How to buy multiple properties with little cash

[Mike Blais]

Hey Everyone, 

I'm pretty new to all of this still and have been listening/reading BP for about a month now. What I am a little confused about is how people with little cash can afford to buy and hold. If you spend a large percentage of your cash on a down payment for a buy and hold property that might cash flow $300/month, it could take years to save enough money to have a down payment for another buy and hold property? Am I missing something? Has this topic been covered in BP before? 

[Christopher Giannino]

There's a couple of different ways investors do this.. I would say one of the more popular strategies is the BRRRR (buy, rehab, rent, refinance, repeat.) Basically, the idea is that you buy a distressed property and rehab it. After you rehab it, it should be worth more which would then allow you to refinance out of your first loan. If done correctly, you'll be able to pull out all the money you put into the deal (rehab + original down payment + closing costs) because you "forced" equity from the rehab. This strategy allows you to essentially have no money in the deal, instant 20+% of equity on the property and cash flow.

Another strategy investors use is house hacking. They buy a small multi-family (or SFH) with FHA financing which is 3.5% down. The rents from the other units (or bedrooms) cover their mortgage, taxes, insurance and PMI which then allows them to live for free and because of their lack of living expenses this allows for them to save money for future investments.

There are many of other creative ways but these seem to be the most popular especially for beginners.