Figuring out just how much?

Question

So I’m at a W-2 job as of right now here in Chicago and they have a good bit of over time, so my question is just how much should my goal be to put away before I even start looking to step up to the plate? I’ve done the numbers and can save anywhere between $1500-$1700. Let me know thank you for reading.

Gustavo Perez Jr · Answer

@Jonathan Klemm Much appreciated I will keep that in mind for when a deal arises, they both seem like good areas and close to where I work as of now which is a plus.

Gustavo Perez Jr · Answer

@Jonathan Klemm

Well I’m in North Lawndale for right now I am at the safer foundation center there on a work release program, to be honest I don’t know where I’ll be moving to in the city when I get out I’ve looked at Irving park and Logan square but I’m still new so I’ll need some time to get familiar with the city. My goal is to find and rehab houses to either sell them or if the deal works out better in the long run for BRRR but the plan is to find, fix and sell.

Gustavo Perez Jr · Answer

@Crystal Smith I have gotten that figured out for the most part but no impulse buys no Netflix just food and bills.

Crystal Smith · Answer

My opinion- You should figure out the minimum amount of $ you need to live day to day & bank the rest. No hanging out, no impulse purchases, nothing. All of your spare time should be used evaluating opportunities to invest; establishing relationships with honest like minded people, learning,...... I consider all of that "Stepping up to the plate"  What will happen during this process is an opportunity will present itself just at the time you're prepared to take advantage.

Jonathan Klemm · Answer

@Gustavo Perez Jr - BRRRR is a great way to get started.  The areas you mentioned Irving Park and Logan Square are both great, I actually live in Logan myself.  If you find a good deal let me know and am happy to help you through the process.

Tom Scott · Answer

Live-in and flip.

In Ontario, Canada you can sell your principal residence and keep the profit while avoiding capital gains tax.

This is an excellent avenue for newbies starting out in RE.

The key is to find a deal that isn't overwhelming, but has a nice upside. Clean r up' and peddle it a year later. You can use your job to fund the mortgage payments and hustle on the side. Rinse and repeat...

This is an excellent strategy to build wealth.

As long as you fly under the radar… (one a year)  you won't raise eyebrows from the CRA.

Good luck

Jonathan Klemm · Answer

Hey @Gustavo Perez Jr - My response is always to step to the plate as soon as possible.  I always think of the Mark Twain Quote "The key to getting ahead is getting started"

In fairness, though I think we need a little bit more information.  Are you saving for a downpayment on a property?  If so, I'd look into a low down payment loan of 3.5% then if you find a $100k house or multi-unit you are only putting down $3500.

The standard rule of thumb is to have a 6-month emergency fund saved up and then use the rest of the money towards your investments.

Where are you in Chicago and where are you looking to invest?

Jim Kalish · Answer

@Gustavo Perez Jr The what you are saving for question is less about you long term goals and desires and more about the mechanics of the deal.  What price range will you be looking for?  How are you going to finance it?  How much rehab are you willing to undertake?  And I don't mean you personally, I mean do you want to do paint, carpet and roof or a complete gut?  You have to work through the numbers and then see what it will take.  If you are looking for a house you can buy with a bank mortgage you will need 20 - 30 % down.  Then you will have to cover the rehab costs out of pocket.  If you are going to use a fix and flip loan you will still need a down payment but can finance the rahab too.  But the rate is going to be higher and there may be points up front.  So it's tough for anyone but you to decide how much you need.  And of course there is always the option to partner with a money guy.  You find the property and run the rehab.  He puts up the money.  You split the profits.  A lot of work has to be done up front before you put in any offers.  Rehabbing is the easy part.  Making sure up front you don't run out of money or lose your shirt is what take all the work.  Remember, you make your money when you buy.  That means have all your financing figured out and know what you are going to have when you are done before you buy.  That way the end results are a given and you will succeed.

Best of luck!

Aaron W. · Answer

@Gustavo Perez Jr Very good!

It is possible to get into real estate investing without little to no money out of your pocket. There are many articles and examples on BP talking about it. If you can find a great deal, then there is likely going to be someone out there who is willing to fund it since they don't want to do the work.

Best of luck!

Gustavo Perez Jr · Answer

@AJ H.

Well I’d like to start flipping house to then invest the money into apartment complex buildings, I’ve worked in construction and I liked it but I do think I will be using a General contractor to do the work because A. I do not already have a construction business and B. They have the experience. So my big why being I want to live life as an entrepreneur, I’ve done the 9-5 and I just always felt like I have more to offer than a job could possibly provide. I chose real estate cause it’s always interested me and it is a good vehicle to build wealth and can be passive so I can free up time.

Figuring out just how much?

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