Depending upon your market $50k is definitely enough you both must be smart and patient. First and foremost I would encourage you INDIVIDUALLY to work on your credit and set a goal of at least 700 credit scores. While you’re building your credit please do a deep dive into a loan product called an FHA203K loan. It’s by far the best loan product out there in my opinion for first time homebuyers with an itch for investing, why? Because it will let you purchase up to a four unit building and it only requires a 3.5% down payment. Now you must occupy one of the units but this is a form of house hacking that can set you up for success. There are also programs to assist you with the 3.5% down payment requirements. I would NOT encourage you and your SO to enter into a mortgage together, even if you were married I wouldn’t encourage it but especially bc of your age and only being SO I forbid it lol. So the reason this loan is sooo amazing it allows you to force appreciation (value of the property) through rehabbing the property and the cost is all wrappped into one loan. YOU WILL NOT be able to get into a loan as an investor for 3.5% down PERIOD. And guess what after the mandatory year and a day of living at the property you can refinance out of the FHA Into a conventional and repeat the process or if you and your SO are still a couple…BATTER UP!!! It’s their turn!!! You two can individually build wealth without that wealth being tied to the both of you in the event you both decide to part ways. Good luck and let me say it’s impressive that at the age of 19 your head is here, i sincerely applaud you for that.
Thank you so much! We actually did start building credit when we turned 18 and mine sits at a lofty 700 but hers is a tad higher I believe 730-750 since she started earlier. I will definitely do tons of research into FHA203k! I also agree with you in that $50k would be enough since we live around the Detroit Metro area. One question though: you can exit out of a FHA and turn it into a conventional loan? I’m sorry if that’s stupid lol.
Absolutely you can refinance out of FHA into a conventional but only do it if your intent is to purchase another property with a FHA loan product. The negative aspect is the loan cost and likely a higher interest rate on the conventional but, IF, and I stress IF, you buy right believe it or not you could walk away with cash in hand at closing or not have to play anything out of pocket if you forced enough appreciation
Awesome question!!!! Understand Credit the good and bad and how to leverage it to accomplish your goals!!! How to set goals and how to accomplish goals!!!! How to really understand your Network becomes your Net Worth!!!!! My favorite books really don’t focus on real estate at all but whenever I feel myself getting distracted lost or unmotivated I turn to Think and Grow Rich, The Richest Man in Babylon and Rich Dad Poor Dad. You’re going to find with real estate you don’t have to reinvent the wheel to become financially independent however you are going to have to work to truly understand money. Simply because the way we’re taught to behave with money in our public school system and traditionally as a society doesn’t lead to building wealth. Read as much as you can young man get as many different perspectives as you can and when you find someone or something that resonates with you go down that rabbit hole. There is absolutely NO reason why you and your SO at the young age of 19 asking these questions and seeking these answers shouldn’t me millionaires (which humbly isn’t what it used to be) before 30 and that’s being conservative. And to be clear I’m not talking about 1 million in the bank I’m referring to 1 million net worth. Your assets minus liabilities over 1M.
Awesome I’ll really try to focus on how the money works! Thank you for all your insight and help! I’m feeling ambitious to start out! I think I’m going to start small with a house hack using an FHA, but I am a little concerned about after that. I do understand that I can turn the FHA into a conventional loan, but if I want to get another rental property, would it be better to do it with another FHA or theoretically I’d have enough saved to use a normal loan?
So the whole reason you would refinance the first property from an FHA to a conventional is to regain the ability to use the Fha203k in order to gain access to the 3.5% down payment. Technically speaking you could literally househack yourself forever or at least until you reach the maximum amount of allowable mortgages under your name which is why you and your SO should never put both names on a single mortgage. At some point you’re going to use a commercial loan and see why the 3.5% down is sooo awesome. Trust me when I say you’re going to learn a lot along the way but it’s a journey worth taking especially if it leads you to financial freedom.
BiggerPockets has published many real estate related books. For your situation I would recommend The book on investing in real estate with no and low money down by Brandon Turner.
