New Haven, CT · Member since 2016 · 90 posts · 99 votes
10y
18 with no money, no credit, no past REI experience and i'm assuming no steady income? I would save up over the years, build up some credit and research more and more before trying to get a loan with none of the above. I think the only way is for a friend or family member to loan you the money. Good luck though!
PS.. while doing that, you might go through another market correction which could benefit you greatly. Most parts of the country have come back and or come back strong. I'm having a hard time in CT right now with over bidders, cash buyers and nothing worth getting into. Seems to be my only option is to buy land and start new construction at this point.
Lexington, KY · Member since 2015 · 1 post · 0 votes
10y
Hey Jordan... I am curious what the typical terms would be for a hard money lender. Thinking of using one myself. Hope someone who has used a hard money lender or is a hard money lender replies to the post :)
Investor · Emerald Coast, FL · Member since 2013 · 45 posts · 11 votes
10y
I would not use hard money, you don't need to. Hard money is typically used if you're over the 4 or 10 conventional mortgage limit. You'll get a better interest rate with conventional loans and make a much better return overall.
Investor · Houston, TX · Member since 2015 · 29 posts · 18 votes
10y
It will depend on whether their is room in the deal and your personal tolerance for risk. I would talk to a few lenders and see if they would be willing to lend to you based on your experience level and cash reserves.
We didn't use hard money on our first two deals but entertained the idea. Ultimately we wanted to get some experience under our belt first, and wanted to be sure we had the cash reserves to pay off the loan in the event things didn't go as planned.
Investor · Houston, TX · Member since 2015 · 29 posts · 18 votes
10y
We are still experimenting with it. We've done one flip and have been close to two more deals from direct mail, but a lot of the calls we get are tire kickers.
The key though is to send them out consistently. Our first 2-3 mailings we barely got any response. It wasn't until the 4th and 5th mailing to the same list that we started receiving a decent response. We've spent about $2K total on mailings over the past 6 months and closed one flip for $26K so it has been worth it so far!
Investor · Emerald Coast, FL · Member since 2013 · 45 posts · 11 votes
10y
@Jordan Lisenbee could you borrow from a 401k? That is a way to get a down payment at a low interest rate and then borrow the rest conventionally. If you don't have the cash for a conventional loan you definitely don't want to do hard money - you could leverage yourself into financial hardship if the deal goes bad.
New Haven, CT · Member since 2016 · 90 posts · 99 votes
10y
18 with no money, no credit, no past REI experience and i'm assuming no steady income? I would save up over the years, build up some credit and research more and more before trying to get a loan with none of the above. I think the only way is for a friend or family member to loan you the money. Good luck though!
PS.. while doing that, you might go through another market correction which could benefit you greatly. Most parts of the country have come back and or come back strong. I'm having a hard time in CT right now with over bidders, cash buyers and nothing worth getting into. Seems to be my only option is to buy land and start new construction at this point.
Rental Property Investor · Savage, MN · Member since 2016 · 202 posts · 61 votes
10y
Hi @Jordan Lisenbee, perhaps focus on finding a duplex, or 4 flex to house hack for your first deal? You get experience as a landlord, and it can create great cash flow. I did this with my first single family home with a buddy for a few years. Then turned it into a full time rental when I moved out. Food for thought.
Delaware, OH · Member since 2016 · 29 posts · 4 votes
10y
Alexander Lang I was thinking that too but then again I could just continue living with my parents for free I mostly just trying to figure out how I'm going to finance the first deal
Rental Property Investor · Savage, MN · Member since 2016 · 202 posts · 61 votes
10y
@Jordan Lisenbee - That makes sense as well. Yeah do not feel the pressure to "jump right in" and risk making horrible mistakes. If you have the opportunity to save up and build a nice down payment on any property while continuing to educate yourself then you will be ahead of many investors even today. Just because you buy a house and rent it out it doesn't make you a successful investor/landlord. It's when you buy it right, understand the basics and can learn while you grow that creates longevity in this business I feel. It would be a career killer for you to jump out, buy your first property, and get a dumpy tenant, or buy wrong and end up paying for people to live in it (I know people like this), so take your time, educate yourself, and save up for the right opportunity so when that happens you are ready to rock it.
Delaware, OH · Member since 2016 · 29 posts · 4 votes
10y
Alexander Lang yes exactly and I'm taking my time to learn and research but if a good deal was to come across I would probably find a way to jump on it
Investor · Benton Harbor, MI · Member since 2013 · 257 posts · 140 votes
10y
To answer your question from earlier, basically many have said what I summarized it the "tough" statement. HML are great because they primarily use the subject property to determine terms, however with little/no experience, cash, credit your options are limited. If you think you have a smoking deal I would see about partnering with an experienced flipper or at least a contractor who has done flips (if they have not done flips they are not the same). They can help you avoid pitfalls most newbies can fall into such as over-paying, underestimating rehab, over/under improving.
Additionally I have to give you kudos for stretching yourself at such a young age. Wish I had started at 18!