Need advice buying 2nd property!

[cobando]

Hello,



About 3 years ago, I was on this site asking for advice on how to buy my very first condo. Last year, I bought my first one all on my own at age 23 and now I'm so excited to get my 2nd one for investment!



I have about $10,000 for a down payment and understand I will need a 20% down for an investment property. I find that most JV partners are looking for other JV partners who have at least 50K cold cash to invest with.



For those who overcame the initial hardships of getting past their first investment, any advice? How could I have someone with just $30K to invest with me? To better phrase it, does anyone know of a smaller JV partnership, preferrably in BC, where each partner invests minimum $10K and profits are split equally among members?



I'm in Vancouver and would love to hear from people who have had success in not letting insufficient downpayment stop them from investing in real estate!





Best,



Cathy

 

[housingrental]

Hi Cathy



Save your money until you have more!



A lot can go wrong when owning an investment property and you want to have enough cash reserves available if it does

Taking action is important - however you risk setting yourself up for failure taking action when not in a position to



The same from having your own personal condo - think special assessment - wait until you have more saved, and continue learning until then. You will be well prepared when the time comes if so.

 

[Sherilynn]

You can structure a JV however you want. You could have 5 partners each contributing $10k and splitting the proceeds in whatever shares you like. For instance, if you are the "real estate expert" in the transaction, you might contribute your expertise instead of your money, and your share might be 40% with the remainder divided among the money partners.



The limiting factor is the complication of the structure, especially if one or more of your co-venturers wants to have a say in the daily operation of the business.



I agree that you should have a healthy reserve fund, especially with condos where $25,000+ assessments are possible and you would have no advance knowledge of it unless you were on the board of directors (and even then, crap happens).



Continue enthusiastically pursuing JV partners. When you find one or two, be sure to include reserve fund money as part of their initial financial contribution. And if possible, keep your cash as plan B.

 

[cobando]

Thanks for the responses Adam and Sherilynn. I do realize the repercussions of too much leverage but hearing people's take on it definitely made me thread more safely.



@Sherilynn: I assume by $25K+ assessments you meant the strata stuff---yes, thanks for reminding. Almost forgot about that! I'll definitely have at least 3 month's worth of contingency fund.

 

[RobMacdonald]

Hi Cathy,



I'm in the Lower Mainland as well and would be happy to speak with you directly about your options. As you realize, having $10K in cash limits your ability to buy another investment property on your own.



Here are a couple of suggestions to consider:



1. Look for investors to buy into (JV) on your existing property. If you've done your due diligence and bought a great property, having a living, breathing, performing asset may be easier than trying to find another one. In essence, you've recycled your downpayment.



2. Consider buying another property as a principal residence. You can get in with less money down, perhaps improving the property over time and then selling or renting the unit and moving on.



Just a couple of suggestions, but I would be happy to assist you with creating a plan.