Help Purchase First Rental Property

[Tony Stinziano]

I want to start investing in rental properties. I have $40k cash and was wondering what's the best way to invest this money.  Any help or ideas would be appreciated  

[Rick Stein]

Hi, Tony,

  I don't know the price range in your area, but my favorite strategy is to try to find an seller who owns their property free and  clear (i.e. no mortgage). Use as little as possible from that $40K for a down payment  and have the seller hold the note at an interest rate that makes sense and allows you to have a positive cash flow.   OR, borrow private money at the same interest rate.

  I have one investor who has invested (loaned me $) on four of my properties to date. He is a retired police officer with his money in his credit union collecting maybe 1%. I offer him 5.5% interest only loans. I also delay the first payment for 4 or 5 months to give me time to rehab the property. It works well for both of us. He likes the arrangement so well he has told his friends about it. Don't be afraid to ask. You are doing the seller or private investor a favor.

Be creative. Can you get an unsecured line of credit. I have a line with my local credit union for $100K with 5.25% interest. Banks have their place , but I try to avoid them whenever possible. I would also suggest joining your local REAI (real estate investment association) For a very modest membership fee you get access to a wealth of education and networking.

Just some suggestions.

Good luck