Real Estate Investing Newbie

[Will Schafer]

Hey everyone,

I am totally new to the real estate investing game. I have been listening to podcasts and watching videos and studying it for about a year now and I feel I am prepared to begin making my first moves and buying my first property. I have a rough idea about how I want to start and how much money I want to have saved, but I was hoping to hear from some others about their first purchase, how much they saved before-hand, any hidden obstacles, etc..

Thanks all!

[Justin Carmack]

How handy are you with making repairs?  I'm assuming you know how to make some or most of these repairs yourself.

My advice is talk with a loan officer first.  Make sure your credit is where it needs to be and find out what the bank requires in order for the house to qualify for financing through the lender.  What I would be looking for is a house that's one step away from not qualifying for bank lending, needs updates.  I would minimize the mount of money I put down on the property and use that money (that was originally intended for the down payment) to rehab the house.

Looks like you're in the rust belt like me so there should be plenty of houses that need rehabbed and can be purchased for 65%-75% of the ARV. Buy on financing with as little down as possible, fix the house over 1 year putting 10%-15% of the ARV into the house. Refinance as an owner occupied house. Either leave the money in the house as equity or cash out refinance. Go find another house, move into it... wash, rinse, repeat.

The key is getting financing  on the initial purchase.  Know what would be a show stopper in regards to issues on the house.  You need to know what would keep the house from getting approved for financing.  You need to buy it right.  And get an AN ACCURATE ARV. Don't over inflate the numbers or be too optimistic on the numbers which new investors tend to do.

Thoroughly research the area you're going to buy in.  Know values of houses in every block of the area you're looking at.  Don't get emotionally attached to a house and make plenty of offers that may not get accepted.  The amount of money you're going to make is directly related to how good of a deal you get on the front end.  Make posts on Craigslist and Facebook saying that you're searching for a house.  Talk with Wholesalers, but run your own numbers.  Some wholesalers have the tendency to make the numbers look too good for reality.

Good luck to you!