Preparing for first investment, trying to decide strategy

[Michael Varney]

I am looking to do my first deal and there are two things that I'm struggling to decide/ figure out.

I have been learning about realestate for a little over a year so my knowledge base if fairly good. My biggest struggle is finances, up until just recently I was living pay check to pay. I just took a new job that is letting me save money and prepare financially. 

So here are my biggest questions.

The first is flip or hold to start? I know flipping is a great way to raise capitol but I don't have any money to put towards it myself.

However in a year I should have enough money to use as a down payment on a rental which I'm hoping might help raise more money for flipping.

The second is partnering. Should I consider partnering with someone who might be willing to bring cash to the table and work together on a flip. But I wonder who in their right mind would foot the bill for a new investor (regardless of knowledge base)?

Any advice on the issue would be great!

Thank you

[P.J. Bremner]

@Michael Varney

If you don't know anything about rehabbing a property, I would not start with a flip personally.

It may make more sense for you to get an owner-occupied property, possibly 1 - 4 units and house hack your way up. When I first started, I found a property that had a lot of bedrooms and rented the spare rooms out so that I made money while I was living there. I was able to get an FHA loan with only 3.5% down (about $9k out of pocket for a $250k turd of a house and fixed it up as money came in - four years later it's worth over $500k). If you can handle living with other people, it's a great way to start with little risk. Keep the tenants on a month to month. If they suck/dont get along with/ etc. then you just don't renew their lease the following month. By the time I was ready for house #2 and moved out, I was making over $1,500 net on the first house, which is basically a minimum wage job and only required a couple hours per month worth of work to maintain. EzPz!

Once you get into a home and realize what things cost, what needs to be repaired or looked at, what chronological order repairs need to be done in, etc. then you can look into flips more realistically.  Or, if you can find a mentor that will take you under their wing to flip with, you can go straight to it.  Since that seems to be a "unicorn" scenario, I would just get a house with lots of rooms and house hack your way to financial freedom (or units if they are affordable in your area.  They were $750k+ in my area when I started looking so I had to stick with single family).  My first house was 5 bedrooms and I converted the family room into another bedroom.

Best of luck!  Feel free to hit me up if you have any questions as I am an open book.