hello everyone,
i’m completely new to the website and forum and have found some of the readings extremely informative.
i’m a beginner RE investor. i’m 25 and still in school. i haven’t made any deals yet but i have somewhat mastered the market i’m looking at. i live in an apartment right now and i figured i could just buy my first house and move into it for a couple years and then find a new house, move into that and continue renting out the first one.
anyways, all the houses around here i’m finding have trouble cashflowing (not an anomalous finding anywhere in the country i’m sure). i’d like to do no money down to simply maximize my leverage, but that’s where the cashflow problems come into play. i have little money in savings (a few thousand) to make a +cashflow rental.
i realized i can take out additional money for school loans, with a deferment on principal payment for up to 5 yrs! so obviously, i’m thinking to take out 15-20K in school-deferred loans for a down payment to reduce my mortgage and get a cashflow! it appears to me to be a sort of pseudo-balloon type of situation. has anyone done this or see any potential pitfalls to my plan? i’m kinda excited about it b/c if it works i could potentially buy several properties very quickly, and i’ve literally been looking for months and am becoming extremely frustrated/agitated . input greatly APPRECIATED!
Keep looking for stellar deals, buying right will allow you to cashflow. I know they aren’t easy to find but they do exist. If it was easy to find them everyone would be a landlord.
I agree with Rich, find a property that will cash flow without using your own money.
We see these posts every day that people have been looking for a long time and can’t find a property that will cash flow. How and where have you been looking?
Mike
thanks so much for the input; although it’s nothing i haven’t heard a million times before.
i’m looking for properties primarily through a realtor and the mls system. i’ve talked to a few FSBO (for sale by owner) homes but they’re not negotiable to a realistic degree.
i’m looking for properties primarily around our community hospital. i think this would allow me to rent to decent tenants, and they’re close to schools, parks, churches, grocery stores.
i’ve read about 8 of the books; kiyosaki, allen, eric tyson, etc; i’m hoping these forums will expand my perspective, b/c i feel like i could read 8 more and still be in this semi-analysis-paralysis state. mike, you seem like an extremely savy and successful RE investor. but mike, don’t you think my 100% opm idea is good? i mean, i wouldn’t have to pay on the school loans for 5 yrs, then i could get the mortgage to a cashflow level. i know you always talk about your sweet deals, would you mind telling me about your very first RE deal and how it went (or anyone else who reads this for that matter)?? i need to hear from somebody who literally does this.
BIG,
I think borrowing money to cover the negative cash flow is a poor idea. It would be better to do the hard work of finding a great deal. I will post the details of my first deal this evening, but I gotta go skiing right now.
Mike
i haven’t seen any good deals on any homes. it’s a small market (about 60,000 people). is there something i’m doing wrong; i’m using a realtor and local mls? how do you find distressed buyers?
Big,
Just got back from a fantastic day of skiing. Nice to take a break.
To answer your question, using realtors and searching the MLS is one way to find good deals. The key here is that your realtor must be looking for the right kind of properties and networking to find the deals for you. I went through 2 bad realtors before I finally found a good one. However, if using a realtor is all you’re doing, that is certainly not enough if you are to find a steady source of deals. There are a bunch of ways to find good deals. One of them is to join your local REIA and become friends with other successful investors (not other newbies). These investors will know of a lot of deals and they will often refer you to then without expectation of payment.
Real estate investing is not a business that can be done entirely from your home. You need to get out there and meet people. Relationships are key.
My first deal was a double-wide. There was a new modular home lot that opened only a few miles from where I live. I noticed that they only had one doublewide with all their modulars. I stopped to ask them what the deal was. As it turns out, it had been a repo that they bought cheap and they were trying to sell it for a profit. It hadn’t sold for the $28,000 they were asking and they were getting anxious to get rid of it. It looked absolutely new and was in fact only 5 years old. We negotiated and I bought it for $20,000. I did the footers, block work, septic system, electric line, and water line myself. I already owned a lot that I put the doublewide on. The lot was worth $15,000. So, I had $35,000 plus a few thousand in the property improvements (probably $4k-5K) and it rents for $700 per month. It appraised at $92,000.
It isn’t quite a 2% deal if you include the land and improvements, but it is very close. After that deal, I did my first typical rental rehab deal in town and haven’t stopped since.
Again, I did not find this deal on the MLS. Being curious why a lonely doublewide was on a modular home lot got me this deal.
Mike
prop,
where’d you go skiing at? i was skiing in keystone co last weekend and the snow was amazing.
appreciate you telling me about your first deal. i usually work during the days and then check my mls emails nightly. my weekends is when i do most of my looking. i have viewed 50+ properties, i’ve looked at a couple repos that haven’t sold for over 5 months. i’ve even researched foreclosures down at the courthouse and sat in on a couple sheriff sales. i guess i feel like i’m not going to learn much more until i actually get out there and make some mistakes.
i think maybe i could make something work on rehab prop’s, as you did in your first deal, there’s certainly more potential there. however, i was hoping to have something that was good structually, able to move into, but yet still has potential (i.e., unfinished basement, only needing updates). perhaps i should change my focus from what i’m currently looking at to more challenging properties that could yield more returns? as always, i appreciate your insight
BIG,
Just skiing here in Ohio today, but went skiing in Park City, Utah a couple of weeks ago.
Yes, it is easier to find better deals when they need some work. I like the cosmetic rehab deals, but sometimes they need a little or a lot more work.
Mike
You weren’t there when the Dutchman ran into the tree were you?
Keith