First of all, I would like to thank all of you here for the wealth of information you provided to me so I could (re)launch my real estate investment business.
How’s this so far -
-I bought 3fam prop in '00 (cental massachusetts) and lived there for 5 years + rented out other 2 apts
Feb’05 I built (and WAY overpaid) a beautiful SFH in nice suburb town for my family (wife and now 3 kids) , and I rented out the other apt.
Oct '05 as I signed the closing papers, I realized that the market was declining - but I’m in this home for the long haul and all will be well in the end
-Oct '05 to Jan '08 - I get caught up in buying stuff for new home and rack up 40k in credit card bills (bit off a little more than I could chew w/ new home)
My mind says ‘somethings gotta give’
I notice foreclosures on MFH going up and prices coming down, so I start running numbers and realize that I can cash flow the right properties
Feb '08 - I find this site and start reading and absorbing.
I manage to get 50k HELOC on my 3fam from my local CU, with the plan to use the $$ for down payment
I hit the bricks for several months, looking at 5-10 houses a week, honing my semi-trained eyes for deals and put in (and lose) several offers
Dec '08 I find local bank who does portfolio loans, 20% down NOO, and will do 10 loans!!!Wow, almost unheard of these days
Finally in Feb '09, I get accepted offer on 2fam forclosure (in '04 was gutted to studs and rebuilt/remodeled - everything done - inside and out!, house was mortgaged up to 290k). Bank was asking 69k and I ended up getting it for 57k!!!, plus I put in 5k in cosmetics.
Within 30 days, both apts rented for$1500 total rent. PITI is $600 (plus roughly $100 towards addl. Heloc $ from downpayment. I am in the process of doing CO Refi w/ same bank to get DP and cosmetic repair$ back out to do more deals.
Oh, there’s more… so I’m still out looking and I stumble into another 2fam foreclosure. Banks asking 99k, I shoot back “70k, highest and best - final offer”. Next day my agent tells me they accepted my offer!! It’s amazing the difference between diff. banks and how they operate, sometimes I have waited 2 weeks just to get a response. I closed 4/30 on this last one and I am ramping up renovations shortly to get it rented.
Thanks to the info on this site, I am well on my way to my goal of 10 investment props and the sky’s the limit. It’s been a roller coaster ride so far, but I look forward to the challenges ahead!!! I’ll keep you updated on future purchases…Kevin
ps, and yes, I am using the 50% rule when looking at deals
Kevin,
You’re no beginner any more! Stories like yours inspire the new investors and us older investors as well.
Do not forget to have a plan for “worst possible case” in place. If you can’t get renters without reducing the rents…If you have to evict and rehab a unit…if a tenant sues you for some injury–What are you going to do?
You now have 6 units, if I followed your thread.
Well-done.
You mentioned that you are working to get a CO out refinance on a property that you got an accepted offer on in Feb 09. I thought there was 6 month seasoning for CO which is what I have been reading on a lot of posts , but maybe this just depends on the loan. Maybe because you were dealing with a local bank?
I was wondering about this question too. Also If you buy a property for 100k w/20%and let’s say when you want to cash out it is still appraised at 100k …can you get any cash out? Can you get like 80% of your equity out or 80% of $20,000 or $16,000?
Trying to understand the intricacies of financing these days.
Well done Kevin. Most investors speculate and follow the herd thus buying at the peak and at market value. You buy right, with equity and cashflow. Now you have multiple exit strategies and you can duplicate this over and over. You said you are using 100% OPM, are you using Private Money for the down payments?
Good job, keep it up. There is an oversupply of opportunity out there that will likely continue for 3 years.
Thanks Mike, I learned a lot from you particularly. You are who i want to be. I have a great career in law enforcement and I hope to retire early, live comfortably, and have options
To answer other questions -
I am using heloc to fund DP and repairs. Then do cash out refi with local bank (no seasoning!) and replace money into heloc until next deal. Bank will do ten portfolio loans.
First two loans were 5.5%, 30y fixed, no points. My middle credit score is 750
My loan officer fears that the bank may cave in to pressure from the Feds and start using fannie guidelines, which would really suck. Hopefully I can get my 10 loans before they switch
Fannie Mae will make loans up to ten financed properties. The underwriting conditions for the fifth through tenth loans are tougher than the first four loans.
Primary residence mortgage counts as one of your financed properties.
Dave, I have 4 now and it’s the “5 thru 10” guidelines that I don’t want to deal with. Six month reserves for each prop really starts to add up when you’re just getting started like me.
You just need to drop in for a little visit with some local banks in your town (not the big national banks like Bank of America). Ask for a few minutes with the banker and tell him/her you are interested in real estate investing: “Is this bank lending money for real estate investments? Do you sell your loans or keep them in your portfolio?”
Try searching Justin419 (?) a regular poster on this site. I believe it was him who had a thread on how he lined up financing by presenting his investment plan to his local bank. If you read back some threads you will learn how others have done this.