Want to get started. Own a home already and have a small amount saved up. Is it possible?

Question

Hello everyone,

Looking to get some feedback as I'm very interested in making real estate a second job for me. I work full time as a branch manager for a major bank and am realizing that this is a job that will not help me live a fulfilled life and my dream is to one day transition to being a full time real estate investor. My financial situation is as follows:

Credit Score : 740-750

Credit card utilization : 10-20%max (aka very little credit card debt)

No car Payment

Owe 134k on my house that I purchased in April 2013. House is worth ~205-215k

My payment including HOA is around 900 in old town Scottsdale, AZ

Could easily rent it out for 1500-1600 because of location and everything is recently remodeled. Very desirable place to live

I have about 10k saved up in savings

What are my options? I have listened to multiple podcasts and read multiple real estate books and am just scared to take action. Is my best bet getting a private money loan and trying to buy a property that is at the auction? Do I refi my current property and pull some cash out of it to add to my 10k that I already have saved up in my savings and use that towards a down payment on a multi family residence that I could live in for a year? What are you suggestions? I appreciate any and all help!!

-Mike

Account Closed · Answer

Keep on saving for now, unexpected things will come up with a fix and flip or buy and hold property. 10k is a good start but not quite enough in my mind.

Arlan Potter · Answer

my advice is to go out and find a cheap, distressed property. Buy it, fix it up, and either sell it or rent it. I would rent it. Start building.

Mansoor Fazel · Answer

My Advice,

Take out a Line Of Equity so that you have access to the money if needed for any future investments. Then after the loan closes, move out of your home and rent it out, to start the process of earning cash flow on a property you already own. You might need to rent for a little while, but this will let you keep the owner occupied rates that you have on the home now, and earn cash flow to help build up your intial 10k. Once you get a tenant settled in and checks coming consistently, start looking for a new place. Now, since that home is an investment property, you can buy another home as Owner Occupied again! This means you get the low rates again, and low downpayments if needed. Find a good place, at a good price, and buy it and move in.  Fix it up if necessary, but after a year or so, do this process again. You will build up your portfolio, minimize the risks, and get the lowest interest rates possible on each deal! Once you have a few of them, you can use the cash flow to pay off mortgages, or live mortgage free in your own place (since you use the cash flow to pay it )

that's what I would do

William Clement · Answer

Don't depend on the MLS ride around town looking at for sale by owner's. You might find a great deal for 30% less then MLS.

Mike M. · Answer

Appreciate all of the feedback and ideas from everyone. Being that I do have that 10k saved up and could probably pull an additional 30k out of my home via a HELOC is this enough to really purchase an additional duplex or triplex and then ONTOP of that purchase another one? I feel that I would have very little funds remaining and would be hesitant to not over leverage myself. What price range do you recommend I look at for properties?

In going through MLS listings I was seeing multiple duplexes and triplexes for 100-300k, and most of them seem very undesirable! I originally thought that this was a great idea but maybe i should pursue buying another SFR and then renting out my current residence? So many questions being a rookie to this that i want to make sure i don't make a gigantic mistake.

-Mike

Corby Goade · Answer

The cash flow from renting  your existing house sounds pretty good. I would apply for a HELOC on your property you own now. I'd use the heloc to put a down payment on a nice duplex, live in one side and rent the other side out. You should have enough left on your HELOC to use for a down payment on 1-2 more duplexes, triplexes or bigger, depending on your market. You'd be in the game,making money and learning every day.

Rhondalette W. · Answer

How much can you buy property for in your area? Can you purchase a property for $90K or $100K? If so maybe get a home equity line of credit, for your personal residence,  that you will only pay on when you use it. Then add the cash you have to the line of credit to make an ALL Cash purchase that you can rent out. Wait for about 6 months and refinance the rental property to get all of your cash back to pay off your line of credit. You may need to save a little more cash if you cant purchase houses for $90 or $100K  but this is the strategy I like.

Logan Brockmeyer · Answer

Hi Mike! I too am just starting my real estate dreams. I know your looking for advice, but I'll leave that to the pros here. Instead ill let you know where my mind set is and hopefully you may find some value in it.

I find myself in a very similar situation as yourself, just a couple of hours north of you in Prescott. I currently own and live in my home. At first I was set on selling it and using the profit to purchase a multifamily unit, but after doing a lot of reading on the this forum, I have decided to take out a home equity loan ( I dont have much in savings for a down payment) and keep my current investment. I have found some good deals on tri and quadplexs in the area that I am currently looking into. My goal is to find a property that can be purchased at 20% less than value and start making some cash flow for future reinvesting. My main goal is to bring in as much cash flow as possible so that I can reinvest faster and let the process continue.

I found that fear has been my biggest obstacle but I have found confidence from this site. I hope that you too can shake the fear and start your dreams. The biggest thing that I have learned on the forum is that it doesn't matter what avenue you choose, as long as you do your research and are confident that your investment will bring in cash flow. It may flop but you will learn from it and gain the confidence to continue on. Again please don't look at this as advice. Just thoughts from a peer. Best of luck to you Mike!

Want to get started. Own a home already and have a small amount saved up. Is it possible?

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