Lost my compas, need direction.

General Real Estate Investing
1

I would like to get into real estate investing. I am 24 and single and would like to buy and hold multifamily properties. I will explain what I have to go with.

I am a Prosper.com lender
$11,000 estimate ROI %11, complete payback 3 years.
(this is not in the income statement below)

My weighted debt (total value with net interest)
My net weighted debt is 10,000 @%6 (school, CC, car, Carpet cleaning machine …)
I have a credit score of 730 A, never missed a payment, not sure why it isn’t higher.

I am self employed as a computer tech/carpet cleaner/janitor
My monthly gross minus taxes income for the last twelve months has averaged $1200
My gross income should be going up each month, it has been steadily increasing, However I don’t know where I will reach my limit)
My net expense has averages $900
All my savings I have been putting into prosper.com, but it is illiquid and the value of the dollar is dropping faster than it the account is growing.

By the way where I live it has a very low cost of living, $300 can go a long way in living.

Does anyone have advice? I am willing to do just about anything. however I would like to end up land lording multi- family housing. (my real goal is to build equity in order to self finance a solar power company, and build a solar powered ethanol mill)

I have considered bird dogging, but where I live there is no investment club or residential investors (No competition yay. There is little inflation here, the prices of good housing is basically set at what it costs to build them plus labor. In my mind that is good news for the cosmetically challenged properties as a possible path.

However my problem is getting loans, they always talk about my income. I say something like “This property has a current cap rate of %10, So I don’t see why you would have a problem giving me a loan”. There response is usually “Well what if the tenets move out”. in reply I say “All the income from the property I will save, and I will consider the interest from the saving as my own, that way if someone moves out I will be able to cover it, besides, I will invest all my income in and out of this deal until I have enough savings to pay at least six months worth of bills.”. Maybe it sounds too argumentative, but it never flies.

2

Welcome to the WWB !

Leading investors generally put the check mark in the box before the box is even there. The boys at the Wide World of Banking can only move ahead if there is a box to check, then a check in the box , hence they can’t find a box for you ! Thats why there is assignments ,Master leases, lease/ops, no money down. These tools were created for You !
Not boxed in , Darin

3

Do not buy any properties at a 10% cap rate. You’re going to get killed doing that.

You need to find a fixer-upper and a lender that will loan you 100% of the acquisition and rehab costs. With your credit score, that should not be a problem. I am not talking about a hard-money lender, but a bank with an aggressive construction loan program. You may need to use a mortgage broker to find your first deal, but once you have the relationship with the bank, you’re free. I use Regions Bank.

Once you’ve renovated the property, you can then refinance it. Ideally, it should generate enough income to cover your debt and all of your expenses and have some money left over. If it does not do that, then consider selling it to a “gentleman investor” who is looking for turn-key, “nice” properties to rent. There are tons of investors like this.

If you are talking to a banker who seems to enjoy saying “No,” go to another bank. A GOOD banker will be looking for ways to say “Yes,” not “No.” A GOOD banker will tell you what they need to get a deal done. If you can’t bring that to the table, find another lender that can work with what you have. Again, a good mortgage broker is probably your best bet for the first loan.