I asked a question like this the other day...
-First question.. Buy and hold? or Flipping? With ideal situations which would you choose?
-Second.. What is your most successful method of finding the perfect deal? MLS?
-Lastly.. Is it difficult to start investing starting off with small funds? Or is it just based on which type of deal you find?
And I got some great feedback that I will share to you!
Your first question is one of individual choice - it really depends on your long and short term goals. I couldn't say what the best one for you to do is. Generally if you are looking to make money quickly then a flip is what you might want to keep your eye out for - however, if your looking for longer term cash flow, then you may want to buy and hold -both have their pros and cons and risks and rewards. Personally, I have done more buy and hold than flips but I would actually like to do more flips moving forward. After all, I enjoy getting checks monthly - but it would nice to cash in a fat check once in while too.
Question 2 - Networking is key to finding good deals - MLS can have some good deals periodically - but the best deals are going to come from a distressed situation that you find out about through word of mouth - and that means staying in front of your network and growing it so that you are exposed to new situations and opportunities. Talk to contractors as often as you can and let them know you're interested in finding distressed houses and are willing to pay a finders fee to anyone who helps you locate a house that you buy.
Question 3 - First of all - what is your definition of "small funds" ? It's not impossible to get started in investing without a lot of money - but it's going to take a little more work on your part. Most lenders like to see you have some "skin in the game" , so may need a down payment and some closing costs at the very least - however , there are still opportunities to wholesale or bird dog which does not require down payment money but may be a lot more difficult without a marketing budget. There are many ways to get creative about the financing if you're motivated enough. If you're willing to live next door to your tenants, then you can look into a duplex where you can live in one side of it while renting out the other. This could be a good way to get your feet wet and collect a stream of income while saving up for your next property. You can use an FHA to get into a duplex for 3 1/2 percent down plus closing costs if you are going to owner occupy ( reside) in it for at least a year.
If you want to flip without a lot of money - well that going to be a tougher gig - you may want to see if you can partner up with someone who does have the money or maybe you can match funds - either way the point is a partner can open up doors to paths you may not have thought were available. Remember that a flip is usually going to be under market because of the condition - this typically means it is a cash deal - plus you are going to have to have a repair budget to bring it back up to par so you can sell it. You can look at hard money if you have a good enough deal - some I know will lend up to 75% of project cost on distressed property. So your still going to need some money, and this come from you or from a partner or both.
The important thing is to learn how to recognize a good deal and always be on the lookout for one as you build up your assets and your network - this way, you can be ready to strike when the iron is hot. (credit @Jay Orlauski)
I hope you find this as insightful as I did!!!
Glad you find this site! You are in the right place to learn all about REI!
Wishing you the best!
-Dan
