Let's get this done! So where do I start?

Question

Hi there bigger pockets!!! My name is Anna Ayala and I'm a resident of the great state of Texas!! I am super excited to embark on my adventure into real estate investing! So here is the deal I have two little boys, and one big boy aka my husband;) and have some time on my hands.  Hard work doesn't scare me and working under pressure thrills and drives me!

Now I have two properties that I'm interested in for investment, one as a rental and one as a flip.  I have a great mentor that's been in the business for over thirty years but she's exclusively rental properties.

I have about 10k of my personal money any advice about securing more capital for my ventures? Should I start with rentals or flipping? what would you do if you were going to buy your first property rental or flip?

Let me know! I need some advice :)

Anna

Hattie Dizmond · Answer

Hi Anna!  Welcome to BP.  I'm going to close this with my general hints for newbies, but let's get to your questions first.

$10k isn't a lot of money for real estate investments, particularly when any lender will likely require you to have a minimum of 20% down on any non-owner occupied purchase.  It is possible you would have to go up to 30 - 35%.  Therefore, you're going to need to find an equity partner, raise additional capital from private investors, or earn additional capital.  One good wholesale deal could get you to the $20k point easily. 2 to 3 wholesale deals like that, and you would be to the point of being able to do a small flip.  Flips could then fund your buy & hold investments.

You could also try to locate flips or rentals, where owner financing is an option.  If you don't need to put the entire $10k down on the owner financing, it might leave you enough to swing a light rehab or a prehab that you could then turn around and wrap with your own owner financing, requiring $30k down.  (Just an example)

It's time to get creative.  It's time to find some killer deals.

Here are my Quick Tips (If you're listening to the Podcasts, you'll understand the reference. If not...see Tip #2!!!)

1. Get involved in the forums. Offer what you can and absorb what everyone else offers, using the appropriate B$ filters!

2. Listen to as many Podcasts as you can. There has not been a single broadcast that has not provided me value or that I felt was a waste of my time. Great content!!

3. Download and read the free How-to-Guides, starting with the Ultimate Beginner's Guide to Real Estate Investing. http://www.biggerpockets.com/real-estate-investing

You could pay thousands of dollars for this information BP offers free. (I almost did!)

4. Set up some keyword alerts. It will keep you engaged in valuable discussions, while you're getting plugged in.

5.  Get involved with your local REIA's.  Real Estate is all about relationships and networking.  Make it work for you!

The BP community is awesome, and you've taken a great first step!

Kyle Gregg · Answer

Getting the property under contract was easy but closing the loan was a very frustrating process. The lender had issues on their end that delayed closing for a month. Now that the property is mine, things have been going smoothly. The contractor is on the ball and keeping me updated constantly (i got lucky...knock on wood). feel free to ask me more specific questions if you have any!

Anna Ayala · Answer

That seems like a very safe and easy way to start in the game, I originally thought that would be a good plan but my husband is planning on entering into graduate school this next year so we plan to move a year from now.  The great thing is i have family who could look after my investments when I'm away.  But that definitely is a good plan.  I haven't cut myself off to that idea.

How is the process going for you? are you planning on selling the house once your year is up or are you planning on just renting?

Barbara G. · Answer

I think you should explore house hacking and an FHA 3.5 Loan as your first venture.  It's a perfect ntroduction and your renants will be paying your expenses.  Look for a multi family where the numbers work

Kyle Gregg · Answer

well seeing that you want to rent & or flip a house, a FHA loan would not be a short term solution as these loans REQUIRE you to live in the property for a required duration. If you are looking for a property to live in and possibly flip or rent down the roan, a 203k loan would work well.

Im currently in the rehab phase of a 203k in which i plan to live in for a year, refi out of the FHA loan, then rent out. Then start the process all over again.

Anna Ayala · Answer

Thank you so much for the tips just did all of them! I've been house hunting all day!!! on my days off that seems to be all that I've been doing that on my days off.  I feel like success is around the corner it's just a matter of time. The problem is I don't understand banks that well. I did my debt to income ratio and I'm 9% which is good? So which loan should I get a FHA loan with 203k streamline since its my first house or just a conventional loan?

Steve Vaughan · Answer

Starting out with little money I would probably try and flip to build capital.  Flipping is normally riskier with deadlines and cost estimations than buy and holding in general, hence the larger reward potential.   Gotta buy right and have competent, fair contractors.  Lots of moving parts.

Starting out I did some house hacks and owner-financed apt buildings.  The lower down payment req's on owner occs was a huge bonus.  Good job saving $10k @Anna  Ayala!  Hopefully your consumer and student loan debt load is low and you are truly ready to move forward!

Let's get this done! So where do I start?

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