How to get started with little money - Buy and Hold

Question

Good Afternoon Everyone!

I am 24 years old, work full time in commercial real estate and just recently got out of being an acquisitions manager for a fix and flip company. I am in the process of saving for my first investment property. I am not sure where to start and how much I need to save to begin. I have many questions about what the best route is to begin creating passive income for myself.

My biggest concern is the Financial piece to getting started.

Should I see if I can find an investor and work out a deal? ( I won't be able to bring much to the table...)

Should I just save as much as I can and then buy a property myself?

I am from Buffalo, NY!

Thank you

Alex

Steven Foster Wilson · Answer

@Alex Zientara When I got started investing my sophomore year of college, I had $500 to my name, My grandmother lent me $12k for the down payment on a duplex on OSU campus in Columbus. Over the course of a year my wife and I fixed it up, rented to friends, ate peanut butter and jelly, did everything we could. We then refinanced the property and it has given us $140k in cash back and continually produces $1,800/month in cash flow. Get started and it will be only good things for your future!

Craig Clinton · Answer

I wish I started when I was 24 :) First off, pick a market and learn it like the back of your hand. Go look at the insides of houses on the market, look at houses on Zillow, and talk to realtors. Once you pick your market, at your age and just starting, I would house-hack. Buy a 2,3 or 4 family on the market. Live in 1 unit and rent out the others. You can do an FHA loan and only have put down 3.5%. OR I'm going to assume you have skills in looking for off-market deals since you were an acquisitions manager for a fix and flip company. You can find an off market deal, use a hard money lender and a family/friend to lend the 10% that the hard money lender wont cover. Once you get your business up and running, this will probably be where you get most of your deals in the future...off-market. Even if you find an off-market for your first deal, I would still live in 1 unit and rent the others.Meanwhile as you're building equity in that house and learning to be a landlord, go to RE meetups consistently every month. You'll learn tons (which will increase your confidence) plus you'll meet everyone you'll need to continue on your investor path. For instance, you'll meet hard money lenders and private lenders. They'll be key to you buying more properties and building up your MF portfolio.Keep educating and keep networking! Good luck!

Dave Skow · Answer

@Alex Zientara- buy your 1st home as a primary residence ...3% down payment avaialable on conv loan ...hack it ...eventually turn it into a rental or sell it and move onto bigger projects

Matthew Irish-Jones · Answer

Alex, I started with an FHA loan 12 years ago with a low paying job. The best plan is a long term plan. You should get approved for an FHA loan and look to get into a double. From there you can add value by sprucing up one of the units while you live there. Eventually when you have saved enough for your next purchase you can move out, keep the double, and purchase another double. You can continue scaling like this until there is enough equity in your properties to refinance and gain working Capital. At that point you can start expanding faster but... Plan on this taking 7 years or so to get the ball rolling. This is a long term wealth building strategy and nothing happens quickly.

Evan Polaski · Answer

@Alex Zientara, if you don't have the confidence that you can bring value to investors, than I would skip that part for now. If you are not confident in your abilities, most investors will see through that and not want to take the investment opportunity. I would focus on saving and growing you knowledge base. You could get started sooner with an FHA loan house hack, which could allow as little as 3.5% down for a property. If you could find a 4 family with 4 two bed units, you have 3 apartments to rent, and room for a roommate in yours, which could keep your out of pocket down. Just make sure you understand future capital needs and are budgeting for those.

Alex Zientara · Answer

Thank you so much for this! I appreciate It! I think I need the push to get started!

Alex Zientara · Answer

Thank you all so much for your help! I appreciate the kind words and the advice. I hope to be back on here in the next few months with the good news of purchasing a double!Time to get on the road of being financially free from big corporate!