How close am I to beginning my real estate journey??

Question

Hey All,

I am a young professional living in San Francisco, CA and I have been interested in real estate investing ever since I started my big boy job a year and a half a go. I have watched tons of YouTube on the subject and while I’ve learned a lot about the benefits of investing and even how to analyze a deal, I still feel like there’s some hard details missing in all of it. I want to know how much money I need in order to own a rental property that’s worth my time. I don’t care what size or even where it is, but I have saved up about $30k (not inc 401k) and I want to know if I’m anywhere near close to buying anything. Any help is greatly appreciated!

Chris Levarek · Answer

@Michael Gary Define your goals. Without knowing what those are, hard to say what's worth your time.

At a high level, you will need to invest out of local market and most likely in a C class asset of some kind. However, you can make anything happen with creative financing.

I started in a similar path as you about three years ago as I too am a working professional. Being in Phoenix, AZ myself, I purchased two duplexes for $209k cash in North Carolina with 12k in a roth ira and got a heloc on existing primary residence for $50k.

Point is you can make anything happen if you are determined. But what do you want to happen? What are your goals? For year one? 90 days?

First one, won't be pretty and expect it to be a learning process. But no need to wait years to get started. Happy Investing!

Cody Benedetto · Answer

As Luis mentioned, the "house hack" + FHA could really set you up nicely. I wish I did this years ago. https://www.biggerpockets.com/...

Paul Welden · Answer

You're correct that 210 days must pass before an FHA borrower can do an FHA Streamline Refi.

However the FHA borrower can refi out of the FHA into a conventional loan anytime. However, most lenders will not want to refi you until 6 months has passed so that the original lender doesn't have to do a lender buyback.

Gabriel Bures · Answer

@Michael Gary

I'm super new here also but depending on your starategy you may want to look at an FHA house hack. Also, 30 is a solid down-payment in a most markets BUT make sure you have some reserve cash worked into your arrangements.

You're first deal will teach you some lessons and you want to make sure they don't take you out of the game.

Michael Gary · Answer

Hey all, thanks for the replies! I say where I am because I’m open to other markets since generally speaking there is nothing other than condos for under 250k even in sacramento. Are there any markets that might be doable for me?(Phoenix, LV, Boise?)

Luis Sanchez Rodriguez · Answer

@Paul Welden @Michael GaryI mixed up the numbers...A minimum of 210 days must have passed since you closed your original home loan when attempting to refinance.

However, you still have to occupy the home for at least a year when using FHA

My apologies.

Olu Lijadu · Answer

@Michael Gary

Congratulations for taking the next steps of wanting to invest early in your career.

I also leave here in the San Francisco Bay Area. My suggestion is to look further out in towards the Sacramento area if you would like to remain in the Bay Area.

Out of state is another option of course.

Corey Hawkinson · Answer

@Michael Gary I started with less than $30k, but that was also in 2012 and I was not in San Fran. Does your job keep you in San Fran or are you able to work from anywhere? Because I’m a huge fan of house hacking but that might not be an option for you in your area.

I’m less of a fan of out of state investing but that could be a good option for you. If you pick this route you can start now with $30k.

Paul Welden · Answer

@Luis Sanchez Rodriguez

What is this FHA minimum 210 days thing you mentioned?

Luis Sanchez Rodriguez · Answer

Hi Michael,

In my opinion, you first need to decide what market you want to invest in. Many folks will say that you should start in your own backyard...you know the area, you have first glance of up and coming changes to the neighborhood, etc.

Secondly, you have a good amount saved but I would encourage you try not to use all that on a single property. Look into using the FHA loan to acquire your first property, house-hack the property for the minimum 210 days, and then reapply for the FHA loan to acquire another property.

I hope this makes sense. Don't hesitate to reach out if you're still confused.

How close am I to beginning my real estate journey??

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