I wanted to write a little synopsis about my time with real estate. I write this after hearing an encouraging word from (Furnishedhomeowner) in the Random Ramblings section of how newbies might like to hear one of the million+ ways to skin this cat.
A few points:
-I am starting out and am not yet “successful”
-For reference, I am 28 and only have an Associates Degree
-I manage a small restaurant and make under $40k
-I began with NOTHING.
Beginning:
I always hated the shows; “Flip this House” “Flip that House”. It was an abomination of sorts to make money that easily by adding a bush in front and a wine rack in the kitchen. I knew my mantra was in the works: “Look at what EVERYONE is doing…now do the opposite” This was especially true when I was pre-qualified for a $250k no-doc loan when I was selling cars making $30k. I knew “something” was going to happen.
I became a Retail Broker after taking my real estate license exam and interning while selling cars. It seemed cool. I made no money. I went back to selling cars 2 years later. I learned a lot. I considered it “tuition”.
2008 the economy tanks and I get out of car sales and into the restaurant management business. i receive my first steady paycheck. I have a nice car that I am PUMPING with money (2000 Audi S4) mods, insurance and repairs. It is a hinderance to me though I love the thing. I am hearing that people are losing there homes left and right. I decide:
“IT’S TIME TO LEARN HOW TO BUY AND GET MY DUCKS LINED UP”
I got an IPhone and I urge you to do the same Mr. Beginner. I listened to all types of pod casts and books on tape about the different kinds of deals that can be done. I bookmarked every helpful website I came across for later. I learned to see each house I walked by (while listening) with a “what if I bought that” mentality. I started noticing the tell tale signs of a foreclosure; Sticker on the front door or window talking about trespassing or winterization. You can see both from the street. I watched the market by setting up an instant email from a realtor and a realty company. I would get about 3-6 homes that fit in my parameters every morning at 7:00 am. I watched the pricing, location and condition of all sub $100k homes in a certain geographic area of Milwaukee. I visited the homes that piqued my curiosity. Many were awful. I was smitten by a cheap 800sf house for $34k. It was the first thing I looked at and it had sat for 180 days. I passed on it thinking “If I just found this that fast I can’t wait to find cheaper/better ones!” (More later) I would visit the home and look for a neighbor. Don’t be scared of them. They WANT that house to sell to someone. Ask them about it. They will happily tell you everything you need to know without going inside. I found an home that was so bad it will eventually be RAISED. It had 3 stories an the top looked like a scene from the movie “Seven”. No one had been upstairs in 40 years! The 2nd floor was so warped if you dropped a ball it would travel around the house and probably come back to you. The foundation was crumbling. You could see it had problems from the street. I found mushrooms that looked like candles in the basement of another. Carpet is a breeding ground once wet.
First time homebuyer credit expires Nov 09’ Hurry?
I had no money. “How can I become an investor without any $?” you ask. You don’t. You get your shit straight and save. My goal was: pay off my car $8k, my CC $1,100 and have $10k in CD’s by Christmas 2009. I began in April. All the while I learned my market and how to buy/what was a deal. I paid off my CC. I paid off my car. I saved. I sold my car and bought a cheap and easily fixable car. I had a check for $10k in my hand after handing the keys to my baby to the new owner. I put it into the bank. I had reached my goal 6 months early. Now I wanted to hit $20k before the end of the year. I did side work on cars. My co worker was sick of her car and was going to trade it in for $500. It was a pink 95’ ford escort. It ran like a top with 75k. I bought it. I listed it for $1k. Sold it 2 days later for a $500 profit. Lesson: A $500 car that runs is always a $1k car that runs. I hit $20k.
Jan 2010:
I bought a 2002 F250 supercab for $5700 from a roofing company. You cant do your own work on a house in an econo car. It I submitted an offer on a duplex that was going for $59k in a nice area. It was too cheap and someone else bought it for over ask full cash deal. I was on the right track. I could identify the houses that the “real investors” wanted. I had a 802 credit score at my peak. I could not compete with cash offers. I got pre approved for an $80k home with 25% down, 30yr fixed at 5.1% through my bank. I wanted to put the 25% down. I had my parameters set and I went back to work looking.
I would run into the same people checking out the houses I was over and over again. I could tell interest on a house that had been on the market for a day by checking the snow around the house. Lots of footprints = lots of interest.
February 2010
First day back from a short vacation a cheap home crosses my email within my desired geographic area. $59k. 4 bedroom 1 bath, 2.5 car detached 1200 sf. I check it out. It is 4 blocks from my current residence (duplex living). There are LOTS of footprints in the snow. “Pro” investor I lost the other house to is there. I am about to lose another one. I tour it with my agent. I write a full ask offer that night.
They get 10+ offers at asking. The previous owner defaulted on a $158k loan. Realistically, homes in retail condition like this are selling for $135k. This home needs a bathroom and some updating. One of the 4 bedrooms is a hinderance to the upstairs as the wall is too close to the stairs. It is a 1923 bungalow. I need to come with my best and final offer if I want this house to be mine.
Now…I would not allow myself to fall in love with bricks and mortar. If it didn’t make sense financially, it wasn’t a deal. I asked myself: after having seen all the over priced crap on the market for almost 12 months, what would this house NOT be a deal at? ANSWER: I could pay $70k for it and it would still be a good value to me.
I got the house for $70k.
Fannie May sucks. Continued in a while. I need to go outside and enjoy the day.