Ok everyone here’s the situation,
I believe I'm well past the "paralysis of analysis" phase and am getting a bit anxious to do my first deal. However, I've noticed that my area is EXTREMELY competitve and hard to get any straightforward "honest" advice from would-be mentors. I actually had one "investor" in the paper tell me "you can't do anything will real estate until you have your own house and $75,000.00 cash, do you have that?" of course when I stated "no" i was promptly hung up on before finishing my sentence. With that being the case I've decided to "create my own 1st deal and I'd like anyone out there to give me some insight as to whether I've lost my mind or it may work. Keep in mind I'm 23, saving to purchase MY OWN first property, and have about 1k in savings. Here we go:
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Purchase “war zone” 3/2 duplex for 5k (from family member) using personal loan as opposed to mortgage.
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place title of property in Trust with an LLC as to not attach to me personally. (hoping to maintain the first-time homebuyer position for conventional lenders)
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rent property utilizing section 8 for $300 monthly cash flow
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refi (prop worth approx 25k) under conventional lender.
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Use the HELOC as “cash” to purchase owners equity in pre-foreclosure situations
I’m hoping that this makes at least some sort of sense and I can expand on any of the ideas if they seem a bit vague. I know i’m grasping at straws here, but I’ve been to the REI mettings, called ads in the paper for mentors, offered to work FOR FREE just to gain the experience and network, and wasted countless hours working with investors who turned out to know less then I do. Keep in mind my marketing plan is drafted and set to go, I can easily get leads, and continue to educate myself on the ins and outs of REI. I just need a starting point. PLEASE HELP!
Is seller financing a possibility?
P.S. - Forget about your age, it’s not an issue. If it becomes one, sue someone for discrimination.
Don’t believe what that investor told you. Having money is not a prerequisite to investing in real estate, having deals is a prerequisite. The best advice I ever got (don’t even remember who told me) is that if you’ve got a deal, people will give you money to do the deal as long as they get a cut. This is not just in real estate, it’s in any biz.
You could start out bird dogging to accumulate cash. Or tieing up a deal and assigning it to someone else. Or go into deals with the money person and you provide the sweat equity, etc.
I actually had one “investor” in the paper tell me “you can’t do anything will real estate until you have your own house and $75,000.00 cash, do you have that?” of course when I stated “no” i was promptly hung up on before finishing my sentence.
This was either a seasoned investor who wants to eliminate early competition or a newbie acting like a seasoned investor. Either way, his advice is plain wrong.
Thank you all for the responses,
As of yet I haven't run into any seller financing oportunities and purchasing the property in my earlier post does not hold seller financing as an option. I'm not so much concerned with the age difference as I continuosly educate myself in the REI field and have gained alot more info from this board/site also. It just definetly seems to be a bit of a problem "getting in the game". I guess I wasn't aware it was so competitive ???
Thoward,
Take a deep breath. Yes, it’s competitive but it’s a BIG POND and you only need ONE fish. You just need the right bait at the right time in the right pond. NEVER GIVE UP.
Da Wiz
The plan you have on the board will work. Buy the duplex. That will get you started. Refinance to get them out of the picture as soon as you can. Remember you are not a real estate investor until you buy some real estate. Do your due diligence and if it is a good buy do it.
Fear of that first deal is a great obstacle but once you have that first property, you will be able to see better where you need to go next.
Thank you very much, I’ll go ahead and make the move to get the property. The next question I would have is about the refinance of the property. Can the property be refinanced while in a land trust? I have heard of many lenders requiring title transfered to an individual first and THEN the refinance may take place (i cannot remember if this was a LLC or a land trust situation though). How would you all approach a situation such as this?
You will find a lender to loan you the money for a land trust property. As long as you show them all of the documents.
You might have to call a few though.
With a land trust property, most lenders require you to dismiss the trust, refi, then re-instate the trust. I have done this many times. My mtg. broker is also a realtor, investor, and owns his own title company. He is great at simultaneous closings.
Da Wiz