Hi, I just finished phase one of the carlton sheets investing program coaching and I’m in the twincities area. I kinda put all my eggs all in one basket getting the coaching program after my divorce and will be needing a place to live in october… so needless to say I need to get the ball rolling. Im open to any suggestions, thanks, Keith
Hi Keith,
Congratulations on your move to Creative REI. While you learn new strategies in creative investing, always remember that you need to start working on a solid foundation right away. Do your personal finance analysis and figure out what your assets are and what your liabilities are. This is important to get a good baseline to figure out where you stand financially and how to improve it. This should only take about a week at the most since when you first write down everything you’ll add to this list and adjust your total and in about a week you should have almost everything down. Then your first goal is to reduce your cost of living in anyway possible then fix your credit score.
Here is an easy to increase you credit score.
Debt to credit ratio. If you have high debt on 1 card spread them out to 5 or 6 cards.
Example: You owe $10,000 on a $15,000 limit credit card. Your debt to credit ratio is 67% which is high risk to a bank. Apply for more cards of at least $5000 each. If you apply for 5 more cards at a minimum of $5000 each that will give you a total of $40,000 spendable credit limit and you spread out your debt to the other 5 cards of $1000 each. Your debt to credit ratio is now 25%. You need to stay below 50% for a bank to see you as low risk and this will dramatically improve your credit score. When you apply to these credit cards make sure there is NO Annual fee and a minimum of 30 day grace period to avoid interest charges.
After doing this if you apply for a loan your credit score should be significantly higher. This will help you for ANY type of loan including hard money. EVERYONE uses credit to gauge you, even employers when looking for a job.
Now start learning your market indepth. Know where the fish are biting so you know the price range you will be selling at for EACH neighborhood you look at. If you did your studying like you said you know that location is a key selling factor so know your Exit strategy before you buy. Then ALWAYS buy right which means that you secure an equity position in the home your buying before you buy. Figure out if you’re planning on renting or flipping the property because some neighborhoods are perfect for retailing and perfect for renting. You can succeed in both if you bought it right but it will make things just a bit more difficult. Basically you won’t get the quick sale you wanted or quick rent you wanted if that neighborhood isn’t right for that type of deal. Use leverage as much as possible meaning money and work. Let realtors do some hunting for you and get you statistics. Double-check that with mortgage lenders that know your area you’re investigating. REMEMBER - in the end you are the one on the hook, not the realtor or lender, they will get their commission and leave. It would be nice if you can build a long-term relationship but those people are hard to find. TRUST ME on this. Eventually you’ll find some but at first you are nothing but commission to them and if you get screwed on something they won’t be contacting you to build a relationship. Once you’ve done thsi successfully and you’re cashflowing or flipping with profit then you rince and repeat. Rince meaning to refine and clean up and/or improve.
Good luck. I just gave you the most basic strategy I have used successfully. There are MANY others out there, ie. Wholesaling, Rehabbing, Lease/Option, Subject To, Owner Financing, etc…
Cashflow formula - purchase price x .008 = Fixed mortage(debt service) +/- $200 for taxes & insurance.
Then you would check rental comps in the area to make sure that home will cashflow. If not, negotiate down till it does cashflow.
Forgot to mention 1 more thing.
MARKETING - The most successful Real Estate Entrepreneur are experts at this. Which is why some of them make more money selling courses then actual real estate knowledge.
Apply for more cards of at least $5000 each. If you apply for 5 more cards at a minimum of $5000 each that will give you a total of $40,000 spendable credit limit and you spread out your debt to the other 5 cards of $1000 each.
I’d be very cautious at using this strategy. Another thing creditors look at is number of accounts opened recently. Opening 5 accounts in such a short period of time will definately cause some eyebrows to go up. Another thing to be wary of is balance transfer fees. If you plan to “spread out your debt to the other 5 cards” you need to first see if they have a balance transfer fee and/or charge interest on transfer balance. A lot of CC offers will say something like “no interest for xxxxx months on balance transfers”, but you have to look at the prospectus to see that almost ALL charge a 3% balance transfer fee.
Yes you need to be aware of the drawbacks of many credit cards but the point was to reduce your debt to credit ratio. It would be preferrable that you only get 1 other card that has the same available credit as the first then you already cut your ratio in half which should jump your credit score. Then the other cards would not be neccessary.
Again the whole point was to reduce your debt to credit ratio and NOT literally going out and getting 5 other cards. Sorry if the point was buried in there but I think you get the picture.