Chompin at the bit in this ridiculous rental market!

I’m a newbie, just to warn you this may be a long post, love this forum and would love some advice!

My name is Jackie, I’m 24, recently divorced, and live in an amazing market. I’ve been interested in real estate investment and have been educating myself for years. I have a great mentor, a Bachelors in Business, and have been a property manager at several real estate companies. I bought a foreclosure last year (#s: 3 bd/1.5 ba, 1500 sq ft on an acre in an excellent location, pd $85k, owe $65k, appraised at $90k before renovation, halfway through cosmetic renovation). It is a great house and I love it, I bought it so my husband and two little girls would have a place but when I divorced him, I lost the kids (stepkids) and had trouble affording it so I threw in a couple roommates. I have rental income of $625/mo, mortgage is $540/mo. I now have my finances sorted out some (thank you divorce), have a good steady job and a safety cushion of about one month’s expenses. So that’s a quick lowdown on my current situation. I am officially on my own and ready to start controlling some properties but I could use some guidance!

This market has houses for sale and foreclosures everywhere! But no rentals…let me explain the rental market. In this town of less than 20,000, there is a university, an air force base a couple miles away, and a high poverty level. There are three massive rental demands on a market with mostly college and slum housing, many probably not even up to code but flippable. There must be 50 houses on the market for every decent rental.

I’m trying to find my first deal…but I need it to be great. I don’t have the reserves for a serious fixer. I am very interested in lease options. I’m trying to find my first deal by looking at two houses a week at the least, on craigslist, zillow, all the real estate sites, and through word of mouth. How do you go about lease/optioning a house? Do I need to find the perfect house and then try to convince the owner? Do I find the house by sorting through which properties can be bought through a L/O?

My goal is to find a property to control and rent out every 6 months. I think that’s a realistic goal. I can rent out a house here in a snap. I just am afraid I don’t have the knowledge I need to not get taken advantage of! And I don’t want to get in over my head. But I am ready, willing, and able, I have some tools, skills, and know-how, I’m in a great market, it’s just getting that first deal done and under my belt!

I plan to finish remodeling my home while I search for my next place. Then I want to rent out my house and move into the house I bought (or L/O) and do basic repairs (because I’m sure it’ll be somewhat of a fixer), and while I’m there, locate my next property, move into that one, and leaving a trail of rental income…

Well that’s my little REI situation, I’m just getting started and I sure would appreciate any advice, critique, analysis…
Should I wait till I have some more cash? Should I find an easy flipper to get some cash, pay down some debt, and have some money for another property? Should I try to find a L/O? Just wondering how everybody else’s first deals went. What mistakes did you make? Taking on another property by myself is a little scary and I don’t want to make a mistake that could completely derail my financial future…

Houses can be bought in this area for pennies! For example, I just looked at a 4 bd/2ba 1800 sq ft house in a great location, nice neighborhood, central to everything…for $18,000. That’s $10/sq ft. It’s a fixer, the foundation looks a little scary, but everything inside seems to be okay except for some cosmetic stuff. New water heater, new metal roof. There are many, many properties to be found around here, not in as bad of shape as that one, for under $50,000.

If you are in a hot rental market, then you need to get some rentals, fill that demand. If you are in a hot buyers’ market, you need to buy and fill that rental demand. Make hay while the sun shines! Milk that cow while it is in the barn!

How to do it?

Keep it simple. Why not put an ad in very simple English in the local Thrifty Nickel or free newspaper: “Do you have a house you don’t want? A fixer-upper? I want to lease or buy a house with owner-financing. I have a small downpayment, good job and credit. Call bossladyjack anytime @ xxxx or email xxxx.”

Run that ad for a couple of weeks and analyze the number of responses. Then try a different ad. There are threads on this site telling how to write ads that work. In my opinion, that is the easiest way to get some possible houses to look at. Remember, you don’t want to go through a Realtor, that would mean commission is involved and would take too much downpayment.

Ask everyone you encounter–the clerk at the 7/11, your car repair guy, your after-work acquaintances. Get some business cards printed:
“I Buy houses! Call me!”

Good luck, and let us know how it goes.


Be sure to read the blog “Driving for Dollars” on this site. That’s another whole plan to finding that secret market of unlisted “don’t want 'er!” properties. Find a way to solve someone else’s problem for them. Also trashed rentals with filthy yards that the owner can not deal with…find the owner and make them a deal.