What is a typical strategy for first time investors?

[Mark Dolan]

Hi guys, I am new to BP and have been listening to some of the podcasts and reading some of the material on rental property investing for beginners. I am curious however about what a typical strategy for somebody looking to invest in several rental properties and produce monthly cash flow would look like. I assume that the first purchase pretty much gets the ball rolling and hopefully paves the way for your second, third, fourth etc.? One thing however thing I don't understand is how do you raise the capital for your second purchase after paying a large portion of your savings securing your first mortgage? This of course is assuming that most first time investors do not have a huge amount of life savings put away. Do people generally just start from scratch and try to rebuild their savings to the point where they can invest in a second property? Sorry if these are silly questions guys but I am still a little confused by the whole thing and trying to learn how things work. I appreciate any feedback that you may have. 

Thanks!!

[Scott Passman]

Capital is certainly the primary limiter for real estate investors, which is why raising money (private or hard money) is what many people eventually move towards as they get cash strapped.  Starting out is tough because you don't have many assets to pull from so you are using savings, current home equity, or creative financing strategies.  Some strategies people use would including:

- tapping their primary residence for a HELOC, home equity loan, or cash out refi

- pulling equity from rental properties once they have been acquired 

- looking for seller financed deals so they wouldn't need much money to close

- raising capital from other investors or friends/family

- house hacking in order to get a property for 3.5% down while also cutting living expenses

- partnering with others who have the financing and you bring the hustle and operations piece to the equation etc.  

While money is a limiting factor for most at some point, we are really only limited by our creativity and willingness to hustle.