hello everyone. my name is jon. i wanted to pick your brains. might help me get started with something. anyways, im 25 and i still live with my parents and have managed to save $110k through the years and have zero loans and zero debt. i had been recently looking at a home to buy for myself in the $140K range. I planned on putting $75k down and getting a 30yr mortgage but paying off way sooner by making way heavier payments monthy. however, i’ve recently quit looking as i think i could be in a good place to start buying a rental property or two. hey, if i can make some good money on the side, ill stay with mom and pop. they love me anyway. i was thinking if i could find something for around $50k-$60 and pay it off cash, i would have no payments, i would own the house and have cash flow from the tenants. btw, any work needed to rehab would be done by myself for the most part so i would be saving money there. thanks for any input, opinions, or ideas. im curious what you would do if you were wearing my shoes. i see alot of people get started with no money at all and i just want to make the right moves.
Great Idea!! I think split your money buy two properties under two seperate mortgage. Rent one or both. Enjoy rent and pay off mortgage. :beer
yeah, i mean, im no real estate guru but the logic seems pretty simple here. pay a property off completely. have some hard money on hand in the bank incase i ever come into hard times and need it for whatever reason, whether it be repairs or buying another home and just build on that from the cashflow from the tenants. thanks for your imput nick. anyone else?
You might look at purchasing a multi unit home such as a duplex, triplex, or quadplex. You will will get a great rate as an owner occupant of one unit and still be able to make money by renting out the others.
If I were you, I may cosider buy more than two properties or multiple complex for rent. The key for Real Estate Investment is using other peaple’s money, right?
Depends on which market you are in, but you do have options. If you are in a reasonably priced market, consider purchasing a cash flowing commercial multifamily property. This would allow you maximum leverage and the possibility to purchase a half a million dollar property.
thanks for all the input. i am considering a multi unit as well as SFH’s, christopher.
-wang, i havn’t made it that far yet. i have never bought a house before let alone learned how to use someone else’s money to buy one. are you saying the $110k is irrelevant and i should just put that away? im a complete newbie besides reading tons upon ton’s of threads in here and just started listening to some of the free audio books from this site as well. trying to soak up as much as possible.
-my way of life has always been to buy only what i can pay for outright. i dont like the thought of being in debt. yes, i realize this is not the american way but also i believe that is one of the reasons we are going to be seeing many foreclosures coming in the near future spurred by the escalating unemployment rate.
Man, talk about having your head screwed on straight. Congrats on what you’ve accomplished so far!
You could put a little of your money as a down payment on some properties. Your savings will be your safety net. Rather than buying with cash and holding long term, consider borrowing on the property for a shorter length of time. Most of our properties are on 10 yr amortizations. Leverage is good when used the right way. It will get you to wealth quicker than buying a few properties and owning them outright.
justin, thank you for the compliment. yes, in this market i definitely want to keep a safety net. now i just need to figure out what direction is best for a newbie like myself to take. gonna keep listening to these free audio’s from this site. i feel they have a wealth of information for me. anybody else listen to these and feel they learned much?
I highly recommend purchasing investment property. You are in a good situation to utilize your cash and your strong credit/financial situation. You can likely get a lot of leverage. Whatever you do, make sure you do not go over 70% LTV and make sure the cash flow is extremely high. You can set yourself up for life in the next 3-5 years with smart investments. Do you have a mentor?
moellerryan, unfortunately i do not have a mentor. its just me, myself, and i. im usually busy working but when im not i’ve been browsing this website and looking at distressed, short sale, and forclosure properties mostly. its hard for me to make any steps because there is so much i need to learn and i dont really even know where or how to start other than to keep reading and listening to these free audio downloads. at least im learning some of the new lingo.
Your in a great positions and congrats on saving all that money so young. I do have a question. What is your credit score. Everyone talks about financing but do you have credit and continuous employment to qualify for a loan??
