I am looking to get started in real estate and was hoping I could get a few opinions from the experts on here on what the best way to do this would be. I live in a mostly rural area in Central Il with Bloomington and Champaign less than 30 minutes to me. I am wanting to invest in a property or two that will provide me with extra money each month (as much as possible). Should I be looking into single families or multi family homes? I really don’t have that much for a down payment but can come up with about 20,000 for the down payment. Am I being unrealistic in thinking that I can start investing in RE? Anybody have any ideas?
It’s unrealistic to think you can’t start investing in real estate. You definitely can. And with some cash to put down it sounds as if you’re in a better position than most who are trying to get started.
Since you asked for opinions, let me offer mine here. Buy and hold is one wise way to invest long term. But be advised it comes with some risks. If you are new to this, property management can be difficult. And what about funds for holding the property? Vacancies occur. Unexpected maintenance expenses wil bite you. So if you put down that $20K, what’s left in the bank for emergencies? Believe me, I’m not trying to talk you out of anything. Just want you to be prepared for potential pitfalls when they occur.
For your first few deals you might want to consider a short term approach, rather than buy and hold. Lease options and assignments, for example.
Good luck.
Hello petrey10
Good to meet you
Personally I think you should learn how to invest without using your money… As for buy and hold its great if you have high returns… If not buy equity and flip… In today’s market finding a high equity deal may be a little harder so Short Sales tend to be the game… They just take a little understanding …
Good luck
Michael
ok well I may have a property that I could make a deal with the owner on. They have stated that they would do a 3-5 year deal but want 5% down right away but with a price of 425000 that would not be feasable for me. What if I could purpose a 3 year lease and then at that time the owner could sell it and probably get more for the property at that time. Would I still have to put a down payment down? Would I get a credit if I wanted to purchase the property at that time? Could someone here give me a little help on a deal that I purpose to them to where I can still make some money.
You say you want to acquire a couple of income producing properties.
First, figure out whether the property will generate a positive cash flow. If the property won’t cash flow, then you should probably move on to another property and not waste any time or effort in figuring out how to structure a deal.
Don’t put the cart before the horse
Ok well it will definitely cash flow about 18000 per year after the mortgage is taken out. My next problem is they want it to be bought after the 3-5 year period which I would then need 25% down payment. Bringing in 18000 for 5 years will not get me to that dollar amount. So I thought if I could just lease it for 3-5 years and build up a cash fund then I could reinvest that amount into a different property. Opinions??
I would consider doing some small investments and building into your bigger multi-family homes. Right now Kansas City, Missouri has a great buying market especially with the new GM plant and other jobs that have come into town. If you ever want to do out of state investing that would be a great place to look. Feel free to contact me for info on the market!
Does the seller of the property have title and do they have more than a 40% equity interest? If so the 5% percent is easy as long as they will subordinate to a hard money loan… That would also allow you to pull money out to make the payments and or repairs…