Why is it so hard to get started…

Question

I’ve talked to multiple agents and lenders. I have excellent credit. I have a great down payment. Ok W2 job 50k annually. And they all say the same thing…I can’t get started in investing with the money I’m making…I don’t understand how to get started… all I do is research and listen to bigger pockets… im never gonna give up… but I’m just clueless on how people are able to afford this when they talk about starting from the bottom… any tips or information is greatly appreciated… thanks

Jason Porto · Answer

Chris, I feel your pain. I live in the SF Bay Area and have had an incredibly hard time getting started. It took me a long time to save up for an adequate down payment but just recently bought a place and am house hacking it because it's the only way that it works for me. Here's a quick list of a few things I did that made it more affordable and ultimately made it possible for me.

1. Look for FHA loans because their down payment percentage is so much smaller than the typical 20% route. Since a 20% down payment out here is sizable, this opened up a lot of possibilities for me once I realized that I didn't have to drain all of my accounts just to make it work..

2. Like Logan mentioned, I found an agent who specialized in investing and house hacking. It was actually David Greene's outfit since he's local and it worked out very well. My agent targeted properties that I was interested in (mostly du-tri-quad-plexes so I could house hack) and ran quick numbers to make sure it would pencil out before they would even show me a place.

3. House hacking is the biggest reason it worked for me because it would be tough for me to afford the mortgage all on my own. I bought a SFR home with an ADU in the back, and I live in the ADY and rent out the main house which is 3 bed/2 bath. That pays for a huge chunk of my mortgage and allows me to save up money for my reserves and strategize for the next place that I want to buy.

It seems like you listen to the podcast regularly so you probably know much of what I laid out, but hopefully some of it was helpful.

Steven Foster Wilson · Answer

Maybe it’s not the right state that you’re looking at? Have you considered investing in Ohio? @Chris Wharton has been a game changer in my investing. He helps give me good ideas on how to get a loan and what I can do. I will reach out to him and look at different markets. my wife and I bought her first house off of her income and her credit. She made about 55,000 here and we were able to buy a duplex on campus. I work with a lot of out-of-state investors especially from California.

Monica Bianchi · Answer

No advice, just wanted to say I feel you. Going through same stuff right now.

Logan McKay Zylstra · Answer

You’re in a very expensive CA market, which makes things more difficult for you.

However, I would find an agent/lender that understands investing or house hacking.

Eliott Elias · Answer

Talk to the right people, are these lenders and agents investing in real estate themselves? If you were to come talk to me or any investor savy Realtor we'd give you a million ways you can get into the game. Don't get discouraged

Look into secondary or tertiary markets, wholesaling, partnering with an investor, becoming a realtor. SO many ways you can get invest your money and time

Caleb Bryant · Answer

@Chris Leeper watch some of Pace Morby’s stuff, it can help you eliminate the need for those roles altogether. I think Brandon write a book about buying deals with low and no money too. Ultimately though your real problem isn’t the lender or the agent, it’s lead flow. If you’re getting the leads then you can control your own destiny.

Dan Onofrio · Answer

@Chris Leeper Networking is everything. Adding value to people will give you the opportunity to learn what works in your market; that is, if you want to invest in CA. Through my employer (property management company), I've been able to learn valuable skills while getting paid to do it. Quite frankly, I'm getting paid to write this post.

Is there a possibility you can find a job that gets you money, knowledge, and skills at the same time?

One thing I regret about my previous job is I stayed their for too long. I should have found a job like the one I have now years ago.

Are you in a career you want to be right now?

Dan H. · Answer

You do not state how much you have saved for the purchase but the $50K salary will present an issue for most financing.  At 30%, you can pay $15K/year.  This will only suffice if you have a huge sum of money for the down payment.

You could look into other finance options such as owner financed, lease to own, etc.  Brandon Turner has a book on purchasing with little money.  Typically this is more available when the market is more of a buyers market.

You could try to raise your income.  Change jobs, second job (side hustle), get married to someone that has decent paying job, etc.

You could try to make more money to have a bigger down payment.  Wholesaling, bird dogging, flipping can all make you money that can be used for the down payment to lower the finance amount.

Good luck

Brian Garlington · Answer

Actually it isn't hard to get started at all, you simply need to look at resources you may not be aware of or thought about.

You'd be surprised at what you can afford here in the bay area, but it may take some sacrifice.

Making $50K a year and trying to put 25% down to buy a single family home in the Oakland Hills will not work.

The lenders that I work with have been able to help first time homebuyers put down just 5% whether it's an FHA Loan or not.

Also, as a stepping stone buy a duplex in an "up and coming, working class, blue collar neighborHOOD". First, you only have to live there for one year to satisfy the owner occupancy requirements. (Some here on BP will say you simply have to have the "intent" to move in, but that is another topic for another thread). Second, (75% of) the income that is already being generated from the duplex you should be able to count as your income upon closing.

Simple.

Kar Sun · Answer

If you own a property see if you can rent it and purchase another one that you will live in and rent in a future. If you do not own any property then see if you can buy one to live in and then you can rent it in a future. I personally would not start investing outside of my state or even a city. If you rent in an expensive state or city see if you can move. Salaries have not adjusted to the incredible inflation we are in. The prices are really high in large part due to inflation. You can see if your family members can you you financially. It is just touht no matter how you look at it.

Why is it so hard to get started…

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