tcwood, thank you! I think I jumped the gun a little bit there though. My mother in law was able to provide me the mortgage history including down payments. Reading the information was really quite fun and really gave a good picture of the current owners life (for example, one couple divorced, she got the house, then it has been rented for at least a year. she tried to sell it for 240 but after 3 mos, no go. Alll from the mortgage/deed history… I love it!) However, I will definitely keep the site in mind for the times my MIL is not available. I also should have been more through in my history and in what I plan to do. I’ll do that now in my answer to tmcg. Thanks a bunch!
tmcg
“have you read at all about real estate investing?”
Oh yes. A few years ago I thoroughly researched buying land, putting a modular home on it (not manufactured) and selling at retail. The money was definitely there to be made, unfortunately, my finances were not ready. I then looked into rentals but only knew of conventional financing with 10% down plus closing costs etc. I gave up until I recently learned about HMLs/seller financing/other creative financing. It seemed possible and the RE bug bit me again. I have read 10-15 books on RE investing, have read all through this web site and another one, and attended my first reiclub meeting on Monday. I will be going to my first cashflow game on tuesday and am debating signing up for this saturdays fix and flip seminar hosted by my local reiclub.
“have you done any mental preparation at all?”
Absolutely. I have an idea of the physical work this will entail. Since we moved into our home 1.5 years ago we have completely renovated the kitchen (removed countertops and created new tiled ones, new sink, fixtures, stripped/repainted cabinets, added microwave over stove, installed recessed lighting) put in new vanity/lighting in extra bath, painted every interior surface, created a built in entertainment center for our flat screen (and put in a built in desk in the room we pushed the wall into, and are currently installing laminate wood floor. I’m sure theres more but you get the picture. And no, I wouldn’t do half that on a flipper. Other than knowing the work involved, I am ready, willing and already working on changing the things about myself I need to change to be the person I need to be to succeed at this.
“do you have any background in business/real estate?”
I owned my own successful business for 4 years. The market changed and I didn’t want to go where it was going so I sold. I sold at just the right time too. The guy I sold my business to went bankrupt. No backgound in RE other than all the research I did when I was going to get into it a few years ago, and I have been following the market.
“are you familiar with any kind of sophisticated investment strategies?”
I have read about several creative ways to buy property, as well as 1031 exchanges, and converting your house to a rental so it can qualify for that. I am also going to look into creating/using a self directed IRA for investing in RE (have no idea what types of RE investments are allowed) I like the idea of one LLC for flippers and one for rentals. Basically, I have read about several things but haven’t done any yet. You probably don’t consider any of those sophisticated. I suppose the sophistication will come as I learn.
My strategy is to get into fixing/flipping SFR (least fixup possible for the first one). I will be dong some of the work myself (paint, bathroom vanities, lighting, kitchen fixtures) but will be hiring out flooring… uggh!! and probably drywall (too time consuming). I have some connections already. I likely will be using Hard money and will have to keep it at 70% (less fix ups) That only leaves me needing to pay points (or pay at the end if the loan program allows) and paying for holding costs while I fix/sell (and of course realtor fees and capital gains… and I still need to know if if the gain is treated as ordinary income on schedule c and if I will be subject to SE tax?). Goal for year one is 2 properties. Maybe its low, maybe high but it is a good goal for me. During year 2, goal is 6 fix/flips and my first rental. Year 3 is 10 fix/flips, 2 more rentals, and get into tax liens.
“have you or anyone you know done this before?”
Me, never. Known anyone who did it for a career? No. I guess what really got me started thinking was the guy across from my old workplace with all the toys (multiple offroad bikes, quads, a hummer, expensive motorhome, boats, etc) They We talked to the brother of the guy making all the money. The brother was a bird dog for his brother, and also in charge of taking care of the toys/prepping them. The brother says the money man got started with one rental house and just kept moving up to bigger things. That was real inspiring to me. Also inspiring was a couple friends making big money on the sale of their personal homes (was BEFORE the prices skyrocketed)
I guess what I was needing to know is if I need to know any further information about the house itself when researching it (other than what the owner owes and what the fix up costs will be, and if there are any liens other than the mortgage(s)) I am looking in houses in my neighborhood and already know the comps and the area. Of course if it is somewhere else, I will need to know of any proposed changes in the area that could affect the value of the house.
Thanks for your input. I welcome any more questions/suggestions. I want to make the fewest mistakes possible.