchase a home for 100,000 invest 30,000 into flipping and you receive a loan to do so, your interest accumulates. GREAT PART... when all said and done, you are able to resale the home for more ..200,000 (example number) repay your debts and make a huge profit. Many investors are now up and running all because of one loan that they've taken out to get started...
Yes I understand hard money loans are the way to go, instead of a conventional loan or 203k loan. However the purchase price in my area starts at 650k+ for just a single family. Most hard money lenders only lend out 80%. Therefore I need to come up with the 20% myself.
650k x 2% = 130k
I wouldn't even know how to come up with the money.
honestly, im stuck there. My suggestion is to sell real estate for about 3 years. Save up as much money as you can...and then start with your investments (this is what im doing aswell).
You guys are in the right place for information, but you're asking the wrong questions. There's tons of different ways to get started in real estate without having any money. I suggest you start here http://www.biggerpockets.com/real-estate-investing
This should start getting things going, then spend more time browsing and reading.
Welcome to BP
Originally posted by @Carlton Kohler:
You guys are in the right place for information, but you're asking the wrong questions. There's tons of different ways to get started in real estate without having any money. I suggest you start here http://www.biggerpockets.com/real-estate-investing
This should start getting things going, then spend more time browsing and reading.
Welcome to BP
I have read through that guide plenty of times. The math still never works out.
For example:
3 Family Property in NYC Metro area - $1,500,000
House hack and take out an FHA loan with 3.5% down (not including closing costs)
Down payment - $52,500 (which I cant come up with)
Mortgage Payments (approx. interest) - $4,221 - not mentioning mortgage insurance
Occupy one apartment due to rules of FHA Loan and rent the other two for $1700 each
$4221 - $3400 = -$821 cash flow and that's not covering the costs of the house (gas, taxes, water, etc) on top of that
This is the problem I keep coming across with every property i find even if its a little cheaper.
Any suggestions how I can turn this into a good investment?
Thanks again !
-Anthony
You're both on the right track in getting your license. Pound the pavement and get in with a go RE firm.
The high prices in your areas also equal bigger commissions. Live as cheaply as you can, and save as much of those commissions as possible to bankroll your REI.
Your licenses will also lead to contacts, which of course lead to opportunities - especially when the investors in your area get to know you.
It won't happen overnight, but its worth the effort.
Good luck
Jeff
Join a real estate club and join a Real estate meet up group. You do't have to buy anything in Manhattan or Brooklyn. There is Sulfolk county or Nassau and Queens and the Bronx. You can move.
Barbara Goodman do you know of any clubs in particular?
My advice for the people I see in these areas is to MOVE or invest in a different area. I don't know how guys in Cali and NY do it.
Ryan D. I know, in this area it's very hard. I've been thinking long distance but it's a little nerve racking being this would be my first investment. Any advice?
I'm not familiar with the NE. Do you have family in any mid-west areas that you can work with? You could live with a family member or a friend for a few months while you flip the property.
Ryan D. Unfortunately I don't, we are all stuck in the big apple. You can see how this is frustrating.
Anthony read what Bigger Pockets has to say about Real Estate and they have some names for you.
click on the link below for starters: o find some Meet Up Real Estate groups.
http://www.biggerpockets.com/rei/real-estate-clubs...
bg
The big thing you want to do in your position would be to build capital then. If that be through wholesale or flip would be your call. You could always lend it out on short term deals but you want to be careful.
I agree with @Ryan Dossey...easier said than done to just get up and move away or even commute back and forth while a more reasonably priced flip in a different area is going on, but it definitely makes it more manageable with what you need to put down in regards to cash.
I know you said it'd be nerve wracking doing a first flip in a town/area you were unfamiliar with but it may be equally as frustrating to be where you are familiar without any way to start on your fist flip.
Get on Google maps, type in your city and then see what markets there are within 45min to an hour of you that you can manage financially (call RE agents in those areas and ask about the flip market there and property prices). That might give you an idea of a starting point at least. Good luck @Account Closed!
