New Kid on the Block - Buy and Hold Newbie Investor

[John Liapis]

Hello BP,

my name is Giannis (pronounced Yanni), and I've been a long time lurker of BP. I had the RE itch since I was young and I am looking to get started.

My home market is Chicago. I currently live in a suburb of Chicago and I've been reading the blogs and books here on BP, so I have a good understanding of what to look for like cap rate, NOI, ROI. Cashflow and so on.

Right now, I'm in a bit of a bind. I only have 3K saved up. (A small amount, I know). By mid year 2016, I should have 12K saved up to put down on a buy and hold investment.

My longterm goal is to have 8-10 MF buildings producing over 20K in gross rent over the next 5 years.

I've also been reading info by @Brie Schmidt, and the news I read is great. Not sure that I want to invest in Milwaukee. (Not looking to invest out of state, yet.)

I know that I am in the beginning stages of my career, both in RE and my job. But, I am looking to started now that I am 24 instead of when I am in my 40s.

Thank you!

[Bob Tierney]

Hi John,

Welcome to Real Estate Investing! I saw you live in Elgin so I thought I would reply. I bought my first house in Elgin in 2004 and love investing here. I restored Victorian homes for almost 20 years so buying here was a no-brainer with all of the gorgeous historical properties in this city. Investing in historical properties comes with its own pitfalls but so worth learning about as we can acquire these homes for fantastic prices, people love living in them and pay a premium to do so, and they are so worth fixing up and maintaining because they are beautiful. :)

As far as your $3K you have saved I would like to give you another perspective. One of my favorite Elgin deals I did I used a Self-Directed Retirement Plan investor that had $100,000 to lend. I found a 3 bd house for $39,500 that needed about $45,000 in repairs to get it rentable. I bought and rehabbed the house using the SDRP funds which had no payments while I was using the money. I fixed up the house then refinanced it - the house appraised for $165,000 and the bank gave me 75% of its appraised value ($123,750) on the refi. I actually was able to get over $30,000 more out of the refi than it cost to buy and rehab the house. It rents out for $1550 per month generating close to $500/month in positive cashflow. I took the money from the refi and bought another house for $70K that is now rehabbed and getting refinanced. I am using the same $100K to buy house after house now, generating tax deferred income with each rehab, positive monthly cashflow with each house, and didn't use one penny of my own money to get started. (and my investor is elated getting a 8% return on their retirement plan, their mutual funds were only paying them 3%!)

Learn how to use creative financing strategies & buy properties right and you will no longer be concerned about how much money you have personally saved up. You do not need to use your own money or even have your credit checked to do real estate deals. You should also be learning about corporations and how you are going to structure your deals, building business credit inside of your company so you have access to low interest funds in case you need extra capital, and take this business seriously learning all you can about it. 

If you would like to come out and see some of the properties I have restored I do property tours once in a while. I love sharing this business with people and am grateful that I met someone 10 years ago that was willing to share it with me. 

Best to you!