Start With What You Can Afford
Many real estate investors have a habit of not setting an absolute budget. When asked what their price range is, they’ll often say something along the lines of, “Price doesn’t matter. If the deal makes sense and can make me money, I’ll figure out a way to make it happen…”
Obviously, if the investor has a ton of money sitting around and can truly make that happen, that’s fine. But most don’t. They just say that and figure they’ll either be able to convince a lender, friends, family, or whoever, to lend them the money to make the deal happen. After all, if it’s a winner, why wouldn’t they be able to find someone willing to give them the money?
If only it were that easy. But it’s not. Sure, it can happen, but most lenders, friends, family, or anyone in the world who has money you want access to aren’t that easily convinced to lend money no matter how good a deal is without you either giving them some phenomenal terms or making you provide documentation or guarantees that are quite difficult to provide. (We’ll touch on this more in a few sections.) And most will be hesitant until you have a proven track record as an investor, and even then they will scrutinize how good and safe the particular deal is.
So work with what you can afford on your own, whether it’s with cash you have or money you qualify to borrow. At least to start. Find the best investment you can within the amount you can afford.
Pro tip: Start with what you can afford but not necessarily whatever you can afford. Just because you can afford to purchase something for $300,000, for example, doesn’t mean you should spend all $300,000.