Starting out with $5,000 and creative financing?

[Scott Isley]

Hello Team!

Been reading posts for a couple weeks now, the open flow of communication and genuine help from those more seasoned is wonderful. Thanks Josh what a great resource! (Great podcasts too....????)

So my question is this:

As I read forum posts and my real estate investing book list (looking into the CCIM course as well by the way)

I'm developing my initial strategy to implement this year. What I'm wondering is what recommendations in terms of property type, financing and area would you recommend given a personal investment of $5,000 per property + creative financing. If my goal is to purchase enough multi unit properties to cash flow $6,000 per month within a year. (Again not married to the strategy just yet, but curious to know the experienced investors thoughts on the matter)

As I am in the fitness industry and have been for 10 years. If someone new comes to me and says "I want to lose 100 pounds in 3 months" I would let them know that that is mathematically improbable if not impossible and guide them to a realistic high and low scenario 10-40 pounds...kind of the idea with leveraging the wealth of knowledge here :). Could use a realistic approach.

Im comfortable with put of state, 3rd party management ( Ken McElroy's ABC's of property management is great btw) and am interested in an overall buy and hold strategy.

Thanks for the time fellow BPers!

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Also I live and work in the San Diego area I'm always up for a meet up to discuss RE, feel free to contact me. Also, There was a So Cal BP meet up a couple months ago, I'd be up for another one soon, if anyone else is interested.

Thanks all!!!!

[Dan Costantino]

Hi Scott. This is my first year and I've acquired 3 properties thus far. The first two were cash.......simple to understand.

However, I did secure a 0% loan from an out of state owner. Initially, he accepted $5k down, but when he thought about the transfer tax and closing costs, he would have been left with almost nothing. He backed out. I ended up raising it to a $10k down payment and $550/month for 100 months ($65k total). The place currently rents for $850 which will cash flow roughly $100/mo after taxes, insurance and expenses.

My initial investment of $11,194 (inc. closing costs) will turn into $75,000 in 100 months (cash flow + equity). That does not account for any appreciation that may occur. (I will need to invest about $10k in repairs over the next 100 months also).

I'll also mention that this house could rent for $1200/mo, but I'd have to look for college kids and I'm not sure I want the hassle/turnover each year.

I fully expect to raise the rent to $1,000 in leasing season next year. If I accrue $15,000 in cash flow, and $65,000 equity in 100 months with a total investment of $21,194.........that is a 377% return over 8.333 years. That's a 45% return per year (roughly)...including planned repairs.

My point is this, you CAN turn $5k into something significantly more, but it may not be in the form of cash flow in the amount you mentioned. 0% loans are a great way to set yourself up in 8-10 years with little money down.

Also...you can wholesale these 0% deals like crazy at your REIA. Good luck!