I recommend buying a 4 plex or even commercial if prices are cheap in your area. Put down your 20% for best rates if you Qualify for a loan. Buy 1 property first, manage it for at least 9 months to see if you like it.
Also with a strong cash position you can do rehab work and flip. Yes the deals are there in many markets and with cash you can put in cash offers. Again no clue on your market since not mentioned.
Just remember on rehab and flip you want to have at least a 40% equity position when completed if your looking to sell fast.
yrush, my credit score was somewhere around 720 or so if i remember correctly last time it was checked, maybe higher. i am currently employed as well. I live in york pa about 45min south of Harrisburg close to the MD border. halfway between harrisburg and baltimore basically.
like i said, im very new to any investing in real estate and was wondering what some of the guru’s here think of a program such as this http://www.padeals.com/index.cfm
Jon,
Tread very carefully around a well-advertised, slick-looking deal maker like PA Deals. If the deals are that good, why advertise them?
First–You need to go to a real estate investor club meeting in your area. There will be one. Just sit and listen, and try to find out who is already successful, not wanna-be. Don’t tell anyone how much cash you have! It may take a month or two, but start looking for someone who can give you good local advice.
In the meantime, begin reading newspaper want ads and driving by some of the listed properties. You will soon discover which areas you DON’T want to be in. And which you like. Personally, I wouldn’t buy in an area that I wouldn’t live in. That should go for you too, as a young novice.
OPM (Other People’s Money) is just a fancy way to say “loans”. If you want to buy a $100,000 property, you could pay cash. Or you could pay a downpayment of $20,000, and borrow the rest–OPM. Now, theoretically you could buy 4 more $100,000 buildings. And control $500,000 worth of real estate instead of $100,000 in that one house.
After your investor meetings and your newspaper research I also recommend that you buy near your home, buy a 2-4 unit building, owner-occupy and do the landlording yourself. Try to use the $8,000 free downpayment stimulus money. You will probably need an experienced Realtor to walk you through your purchase.
Good luck and keep us informed. You are exactly the kind of person whom this site can help enormously.
Furnishedowner
Thanks for the information furnishedowner. I’m starting to realize that i need a realtor that specializes in forclosures. originally i was only looking for a first home for myself and i got a realtor that was recommended by a friend. she has taken me to look at quite a few houses, well…probably at least 7. since then i have gotten this idea that i should make something out of this money i have and i think i could really enjoy getting into real estate. im a very hands on person. although i dont feel she is trying real hard for me, its still hard for me to figure out how to get rid of her…i guess i let me emotions get in the way and i feel bad although i should not. how could i let her go and not make her mad at me?
Are the investor club meetings for total newbies like myself or would i be really out of place? Where are local meetings advertised usually?
If you do not have a contract signed with the Realtor, you can get rid of her with just a phone call: “Thanks for your help, but I’ve got some other plans now and won’t be buying a single family home now. Good-bye.” Or do it by email. Realtors are used to rejection. This is business, and you need to think about yourself. Don’t get sucked into a social situation with a needy Realtor. Just say, “No, thanks.” It’s okay if she gets mad at you!
Look for a guide to local REIA meetings on this site. I have only been to a couple, since I live pretty far from an urban area. The two I went to were held in church meeting rooms. They were not useful to me because the attendees were brokers who were going into foreclosure on their stupidly-purchased deals. They were looking for buyers. I was looking for peer discussion. You should be welcomed as a newbie.
Furnishedowner
There is a list of Real Estate Clubs on the left side of this site, they are great places to network. One thing I caution, is that they have a speaker and discussions on every strategy out there. I suggest picking one strategy and becoming a master rather than spin your wheels on 15 strategies and do nothing. That is the most common thing I see with beginners. No focus, no business plan, results in no success and waste of time and sometimes a loss. I provide free mentoring and the first thing I do is go over goals and strategy. I do not move forward if they do not document their strategy. This is the one area that seperates the doers and successful people from the time wasters.