All Forum Posts by: Samuel Olivas

Nothing that you said is a smart idea right now. It's possible, but not smart. No/low money down loans come with other negatives or they wouldn't be available. You have good responses above because you need ample reserves to buy also. What if the furnace breaks a day after closing? What about inspections? The people who generally get low to no money down deals have money, that's what allows them not to have to use it, collateral. I would focus more on going to meetups, saving money, and learning, before jumping too soon into something with a hard paydown vs. incoming income and no savings.

Great points, thanks for the comments. I do find encouraging the "its possible, but not smart" comment. I feel like we have all seen ways or at least heard stories of people coming into real estate with little money & some creative maneuvering to make it happen. I agree on waiting for a bit to find some local meetups & learn from some investors in my market to see what has worked for them. appreciate it!

1 Vote

Grand Rapids, Michigan

Quote from @Tanner Lewis:

Even with no/low money down options, I suggest having ample reserves in case you need to come to the table with cash for some reason.

Completely understand, based on the other comments on this post, I can see a trend. As a lender, what is a safe amount of money to have saved in market where the average home price is 185K?

0 Votes

Grand Rapids, Michigan

Quote from @Jaron Walling:

@Samuel Olivas From personal experience you can't have your cake and eat it too.

"What are pros & cons to using this "creative" method to finance the property?" - Risk. What about leaking roofs or accidents you can't predict? What about tenants that stop paying rent 3 months into a lease? Unless you find a great deal you'll have very little, zero, or even negative equity from day 1. I advise against using a $0 down loan. Without any skin in the game the downside far out weighs upside. Smart investors never put them self's into a position like that. There are exit strategies (long and short) baked into every property. With nothing down, no value add, or no strategy you can't exit quickly if something bad happens.

"What are some things I need to look out for with a loan like this?" - In my opinion I would avoid this loan. REI requires $$$ and it's stated over and over again for a reason. No skin (money, time, skills) in the game can lead to a disaster; lose property, cost you money, start over.

"When renting a duplex, what have been some of the best way you have found tenants & what is your process to screen them?" - Focus on the market research, numbers, and location. If you buy property in a nicer location quality tenants will find you! Avoid the war zones. Read and learn about screening tenants before you ever make an online listing > the rest is LEARNED FROM EXPERIENCE.

"Does anyone have experience using a side of their duplex as a STR & if so, what did you learn?" - You're running a small business. It's much more hands on depending on demand. Know the market and determine if it's saturated or an opportunity. You're buying nice furniture, chasing 5-star reviews, and probably handling all the PM. It's completely different than a LTR.

I appreciate your comments. I feel like I should clarify that it isn't a "$0" loan, but a loan on top of the conventional loan that is payed back when the property is sold or payed off. Also that I do have $ saved, but would essentially all have to be used in down payments & closing cost. Regardless I understand what you are saying. It difficult since so much of what I heard has been that you learn from experience, but that you can't access this experience until you have 25k+ saved in the bank. Perhaps that is just how it goes. I truly appreciate the information.

1 Vote

Grand Rapids, Michigan

This is my first post on biggerpockets.com & I would like start by saying how useful all the free resources and information has been on here. I currently live & am looking to invest in Michigan. Ive always wanted to invest in real estate but I struggled to take the leap because I didn't have the amount of capital that I hear many people say they need. So for the last 2 years, I have let this idea stay just that, an idea. This year, I decided I'm going to do whatever it takes to own my first investment property by the end of the year. I said to myself "im gonna get into my first duplex...and im gonna do it with as little money as possible". This seems like an impossible task in today market but I decided to do my research on creative financing anyways. I knew that in Michigan (and im sure across many states as well), you can purchase your first home with only 3% down on a conventional loan, or 3.5% down with a FHA loan. I knew that I could probably cover these cost on a sub 185k home, but that still left closing cost and other unknown expenses to come. So I did some more digging. Turns out, there is a a loan called the MISHDA Loan in Michigan. This loan "grants you" 10k towards down payments & closing cost. This means if I purchase a home at the right price, I came come into this deal with little to no money down to start off. Now it is a loan so this means you will have to pay it back when the loan is payed off or when you sell the property, but regardless it could my ticket into owning my first rental property. I should also say my main interest is purchase a duplex & house hack.

Now that my backstory is out of the way..

What are pros & cons to using this "creative" method to finance the property?

What are some things I need to look out for with a loan like this?

When renting a duplex, what have been some of the best way you have found tenants & what is your process to screen them?

Does anyone have experience using a side of their duplex as a STR & if so, what did you learn?

Thanks again for everyone that took the time to read this & answer my questions!

0 Votes

Grand Rapids, Michigan

All Forum Posts by: Samuel Olivas

Samuel Olivas has started 1 posts and replied 5 times.

Post: Starting off with no-money / going into first deal with nothing down.

Post: Starting off with no-money / going into first deal with nothing down.

Post: Starting off with no-money / going into first deal with nothing down.

Post: Starting off with no-money / going into first deal with nothing down.

Post: Starting off with no-money / going into first deal with nothing down.