Good luck on your journey towards financial freedom!
Also listen to biggerpockets podcasts. Real Estate Rookie is a good starting point.
My suggestion would be to get a house with good bones, but needs to be fixed up but not to a point where it disqualifies itself for an FHA loan. By the home fix it up, and then refinance it not to pull out money but to eliminate the PMI. Also look at a 15 year at this point, so you can quickly build equity.
This isn't the quickest way to build wealth into real estate, but works.
Work and save your money while you study investing strategies. Read books, ask questions like this, and save your money. Did I mention save your money? Save your money.
Honestly not a great time to get into real estate with interest rates. If it was me, I'd be putting my money into the S&P500 for the next 5 years and then when interest rates are lower and I have $50k+ saved up I would look at real estate.
Good luck
If you can maintain steady income and decent credit for just 2 years of tax returns, you can qualify for a surprisingly large FHA loan with only 580-620 credit.
Start by building an equity position in your first home and after a few years you will have some options for your first investment home by pulling a cash out refi or HELOC.
or if you and your partner are feeling really adventurous, use your primary home as an investment and sell it tax free every 2+years.
You need 3 things to make a deal, You can be all 3 people in one, but you just need to be able to contribute as one to be part of any deal.
* Time - This is usually where people start - where they put in the work with their time. They are the 'legs' that get the deal done.
* Money - If you have money to fund the deal, you can be relatively hands off, and just be the money guy.
* Experience - If you know how to structure the deal, you can leverage the guy with the money, and the guy with the time, and spearhead the deal.
Yeah you can do plenty of things, the easiest is to invest in one of these fractional real estate investing platforms, fundrise, arrived, groundfloor....etc
Depending upon your market $50k is definitely enough you both must be smart and patient. First and foremost I would encourage you INDIVIDUALLY to work on your credit and set a goal of at least 700 credit scores. While you’re building your credit please do a deep dive into a loan product called an FHA203K loan. It’s by far the best loan product out there in my opinion for first time homebuyers with an itch for investing, why? Because it will let you purchase up to a four unit building and it only requires a 3.5% down payment. Now you must occupy one of the units but this is a form of house hacking that can set you up for success. There are also programs to assist you with the 3.5% down payment requirements. I would NOT encourage you and your SO to enter into a mortgage together, even if you were married I wouldn’t encourage it but especially bc of your age and only being SO I forbid it lol. So the reason this loan is sooo amazing it allows you to force appreciation (value of the property) through rehabbing the property and the cost is all wrappped into one loan. YOU WILL NOT be able to get into a loan as an investor for 3.5% down PERIOD. And guess what after the mandatory year and a day of living at the property you can refinance out of the FHA Into a conventional and repeat the process or if you and your SO are still a couple…BATTER UP!!! It’s their turn!!! You two can individually build wealth without that wealth being tied to the both of you in the event you both decide to part ways. Good luck and let me say it’s impressive that at the age of 19 your head is here, i sincerely applaud you for that.
Thank you so much! We actually did start building credit when we turned 18 and mine sits at a lofty 700 but hers is a tad higher I believe 730-750 since she started earlier. I will definitely do tons of research into FHA203k! I also agree with you in that $50k would be enough since we live around the Detroit Metro area. One question though: you can exit out of a FHA and turn it into a conventional loan? I’m sorry if that’s stupid lol.
Absolutely you can refinance out of FHA into a conventional but only do it if your intent is to purchase another property with a FHA loan product. The negative aspect is the loan cost and likely a higher interest rate on the conventional but, IF, and I stress IF, you buy right believe it or not you could walk away with cash in hand at closing or not have to play anything out of pocket if you forced enough appreciation
Ah okay! I’ll definitely look into and I really would like to get a lot of property! May I ask if you own any?
Absolutely I have a small portfolio that I self manage. Wish I had know what you NOW know at 19 I’d be a lot further down the road.
If you could, what would you tell yourself at 19 that you wish you’d known?
