New investors alert

[Chris Kendrick]

Ok so for first time new investors, i went to multiple of banks and there is no such thing as no money down or 3 or 5 percent low down payments, its normal 20 or 25 percent down, so only way i see to profit from rental or investment properties is either flip or do the brrrr method , cause you cant put a down payment of 20k,30k or 40 or 50k, cause it will take you forever to get that money back if your only cash flowing around $300 or $400 a month, you cant buy a property every 7 or 10 years doing the conventional method of buying a house, so you almost got to rehab the house and either flip or get it appraised for more and cash refi to get your money back and rent it out, i dont know how everyone making money, please dont say seller finace, cause that dont exist

[Ed Brancheau]

There are 3% loans for first-time home buyers through the FHA and USDA, and there are 0% down loans through the VA. Depending on the county, FHA loans can be used for properties up to a certain value. They can even be used for multi-family homes in which you live.

That's why many first-time investors start with "house hacking."

They either rent out a portion of their house, rent out an ADU -- or, as I did, they live in the ADU and rent out the house, or buy a multi-family property and live in one of the units.

Regarding the BRRRR method, you don't necessarily need to come up with 20% down. Seller financing is an option. You just haven't talked to enough landlords. There are many tired landlords that feel like they want to sell but are afraid of getting hit with a huge tax bill, so they don't even try to sell the place. But when you explain how they can sell their property and avoid the huge taxes by becoming the bank and offering seller financing to you, they jump at the chance.

There are thousands of people on Bigger Pockets that have done just this so don't say it's not possible. It is possible when you learn how.

Also, the Rehab and Refinance steps are very important in BRRRR. You're Rehabbing the place to increase the property's rent and value. Then in 6-12 months, you pull out whatever equity you can. By this time, this can be between 10-20% of the value, which generally equates to 50-60% of what you put in, effectively reducing your down payment by 50%.

And assuming that you bought a property in an area that is appreciating in value, you can refinance every 6-12 months. Good areas can appreciate by 5% or more every year, which means you can constantly pull out 5% more. So, even if you have to put 20% down on a $100,000 house that appreciates at 5% a year, you'll be able to pull all of the money you put in over four years.

One thing I had to get through my thick skull was the fact that most investors never want to pay off properties for several reasons. But mainly, they can put their money to work elsewhere.

Finally, my best piece of advice is to be humble and have an open mind. Be sure to ask questions -- do you realize you didn't even ask a question -- instead of making assumptions. And understand that every investor was seriously confused about things similar to what you believe right now.

Also, we've all been there before with something similar. For me two years, I couldn't figure out "Subject to" deals until someone explained it to me simply, and it just clicked in my head. Now I'm consistently setting up "Subject to" deals.

Stay Awesome!