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Real Estate Start-up � How Much Money Do I need to Get Started
Hi! It�s Neva at timeforinvesting.com and the question I�m answering today is how
much money do I need to get started in real estate investing? So this was a young lady
that asked me. She wants to get started and I just thought is if you definitely want to
do real estate, really look at how much funds you have right this minute that you want to
start and kind of do what you can with that is my best advice.
The reason is I think that every level of finding is there�s something you can find
in real estate. For instance, if you don�t have any money at all, let�s start with
that. If you don�t have a lot of money, of course, wholesaling is the best thing for
you to start because the only thing you probably really need money for is marketing. And wholesaling
is very low-risk because you don�t actually purchase the property yourself. So, also it�s
low-risk. So I would suggest wholesaling if you don�t really have a lot of funds.
For people that actually want to purchase property, renovate it and then resell it,
I would suggest that you definitely have some money, maybe $24,000 to $28,000 and the reason
is, although you can definitely borrow the money to purchase the property and to renovate
it, you can use hard money. However, you should have some reserves in
case of sometimes your project goes over and anything because although they give you the
money, it�s a lot of requirements that you need to meet. They don�t just give you the
money at once. They give you the money in draws. So you need to hit certain milestones
and make sure you finish your project on time. Other successful people that I see that actually
renovate property, they have a good amount of reserve for things that come up because
the thing is, even if you borrowed the money, say you don�t complete on time or anything
like that, the hard money lender will take over the property from you because the hard
money lender actually is on the tyrant, owns the house until you deliver.
I know a lot of people want to just jump in and start buying and purchasing. But if you
really don�t have any money, I wouldn�t suggest you do that. You can wholesale a few
properties and build up that reserve and then start to actually do renovations.
As far as rentals, for me, I started in rentals first and now, looking back, I wouldn�t
have done that. I think you should have a lot of money, a lot of cash reserve, way more
that I did at the time I started. You need to have at least eight months to a year of
reserve for rentals because so many things come up. You have tenants that don�t pay
rent. I had like a boiler I had to replace once. That was $10,000.
Other people now, successful investors that I really look to for advice, they are landlords.
They have hundreds of thousands of dollars of reserve. And what I find is it allows you
to be a better landlord. A lot of them, they don�t have mortgages on their properties
or if they do, their house might be worth $500,000 and you mortgage is $100,000. So
you can see they don�t have a lot of stress of trying to pay the bank, having a huge mortgage.
For rentals, that would be my suggestion. Another thing is to say, you were starting
and you don�t have any money. You started wholesaling first. You built up some money.
You can start to renovate properties and resell it. That�s where you�ll make larger, big
sums of money. Use that money. Save that up. Use that to get your rentals. That�s a strategy
that I would suggest. Thanks! Bye!