Obtaining funds

[Ryan Waller]

Hello,

My name is Ryan I am new to real estate investing, but have some knowlege from books etc. on real estate. So here is my question with a young child and a dead end job ive found myself in debt with little funds to start up my real estate investing. By little funds I am looking at a few thousand dollars to start with. I know what my goal is. I want to own and rent properties in the Philadelphia and suburban area for the majority with a few flips here and there down the road. But only after the financial infrastructure to support a flip is set up. My struggle is being in debt and barely getting by how do I obtain funds. I have two real estate agents whom I am close with. Most banks require 20% down I am a hard worker and dont mind putting in my time, but how have others found funding? I am aware from reading about hard money lending/ private lenders, but where do you find these people and what do you generally need in place to do so? Any advice? 

Regards

[Scott Hollister]

Hello @Ryan Waller, 

Welcome to the Forums! You have to start playing defense and offense with your finances. (Read the Millionaire Next Door for more information. Basically, you want to repeat to yourself that "I have the ability and talent to produce more and be financially free" Start changing your mindset, thats the first step.

Second, defense. You want to be extremely frugal where you can. In the US we are on a high consumption diet. So protect yourself and monitor where your money is going out. Start saving for a downpayment, it doesn't have to be 20%. I just saw a first time home buyer rate of 3% down. 

I'm sure you can get a house in Phili for what you have now but weigh out the risk/reward of getting a C/D property. Shoot for a good neighborhood, good schools, and job growth. 

Your actionable steps in this order: 

1. Fix your credit, get out of debt. 
2. Appreciate your job because you have one, if you aren't happy then find a new one. But remember, as long as your working for money its a job. The financially fit have money work for them. 
3. Get pre-approved for an FHA 3.5% down loan.
4. Search for a duplex, triplex, quad apartment. Try to live for free (Possibly make money while you live there) Remember, play defense with your money or you might always find yourself in the same position of debt.

If you can convince someone with private money to partner on a deal, great for you. But make sure you start small and don't get over your head. Read J. Scott's books for flips. 

Private lenders typically want skin in the game, most like to see a history of flips. (From what Ive seen it can be money, equity, property.) They can do things differently than a bank.