Here's an article that BP had a link to in their last email that could help in regards to looking for a property out of state:
http://www.biggerpockets.com/renewsblog/2015/05/10/invest-out-of-state-how-to-analyze-a-city/
Originally posted by @Chad Jarrah:
I agree with @Ryan Dossey...easier said than done to just get up and move away or even commute back and forth while a more reasonably priced flip in a different area is going on, but it definitely makes it more manageable with what you need to put down in regards to cash.
I know you said it'd be nerve wracking doing a first flip in a town/area you were unfamiliar with but it may be equally as frustrating to be where you are familiar without any way to start on your fist flip.
Get on Google maps, type in your city and then see what markets there are within 45min to an hour of you that you can manage financially (call RE agents in those areas and ask about the flip market there and property prices). That might give you an idea of a starting point at least. Good luck @Account Closed!
I was thinking the same thing also. An hour commute wouldn't be the end of the world and there are properties priced less in those areas. I feel like I keep holding myself back and need to just take a leap of faith and do it! In terms of financing, which do you think is the best route if I did not want to occupy the property?
Thanks, Anthony
If you're not going to occupy you are going to need to come up with 20-25% down typically.
If you don't want to be an owner occupant and you don't have the money for 20-25% down, then try to find an area relatively close by with lower listing prices. As you research these areas save every cent you can - 10k is hard to swing it in any area especially with rehab costs. Scratch it up to 15k at least, try to find a 50-70k house that needs work with potential for profit (account for mistakes you'll make because you will make them). That would be 10-14k down. Try to get some closing costs covered with a request for seller's assist in your offer (3-6% of the offer amount). And then rehab with money you'll be making at your job along the way.
It won't be easy, but nothing that's worth it ever is.
(And I know you said time is money and you're right, but also make sure you have your ducks in a row - know your market, make some good contacts with agents and contractors. You don't want to take a blind risk but a calculated one.)
Anthony my opinion is that jumping in and flipping your first house is too difficult. You have to walk before you can run. You are looking at $500,000 houses. This does not make any sense as you know.
Find yourself a Real Estate club or two of them or three of them and listen. Make sure you don't lose any money just listen. There are many things you will be able to do and you will find them but not in the middle of New York City. Maybe you should have a partner for your first venture. No an hour away is not too far. Two hours away is OK too.
You should be looking at owner occupant because that is probably all you can afford for your first venture into this big world. That 3 1/2% down payment is a gift that you should take advantage of one way or another
I'm from Brooklyn also and this is the problem we New Yorkers face. Its not going to stop me. All the advice you guys have given it is great I think determination is the best for achieving you goal.
Hi Anthony
You should spell out your circumstances. Are you living with your family and what are your living circumstances? Someone on Bigger Pockets said Real Estate Investing is "Short term Pain for Long term Gain" and i found that remark very helpful.
You don't want to wait "Time is Money" you said and I fully agree with that. The more time you wait the more money you lose.
You have to compromise and get a new plan. Buying in New york is not doable right now. Flipping is too expensive right now and is for the more experienced investor,
What are you going to do as your next move? Its alright for people to suggest thigs but you have to deciede what you want to do with any of the recomendations
Barbara Goodman I currently live at home in Brooklyn and run a Verizon store in lower Manhattan. I work about 60 hours a week so it's rare to find time to go around looking at houses. It looks like the best option would be for me to occupy a multi family home further out of the city (NJ, Staten Island, Long Island) and take out an FHA loan. By doing this I can afford something around the 300k - 500k area. With only so much capital that I have 3.5% beats 20% by a long shot. I guess I'm just holding myself back from doing it.
Anthony I think that is the perfect solution to your desire to get into Real Estate Investing. A rental can be a drawn out Flip anyway. Do you rent now or live with your family? If you pay rent now how much rent do you pay? If you are single you can even share the apartment you are occupying in the duplex or triplex that you buy. As long as you run the numbers and run anywhere near positive cash flow it will probably work and you can run any deal by BP. With such a small down payment and such a large mortgage it might be a little difficult but I am sure you can find something positive. Before you go looking at the place in person you can look at Zillow and see just what the numbers look like and if it is worth taking the trip to see the house. Let us know how you are doing and I wish you Good Luck