Next logical step forward?

[Leche Hopkins]

Hello Everyone,

I finally went to see two sub 30k properties with my realtor yesterday. Both homes had water damage on roofs and the upstairs ceilings were completely caved in. One even had tons of mold. I’m feeling very discouraged that I really just don’t know what I’m doing. I also thought I could get a loan but because they’re so low I’d have to pay cash( which I don’t have enough for property and rehab). I’m in need of some advice on what to do next. Should I move on to something else? Should I try and find a loan? Should I be looking for a contractor to see the property? What is the next logical step in the process? Any help/ recommendation would be great! Both properties are in the south jersey area.

[Lauren C.]

Hi @Leche Hopkins. Why are you only focusing on sub 30k properties? If you have 30k, that is enough to close on a loan for a 50-80k house and leave some for small improvements. Being your first deal, I wouldn't jump right into a major rehab. Unsure of your current living situation but I'm a big fan of the house hack. It allows you to get into a property for lower money down thanks to owner financing and provides some training wheels while you figure out renovations and landlording. Good luck!

[Daniel Haberkost]

Hey @Leche Hopkins what exactly is your strategy? You said both homes were in very poor condition so are you looking for a BRRRR? Or a flip? Also, have you done any deals as of now or will this be your first?

Knowing where you're at and what your goals/strategy is will help myself and others answer your question. 

-Dan

[Leche Hopkins]

Hi Dan,

Thanks yes let me clarify this would be my first deal. My strategy is buy and hold. I’d like to fix it up and rent it out. Both would provide a cash flow of roughly $400 in rent monthly once done. For example, the one property is around $30,000. I have enough cash on hand to purchase but I have no idea what it would cost to rehab and I’d prefer not to spend all my cash up front if I don’t have too. 

[Doran Summers]

@Leche Hopkins you should take a contractor with you so he can get estimates. Then depending on the Arv find a hard money lender to help with the rehab. Then refinance after rehab is completed.

[Jose Batista Abikarram]

I agree with @Doran Summers and would add that you can find good ones by either asking for references in your local REIA or if you feel very extroverted you can go early to a Home Depot with a box of donuts and get a few contractors talking to you. Good luck and keep at it!

[Lauren C.]

Hi @Leche Hopkins. Why are you only focusing on sub 30k properties? If you have 30k, that is enough to close on a loan for a 50-80k house and leave some for small improvements. Being your first deal, I wouldn't jump right into a major rehab. Unsure of your current living situation but I'm a big fan of the house hack. It allows you to get into a property for lower money down thanks to owner financing and provides some training wheels while you figure out renovations and landlording. Good luck!

[John Wijtenburg]

@Leche Hopkins There's some good advice above, particularly from @Doran Summers and @Lauren C.

I would echo that a major renovation may be a little too far out of your abilities for the first deal. Look for value-add deals where the scope of work is limited to cosmetic improvements, like paint, flooring, and maybe some cabinetry, rather than structural issues, like mold, roofing, and other weather proofing.

The lighter scope is more manageable for a beginner and usually doesn't result in major unexpected challenges.