Starting out in REI with $25k

[Chris Carpenter]

I have $25k to use toward my first multi family apartment building. I also have a VA loan to use that can get me $500k-700k with zero down at 2-3% interest. What are some steps that I can take early on to purchase my first building? -Should I have a real estate license? -Do I use an agent or broker to find a property? -How many doors should I start out with? -How much should I use on repairs? -What are the first couple steps in attaining a property? (What’s the first thing I should do, what’s the second thing I should do? 3rd, 4th, 5th?) -Do I use an attorney at some point in the process? -How long do I wait before buying another property? Also, if anyone knows any good mentors, I’m all ears.

[Daniel Winsor]

Man, that’s a lot of questions. I’ll answer one or two that I am familiar with. 

I'm in a similar process right now, attempting to buy a duplex with a VA loan (Currently own a home in CA with a VA, so only have $288k remaining for new purchase).

For VA loans, you can do no money down up to ~$450k or so. In certain higher cost markets, this goes up to ~$529k. Anything above that, you will be putting money down. The down payment will be the difference in the purchase price and your available VA numbers. Not sure where you came up with the $700k number and I'd be interested if I'm mistaken.

Also, 2-3% is not realistic. Two years ago, I got 3.25%. Now, with a stellar credit score, I’m qualifying at 4.65%. Again, I could be mistaken, but I’ve shopped a lot of lenders recently and mid to high 4% is what you should be expecting at best.

As for what you should do, start researching. $25k will almost be what you are paying in closing costs on a VA loan at $500k+ with originations fees included. Talk to lenders, shop some rates and find a property or two in the area you are looking to find out what you are comfortable paying to have them run numbers on - this will give you your monthly payments fairly accurately.

That’s the end of my “advice”. For my personal experience in the recent months (currently in purchase negotiations on a duplex - process started cross country):

1.) I talked to lenders, found a price I was able to afford first.

2.) Looked at houses in the area I wanted to buy - over weeks/months to get a general understanding of what made sense

3.) Acquired a real estate agent. This took 4 attempts before someone worked for me.

4.) Run numbers before making an offer - Make sure they work for you. (I ran my numbers very conservatively to allow for my lack of experience in this)

That’s about all I did. I viewed about 10 properties in total. The one I’m trying to buy never hit the market as my agent knew the seller and put me in touch with her to get the ball rolling (lucky). But viewing the other listings gave me a good understanding that this one is the best deal I’ve seen. Hope some of that helps! Good luck.