What do I do besides save for a down payment?

Question

Hi BP!

I am currently in the process of saving money to get my first deal started.

The big obstacle that I am facing is that I live and work in Orange County, CA where the average home is over $400k.

From my calculations it will likely take me at least a year or two of saving to get anywhere close to being able to afford a down payment. (I only save about $700 a month)

My question is, what should I be doing in the mean time besides reading books and watching webinars?

I've considered wholesaling and lease options but I'm fearful that I will end up losing money and slowing down my savings. I'm also worried that there aren't many opportunities to use those strategies in my area. What are your thoughts?

Anyways thanks so much in advance!

All feedback is appreciated.

Anthony Gayden · Answer

@Adam Pierce

I honestly don't know how beneficial it is as I am not a Realtor. I honestly was trying to think of ways you could get experience in the industry and perhaps earn some extra money to move your investing career forward and keep you focused on real estate.

It takes a long time and a lot of patience to save money to buy an investment property. I am working in less expensive markets, but still spent over a year saving for the down payment on the property that I have under contract right now.

It's easy to lose motivation as it seems that it takes forever to get the amount you need. I think it is a necessary step though. While others may choose to use more creative financing techniques, I have found that when I do the numbers, many of those techniques reduce cash flow to the point that a great deal is hardly even a good deal.

Dean Suzuki · Answer

Hi.

I'm live in Orange County as well.  I would also recommend networking with the folks on BP and continue listening to other podcasts and read books.  I invested out of state and am currently evaluating opportunities in San Antonio where the average home is $70K.  You might also want to look into notes or hard money lending.  I have done some hard money lending and am investigating notes.

Thanks

Dean

Joe Homs · Answer

@Adam Pierce  Welcome to BP. When you talk about your first deal does that mean an investment or purchase for you to live in?

There is a monthly meet up in Lake Forest on the third Wednesday (Tomorrow) of each month at 7:00. Very low key and you can ask your questions there as well. PM me for location.

Account Closed · Answer

Wholesaling is a great way to earn quick cash to help jumpstart your real estate goals.  And with a great community like BP, any questions you have on the subject can be answered and you can meet all of the people necessary to be successful. I'm sure the competition in a place like LA could be tough, so maybe meet some other local wholesalers here and team up? You could find properties and they could bring the buyers. Just a thought!

Patrick Britton · Answer

@Adam Piercethe most cost effective way to get into real estate investing could very well be the owner-occupied fourplex purchase using an FHA loan.  given that you're in California, you might also be able to get the NHF Platinum Program's down payment assistance grant, assuming you don't make too much $$$.

When i was a lender, i helped a couple purchase a fourplex with 0% down.  yup.  two things had to happen though, they had to live in one of the units, and the total rent of all 4 units had to be greater than the entire mortgage payment.  get those two things sorted and you are golden pony boy.

Anthony Gayden · Answer

Well you could try to get your real estate license. That may help you in terms of finding deals and perhaps making a little extra cash. It will cost you money, but if it helps you find a deal, you will save far more than it costs. Also it could allow you to work at least part time in property management, which would be a great education for the aspiring rental property owner.

Rod Desinord · Answer

Save for closing costs too. And wholesale in between to get your funds up!

Adam Pierce · Answer

@Rod Desinord Yes good idea, is there any way to estimate how much the closing costs are going to be? Are there any ratios I could use for the OC area?

@Anthony Gayden Yes I've considered getting my license for a while now. I've heard such mixed reviews on it. Do you strongly believe that a buy and hold investor would benefit from getting one? I have heard that people just use wholesalers or realtor websites these days now. I am curious what your thoughts are because this is something I've been seriously considering.

@Joe Homs Thanks Joe! I'll hopefully make it down. I'll send you a message tonight.

@Dean Suzuki Hi Dean. I've heard a lot of people suggest to try and stay local for your first few deals. I find it hard when the prices are so high in my area. Would you suggest a new investor to start out of state on their first deal?

@Patrick BrittonWow I've never heard of the NHF program before. I'll have to look into that, it sounds incredible!

What do I do besides save for a down payment?

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