I’m new to REI (surprise!) and so appreciative of the articles, posts and general help for beginners from the experienced. I can’t say it enough, THANK YOU!
Well, here is my current story and situation…
I’m debt free, currently residing in San Francisco, CA with an eye on eventually moving back to my wonderful home state of NC (Go Duke!). I won’t go into how I ended up in SF, but I will say my plan while here is to save up a somewhat substantial amount of money and return to NC and begin my REI career (though, with all the research I’m doing, I’d say it’s already begun). By substantial I mean 20-30k in a years time or less.
Like many, I’m sure, the idea of creative buying/ leasing terms like “Subject To” investing sounds really…creative and profitable. At the moment I’m not too warm to working with banks, I’ve got a fairly bad credit score (something I’m working on), so I want to use my money to begin with.
So, what advice do our ever so generous experienced investors have for a newbie, like myself? Other than saving and credit work, where should I begin? Where would you begin? I’ll keep reading articles and watching videos, regardless!
There are a lot of different view on the site but let me tell mine. I believe that real estate is a business. I don’t love real estate I am not into buying houses to own houses. I am into real estate for the money it makes. All of your actions need to be based on what makes money. That being said you have tools and toys. Tools help you make money in real estate and toys are what you have that helps you enjoy life. You need to determine what is a tool is and what is a toy. Your credit is a tool. Although it is connected to your name as if it were one of your toys and can be used at Best Buy to pick up a nice flat screen TV, it is a business asset and should be treated as such. If your brother needs you to co-sign a car loan the answer is no because your credit is a tool not a toy. You can’t lend it to someone. You must guard it. When you said you were debt free you didn’t have to say you had a bad credit score because one follows the other. Anybody that says they are debt free with an 800 credit score is not telling the truth…that is not how the credit score works. They are not in all likelihood lying they probably don’t have any idea what their score is because they don’t use it. Now with that being said real estate is no better than any other investment except for leverage. If you pay cash for all your real estate your returns won’t be any better than buying stocks or bonds. What makes you money is buying properties with credit. Think about it did Donald Trump save up $1Billion and buy Trump Towers? No he borrowed that $1Billion.
When I was getting started in real estate I paid off all my debts and put a bunch of cash in an account to get myself ready to start buying houses. When I applied for my first mortgage my mortgage broker told me that he could not finance the house because my credit score was too low. I went into my Tony Soprano mode (This is just what I tend to do when I hear something that I don’t like). What he told me then is what I have been saying every since. He didn’t say I had bad credit what he said was that my score was too low. Credit tends to be a personnel thing like salary or your beauty. Things that people see as a reflection of their self esteem. But it should be looked at logically for what it is. There is no good credit and bad credit. What does that even mean? Saying you have good credit or bad credit is like saying a girl is pretty or a girl is ugly. There is no definition to that. Actually credit is a score. It is a number derived by an algorithm. There are things that when run through that algorithm makes the number increase and things that make it decrease. You need to do the things that make the number increase. If you don’t use it the number will be low. But you need to use it only to make the number increase not as a toy.
What I would do is fix my credit and in the meantime find out what makes money where you are going to be living in NC and work on that.