A few sentence story of your very first buy, I’d love to hear it. I’m currently working on getting myself educated, improving (actually, building is the better word) my credit and trying to be active in REI clubs, forums etc…and of course thoroughly improving my knowledge when it comes to the financial concepts that pertain to REI. Needless to say, I’m still a ways away, but you gotta start somewhere.
With all this in mind, it’s still a little tough to know exactly where to start - what exactly to look for when perusing listings, going to open houses, etc…
My next question is how and how long did it take most of you to save up the funds for your first down payment? It’s different for everybody, I know, but your answers may provide me some realistic expectations. I’m currently a property manager, and I think my initial strategy may be to look for a duplex/triplex as an owner-occupant, and obviously manage the property myself. Renovations are a possibility, but we’ll cross that bridge when we get there. Would you advise against this strategy as a first time investor?
My first property I bought at auction. I still hold that property as a rental today.
I have been saving and investing for years before I got into real estate. But you can get started with modest funds with the right strategies, and techniques.
Where to start? Decide what you want to do, Rehab, be a landlord, wholesale? Learn what makes a good deal. Learn how to evaluate deals. Learn the techniques and strategies you will need. Line up financing if necessary for your strategy. Learn the market. Do all these things so you will Be ready when the right deal comes.
1st Deal?
I was a single parent working nights in a hospital. Hated the job. We had just come back from traveling in Mexico and Central America, and I decided that since my daughter was going into the first grade we could no longer move around that much.
I rented a single room at an acquaintance’s house for $100/month. My little daughter and I “hot bedded”. I came home from work at 7 AM, got her out of bed and sent her to school. Then I crawled into her still-warm bed. When she came home from school we ate and I went off to work and she went to bed. We did this for several months until I had money for a downpayment. I then bought the cheapest 2 units in the first acceptable neighborhood I could find.
Nothing very dramatic about my first investment rental property.
The year was 1980. I used a VA loan for 100% financing to buy my primary residence, seller paid all closing costs. A few months later I got a job transfer (military orders) and could not afford to sell the house because there was no equity to pay the real estate sales commission and I had no money in the bank to bring to the settlement table.
I turned that house into my first rental property. In my new job location, I used a low downpayment FHA loan to buy my second property. After one year of owner occupancy, I turned that property into a rental and bought my third principle residence in three years. Since I already had an active FHA loan, I could not get another one but 95% financing was available from a mortgage broker for an owner occupied property. After another year, I converted that property into a rental and bought a fourth primary residence. My first four rental properties were all owner occupied primary residences that I converted to rentals.
That is how I got started. I guess you could say I was forced into becoming a landlord by circumstances – it was not my first choice. As it turned out, it was one of the better decisions in my life, second only to marrying the love of my life.