$20k to invest, want to buy multi... suggestions on best options for real estate

[Carla Moore]

Hello, I am a little frustrated..... I want to get into real estate, I own free in the clear a home.... I would like to buy a multi.... I have $20k to invest and that doesn't seem enough in my market. I've talked to quite a few lenders and the option for FHA 3.5% is not an option because I own a home? I thought $20k was a good amount to start.... should I fix & flip?, BRRR, go to the casino?

what suggestions do you have out there?   

[Taylor Dasch]

Maybe just talk to as many lenders as you can and see if you can find one that will do the 3.5% down. I believe it is possible as long as the home you own doesnt have an FHA loan on it. I had a few clients that were going to have to put 15% down on a FHA loan for a MFH If I remember correctly so it may be standard. I'm sure there are some lenders on here who could do it.

[Carla Moore]

thanks for the encouragement Taylor... its like some of these lenders just talk the talk... pull my info and ZAP... Carla you if you want a multi you need to put 25% down conventional, for a single family 15% because it will be non owner occupied... investment....

[Andies Shepherd]

If you own a home free and clear you are missing one of the rules of money. Money is debt, so refinance your home take that cash and you can put down 20% on multiple multi-families (4 plex, tri plex etc).  

The home you own is really what you have to invest with, I would use some of the 20k to make sure the property you own max's out at appraisal for the refinance.  

[Theresa Harris]

Unless you are living in the home, you can't get a FHA. If you only have $20K, that won't be enough to flip a home. If you are willing to move out of your home for a year and live in the new place, you could get a FHA loan and then rent out your current home. You could also borrow money from your current home to use as a down payment on an investment property.

How much are multi family homes in your area?

[Benjamin Aaker]

I agree with @Theresa Harris. This is the best idea. Another option would be to take out a HELOC on your primary residence and use the funds to purchase your next property. That new one needs to cash flow enough to pay back the HELOC and its mortgage.

[Adedamola Atolani]

With $20k, it's really hard to buy a property and even harder to rehab one. FIX and FLIP could be an option if you were able to find one that you could afford. With that said, it's a little tough without a ton of capital in a FIX and FLIP. Also there are things like seller financing where you don't need as much capital.

[Scott Allen]

@Carla Moore 

First find an agent that specializes in multi-family in and around Columbus, OH. Have them send you their referrals (lenders, inspectors, insurance agents) Talk to more lenders, let them know you're planning to go FHA and looking for a duplex to live in one side and rent out the other. See what you can rent your primary residence for and what updates you could do to help get it rented starting April-September (lots of moving going on). Find a duplex that you would actually consider living in within your budget to house hack.

Go to the casino after closing on that duplex 

[Justin Moy]

Not sure what markets you're looking in or how far $20k would get you but if you're looking to rehab properties it likely won't get you what you need. 

I think finding out what you want to do and what role you want to take will help. If you want to just invest the $20k there are hard money funds or REITs or syndications you can likely invest in that are 100% passive. 

If you want to be the active partner in a deal I'd think of what strategy you're most interested in (flipping, BRRRR, wholesaling...etc). and start networking for partners since I'm not sure if $20k will be able to get you through the finish line unless you're doing something very low cost like wholesaling.

It's tough when there's so much you can do out there, so I think the first step is deciding on a strategy then likely looking for partners who can compliment your strengths

[Steven Foster Wilson]

Quote from @Carla Moore:

Hello, I am a little frustrated..... I want to get into real estate, I own free in the clear a home.... I would like to buy a multi.... I have $20k to invest and that doesn't seem enough in my market. I've talked to quite a few lenders and the option for FHA 3.5% is not an option because I own a home? I thought $20k was a good amount to start.... should I fix & flip?, BRRR, go to the casino?

what suggestions do you have out there?   

Hey Carla, it would be best to get to know the local lenders and brokers in the area and find better options. FHA would be a great starting point for you.

[Elias Osborne]

Hey Carla, in order to use a FHA loan, it has to be your primary residence. Since you own your home free and clear, that would be the best source of funds for your investment money. You can cash out refinance and make the money work for you or open a line of credit from your home and can use that for the down payment for the MFH. Then from there depending on your numbers and investment strategy, you can choose to fix and flip or BRRR. Don't let the casino rob you.

[Andrew Geier]

Hello Carla, restating some of what others said, you can use a HELOC on your home or cash out refi it. Depending on how you are going to handle that money, and how fast you can pay back will determine what the best option is for you.

I'd also really reflect and see how well of an understanding you have on rehabbing and managing a rehab before going full BRRRR with all your savings.

Before going out and using a dime of your money, I really think you should find an investor locally who does what you are trying to do. Get talking to someone who does BRRR or at the least has flipped many houses. Get them to be your mentor, finding the right mentor is going to help you tremendously. It'll help save you from disastrous mistakes and losing all your hard earned money. $20,000 will go right out the window faster than you think with the wrong deal or mistake. Not to say you don't have the opportunity with your situation to succeed, but you need the right plan too because you won't be able to bounce back as easily as someone with say, $300,000 who can make a mistake or two and keep going.

Wish you the best! You can do this! Good luck! 

[Carla Moore]

Quote from @Elias Osborne:

Hey Carla, in order to use a FHA loan, it has to be your primary residence. Since you own your home free and clear, that would be the best source of funds for your investment money. You can cash out refinance and make the money work for you or open a line of credit from your home and can use that for the down payment for the MFH. Then from there depending on your numbers and investment strategy, you can choose to fix and flip or BRRR. Don't let the casino rob you.

 Thanks Elias,

I'm not sure if I want to take a Heloc loan on my house.... if I am being honest... I want someone to hold my hand... and assure me getting into this is the right move.  I've always wanted to get into real estate.  the gurus make it seem so easy... but i just keep running into obstacles...

[Carla Moore]

Quote from @Andrew Geier:

Hello Carla, restating some of what others said, you can use a HELOC on your home or cash out refi it. Depending on how you are going to handle that money, and how fast you can pay back will determine what the best option is for you.

I'd also really reflect and see how well of an understanding you have on rehabbing and managing a rehab before going full BRRRR with all your savings.

Before going out and using a dime of your money, I really think you should find an investor locally who does what you are trying to do. Get talking to someone who does BRRR or at the least has flipped many houses. Get them to be your mentor, finding the right mentor is going to help you tremendously. It'll help save you from disastrous mistakes and losing all your hard earned money. $20,000 will go right out the window faster than you think with the wrong deal or mistake. Not to say you don't have the opportunity with your situation to succeed, but you need the right plan too because you won't be able to bounce back as easily as someone with say, $300,000 who can make a mistake or two and keep going.

Wish you the best! You can do this! Good luck! 

 Thanks for the encouragement!  It's just frustrating, finding a mentor that doesn't mind walking through your first deal.. understandably, nothing is guaranteed but I am doing this alone and I'm afraid to FAIL!!..  so many tricks, and foolishness... i'm just an honest Joe but it doesn't seem like that's how to get ahead on this...  

no worries, if not NOW then WHEN?  I've been saying this for YEARS!!