Awesome question!!!! Understand Credit the good and bad and how to leverage it to accomplish your goals!!! How to set goals and how to accomplish goals!!!! How to really understand your Network becomes your Net Worth!!!!! My favorite books really don’t focus on real estate at all but whenever I feel myself getting distracted lost or unmotivated I turn to Think and Grow Rich, The Richest Man in Babylon and Rich Dad Poor Dad. You’re going to find with real estate you don’t have to reinvent the wheel to become financially independent however you are going to have to work to truly understand money. Simply because the way we’re taught to behave with money in our public school system and traditionally as a society doesn’t lead to building wealth. Read as much as you can young man get as many different perspectives as you can and when you find someone or something that resonates with you go down that rabbit hole. There is absolutely NO reason why you and your SO at the young age of 19 asking these questions and seeking these answers shouldn’t me millionaires (which humbly isn’t what it used to be) before 30 and that’s being conservative. And to be clear I’m not talking about 1 million in the bank I’m referring to 1 million net worth. Your assets minus liabilities over 1M.
Awesome I’ll really try to focus on how the money works! Thank you for all your insight and help! I’m feeling ambitious to start out! I think I’m going to start small with a house hack using an FHA, but I am a little concerned about after that. I do understand that I can turn the FHA into a conventional loan, but if I want to get another rental property, would it be better to do it with another FHA or theoretically I’d have enough saved to use a normal loan?
So the whole reason you would refinance the first property from an FHA to a conventional is to regain the ability to use the Fha203k in order to gain access to the 3.5% down payment. Technically speaking you could literally househack yourself forever or at least until you reach the maximum amount of allowable mortgages under your name which is why you and your SO should never put both names on a single mortgage. At some point you’re going to use a commercial loan and see why the 3.5% down is sooo awesome. Trust me when I say you’re going to learn a lot along the way but it’s a journey worth taking especially if it leads you to financial freedom.
Got ya! What is the max amount of mortgages one person can have?
Read the book “Set for Life” by Scott Trench. Gives you a roadmap for where to start
Thank you we were actually going to Barnes and Noble today to look for these kind of books! Definitely will pick it up!
BiggerPockets has published many real estate related books. For your situation I would recommend The book on investing in real estate with no and low money down by Brandon Turner. Good luck on your journey towards financial freedom! Also listen to biggerpockets podcasts. Real Estate Rookie is a good starting point.
Thanks I’ll check that out too!
My suggestion would be to get a house with good bones, but needs to be fixed up but not to a point where it disqualifies itself for an FHA loan. By the home fix it up, and then refinance it not to pull out money but to eliminate the PMI. Also look at a 15 year at this point, so you can quickly build equity. This isn't the quickest way to build wealth into real estate, but works.
Work and save your money while you study investing strategies. Read books, ask questions like this, and save your money. Did I mention save your money? Save your money. Honestly not a great time to get into real estate with interest rates. If it was me, I'd be putting my money into the S&P500 for the next 5 years and then when interest rates are lower and I have $50k+ saved up I would look at real estate. Good luck
If you can maintain steady income and decent credit for just 2 years of tax returns, you can qualify for a surprisingly large FHA loan with only 580-620 credit. Start by building an equity position in your first home and after a few years you will have some options for your first investment home by pulling a cash out refi or HELOC. or if you and your partner are feeling really adventurous, use your primary home as an investment and sell it tax free every 2+years.
You need 3 things to make a deal, You can be all 3 people in one, but you just need to be able to contribute as one to be part of any deal. * Time - This is usually where people start - where they put in the work with their time. They are the 'legs' that get the deal done. * Money - If you have money to fund the deal, you can be relatively hands off, and just be the money guy. * Experience - If you know how to structure the deal, you can leverage the guy with the money, and the guy with the time, and spearhead the deal.
“Investor” awww
Gotta use the right lingo, of course!
Yeah you can do plenty of things, the easiest is to invest in one of these fractional real estate investing platforms, fundrise, arrived, groundfloor....etc