Sheemah 6 months, 3 weeks ago
Hello, what would you suggest for someone new to real estate investing with no experience but want to get started. How can that person get funding for a property? Being completely new to investing I was thinking about going through a hard money lender with 20% down plus closing cost, but it will take me too long to save up that 20%. Is there another way I can get funded with just a small fraction of that saved up?3 Replies
Dock David TreeceModerator6 months, 3 weeks ago
Thank you for your question. Getting started in real estate can be the hardest part – especially if you don’t have enough to invest at least 20 – 25% in properties. It’s usually very difficult to purchase properties without at least that much for a down payment. You can sometimes purchase property with as little as 15% down but that would require an SBA loan (https://fitsmallbusiness.com/sba-loan-rates/) or mezzanine financing which can be very expensive.
We have a few articles on different types of real estate investing that may help you figure out which option is best for you. The first is a general article on real estate investing which can provide you with some different options: https://fitsmallbusiness.com/real-estate-investing/
Another article that you may want to check out is our guide to investment property loans. This article breaks down loan option a little further and can help you understand how to use different loans in your real estate ventures: https://fitsmallbusiness.com/investment-property-loans/
Lastly, you may want to check out a full list of our real estate investing articles here to stay current on new articles as they’re published: https://fitsmallbusiness.com/investing-in-real-estate/
If you think that you may have trouble saving up the required equity to invest in real estate on your own, there are a few ideas that you may want to consider trying until you have enough for your own properties.
1. Find a partner – By finding an investor you can share the risk of investing in property, potentially with someone who’s far more experienced in the field. You can also learn a lot as you look at potential deals and understand how the market works.
2. Manage property for others – Property management is a large and growing field that you help you learn a lot about real estate while earning an income helping others manage their own investment properties. To get started you may want to consider working with a local property manager or contacting some local brokers to see what local companies do property management.
3. Sweat equity – If you have experience financing deals or working on properties yourself, you may want to try finding an investor who will help you with a down payment and let you keep part of the profit in exchange for working on the property yourself. This is an especially popular route among contractors who are looking to invest in their own properties.
I hope this helps. Best of luck with your venture into real estate!
Joel HeardParticipant6 months, 1 week ago
I agree with everything Dock said those are some great resources. Another site I would encourage you to check out is Bigger Pockets. They have a multitude of resources for everything real estate related and I’m sure you could find some fantastic information there.
Akshay ManeParticipant1 month, 3 weeks ago
I think for new investors its better to play safe by doing business in partnership.
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