anyone started investing with a 30k job and no experience? how!?

Question

Hi BP, I'm learning as much as I can every single day and soaking up knowledge on here in the forums and trying to contribute any way I can. I'm looking to invest in my first buy and hold rental duplex in about a year after i create my business plan and figure out all the little systems. I'll be investing in Dutchess County New York and looking for help by learning from all the amazing folks on here! In the mean time I was wondering if anyone on here has started investing with a simple 30k per year day job and had success!? Was hoping to hear how you guys got started and if you're still as excited about it as I am? please share how you did it! Did you come up with a business plan and begin seeking out the help of mentors in your area or perhaps you did it all on your own? lets hear how you got started!

Bill F. · Answer

@Daniel Fitzroy

Congrats on wanting to get started. Income plays a big role in getting a home, but it doesn't get you all the way there.

What is your credit like, since that will also play a role? Do you have any other outstanding debts, like car payments, credit card balances?

Starting from a number point of view, if you make $30k/yr, the banks like to see your housing expense make up no more than 28% of your income. That's $8,400. That means you can have a mortgage payment of $8.4k/yr. Assuming a 4% interest rate and 30 year loan, that's a $145k/ loan.

Now what kinda down payment matters too. At a traditional 20% down, you get up to $180k price point. If you go with a 3.5% down loan, like and FHA, the highest price point is around $150k.

The down payment options come with costs. With the 20% down option, you'll need $36k saved and with the 3.5% option you need $5.5k saved.

That's not to mention reserves for thinks like maintenance and repairs for when things break, so $3k is the min I'd have on hand.

In short, you'll need to have about $10k saved to get $150k worth of house. The more you have saved, the more house you can get.

A quick look on zillow shows this is very doable in the Newburgh and Poughkeepsie area.

Good Luck!

Ethan Perry · Answer

@Daniel Fitzroy. Based on my 2019 income (around $44k), I will soon be purchasing a townhome to house hack.  I have pretty good credit and zero personal debt which helped me qualify for a conventional, 5% down loan.  The plan is to rent out two bedrooms to hopefully cover my mortgage.  Not a home run type deal by any means but for me it’s a great opportunity to get in to real estate investing for the long term.  You don’t need a super high income to start.  It’s all about how you position yourself.  Best of luck to you man!

Nicholas Mann · Answer

@Daniel Fitzroy

Hey Daniel good luck on your journey!

I would suggest if you don’t really have a high paying job right now to continue working and saving as much as you can while still learning about real estate.  I can’t speak for everyone but when I was younger I didn’t make a lot and I saved almost every dollar I made so I could invest it one day. Invest in books about real estate and look into possibly wholesaling or doing a house hack.  You’re gonna need good credit, enough income and some money saved up to get into real estate and not be underwater as soon as a tenant stops paying. There’s no get rich quick in basic buy and hold investing so no rush to get started, just educate yourself on ways you can get involved and as many people on here have began investing with hardly any money out of pocket.

Best of luck!

Daniel Fitzroy · Answer

@Christopher Vincent Thank you for sharing how you're being successful its very inspiring. I like the idea of networking with people and I plan on learning as much as I can on here first and if i need to perhaps finding a coach. I want to keep it so simple that even I can understand it.  Im studying all the basics as often as I can and annylizing a random deal off zillow now just to practice. You guys on here are incredibly helpful!

Bill F. · Answer

Glad I could help Daniel!

At a 30k ft view, buying an investment property doesn't differ that much from a primary residence. Find a property, make an offer, if accepted, use some form of debt (loan) and equity (cash) to pay for it.

The simplest way to do this via a LLC is to save up 20-30% for a down payment and then get a commercial loan. That's simple, but difficult to do since it takes awhile to save up the down payment and commercial loan terms are worse than residential.

This is where most of the "creative" strategies come from. If you don't have a LLC you can get a residential loan to buy the investment property. LLC's aren't super useful if you don't have assets to protect in the first place. You can also do the live and flip/rent. You buy a duplex to live in, fix up both sides, buy another 2/3/4 unit, move in, fix it up while renting the first duplex, rinse and repeat.

Those two are just the tip of the iceberg. spend more time around BP and you'll learn about a bunch more.

Joseph Cacciapaglia · Answer

I was making $30K when I bought my first duplex. However, I was in a market where I could find duplexes for $100K (I paid a little less for mine). What do duplexes go for in your market today? That was back in 2005, when lending was much looser too. By the time I bought my second property in 2007, I had more than doubled my income, so the rest of my experience doesn't really apply.

If I were in the same position today, I would focus on increasing my income with a side hustle or part-time job. I find a lot of would-be investors spend a lot of time dreaming of investing, and that time could be better spent shoring up their finances. If you think your networking and sales skills are amazing, then you might want to consider going out and raising money for real estate investments. Otherwise, you are probably better off learning to earn more, and then buying a property or two on your own first.

Christopher Vincent · Answer

@Daniel Fitzroy what’s going on daniel. I can tell you what I am doing now and I only make 40k a year with my w2 job. You got to find out how you can create value for others. You have to be willing to go that extra mile to get a deal. What did was took advantage of the cares act and withdrew month from my 401k and bought a coach. It may seems like a huge risk. But it has been beyond rewarding. I’ve deeply educated myself on my niche ( multi family). Expanded my network with people of similar￼ goals and people that can use the values I bring to the table. If you’d like to go into this further. Feel free to reach out. I’d love to help you create value within yourself ￼

Ryan Evans · Answer

Doing some kind of house hack is a great way to start. A lot of people in similar situations would buy a duplex that can be lived in and a bit of value created while you're there. An FHA or maybe even a USDA loan could be your best bet.

Strictly investing in rentals is going to take more cash and someone will still have to back the loan if you're not fully paying cash. That means even if you can drum up 25% down for a rental, you're going to have to get a loan application approved and that may be challenging with your income. Sure, someone else can bring the cash AND back the loan but then you'll have to really show where you're value is at.

All that said, having any experience at all as a landlord will be tremendously beneficial when raising money from family and friends.

Getting a realtor license will not be counted as stable income for potentially quite a while, so if you're trying to raise your income from a lending standpoint, a second w2 is going to get you there faster.

I started out three years ago with no job after moving back to the states from overseas. Lending wasn't an option. I bought my first duplex for 24k  cash and just hated my life for a while as I fixed it up. Since then I've bought 4 more with no banks involved and no stable income. It's all possible!

Benny Nahmani · Answer

Hi DanielI haven't read all the reply's so i may be repeating stuff you already heard.

from my experience' DO NOT WAIT!if you wan to learn- do!

along with reading and learning pick up a phone and start calling on listings and adds for potential deals, go look at houses and start talking with RE people- realtors, wholesalers, contractors, other investors, title lawyers, management companies and any body that works real estate. go to REI meetups and talk to people.once you know what numbers you want on a deal start making offers, you have no risk in making offers.learn as you go, we are taught to keep safe and not to take any risk, find a good job and stick to it. looks like you understand that it does not work so well.you want to play?put some skin in the game.get out there and practice what you learn.the best way to learn how to evaluate a deal is to evaluate a real deal.the best way to learn about getting a quote from a contractor is, get three quotes from three different contractorsand the best way to learn how to close a deal, fix it up and put in a tenant, is-just do it.i hope i was of some help to you

Daniel Fitzroy · Answer

@Ethan Perry

That's good to hear man thanks for sharing! Congrats on your house hack hope it goes smoothly. You will be able to learn how to manage/screen tenants and maintain the property all while lowering your living costs  its a win win!

anyone started investing with a 30k job and no experience? how!?

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