Starting out with $25k

[Joe Scheffold]

Hi all, Im looking to get started in real estate. I've been doing some research into it over the last few months and decided that within the next year I want to have my first property purchased. Looking more towards triplexes and even considered buying a couple rental houses in a college town that I'm familiar with. I currently have about $25k and am looking for some advice on getting the ball rolling? Thanks in advance Joe

[Nathan Platter]

Hey @Joe Scheffold.

As of June 2018, most banks will lend 75% for an investor buying an investment property. $25,000 means the most expensive property you can buy is $100,000

Without knowing your situation or location, consider house hacking. Basically, if you owner-occupy a residential (1-4 unit) property the bank will lend up to 95%, meaning you only need 5% down. That $25,000 can now buy a $500,000 property. Major opportunity there.

Action plan (and in this order):

1. Talk to a lender/banker. Tell them your intention (owner occupy, own a rental but live elsewhere,...) They can then tell you what they can do to help you make that happen. They'll also write a Pre-Approval letter stating, "We here at Happy Bank will lend Joe $320,000 to purchase a residential property."
2. Talk to a realtor who has helped clients buy 2-4plexes. Tell them you have a bank pre-approval letter for up to $XXX amount.
3. Look at properties that can generate good rent/price ratios. Many use the 1% rule
4. Once you've submitted an offer and the seller accepts, Talk to a Property Inspector. They'll find out the structural situation of the property.
5. You and the seller renegotiate the situation know all the pros/cons of the property.
6. Assuming the deal is still a GO, go to closing.
7. Ta-da, you now own an investment property!