MOney to get started

I am new as well to REI, and just started reading this sites info. I was wondering what type of money one should have available to get started? I am looking to possibly buy a few rents homes, and do mostly flipping, with the short sales, and forclosures. I guess I would like to get a property to flip first to get some cash on the sale. What will I need money wise?

Howdy Kirss:

All you need is earnest money $10 to $500 and some money to place an ad in the newspaper maybe another $100. You need to spend time and money finding a good deal. Gas is expensive so figure another $100 there as well.


This is nice…Why would someone tell me I needed at least 20 grand? Is it because I would need that much to get approved for a loan, because I already have a mortgage for my own home?

Howdy Kirss:

The traditional method of buying real estate is to put 20% down and get a loan for the other 80%. On a $100,000 investment property you would need $20,000 plus closing costs. You would also want some reserves in case of an earthquake or flood or some other major expense. Another $20,000 should cover that reserve. Happy investing.

What you asked was how much you need to tie up a property and to flip it. And I gave you my opinion. If you find a great deal the money will come to you. Everybody want some action with great deals. The 31 units I bought took me a while to close and all I had invested at the end was around $500. I put $1000 as earnest money and had to pay for the appraisal of $1800 half of which I paid for at the closing. After I got a $250,000 loan for the purchase and rehab I still needed $10,000 cash to close. I borrowed that at a really high rate from some REIclub members but I got all the money that I needed plus a little extra back at closing to almost cover the earnest money and appraisal. I had no reserves and ran short on the rehab so I suggest that next time I will have some reserves to cover such shortages. I have the property sold for a handsome profit and it should close within a few weeks. I borrowed the shortage from a friend short term.

I hope this helps you some. You can get creative or do traditional investing. It is easier to get creative when the property you find appraises 30 % below retail after rehab.

thanks! That was exactly what I needed. You know, I just realized that reading about past deals is VERY informative. You get to read the EXACT steps they took to get the property, and what it cost them, and who they asked for help…this is VERY VERY good information. Is there a section on this site with just posts about past transactions? If not, there needs to be! :wink:

Howdy Kirss:

Not exactly. I try to give examples when I can.

Once i was going to buy a house that I used to own from the owner that foreclosed on it. He had loaned my $25,000 to help buy it as a private investor. The seller also financed $7500 on a second mortgage. I tried to cure the default on both mortgages but the 2nd lien holder wanted $15,000. I had a hard money loan approved for the $30,000 that I now owed on the 1st and the $7500 for the 2nd lien holder. The deal would not work and it went to foreclosure and the 2nd lien holder was wiped out. He now has an unsecured claim against my 6 year old chapter 7 BK case. Good luck with collecting a dime there. I ended up getting it under contract with the 1st lien holder about a month after the sale and flipped it to an investor for a quick $3000. I had found several other deals to work on in the mean time and did not have time to fix up the house. It was a great deal but I just could not get the financing at the time. I put up $100 earnest money to get it under contract.