Ok...Ready new guy's??? Some GOOD NEWS!!!!!!!!!!!!!

I figure that at least, I owe you guy’s some GOOD advice…

We all know how long readers here have SUFFERED through all my (let me get this quote right) “negative speculative rantings” So here it is…

What should I be doing RIGHT now, in THIS market, if I am just starting out???

First…simply BUILD CASH!!! I can not over state this. I know, I know, nothing new there?? But listen…ask yourself some questions?

Maybe you have a beautiful Harley that’s worth $15,000 sitting in your garage? Do you think it might be a good idea to turn that into cash right now??? Of course it is…If this economy gets slower bikes and boats are the first thing people start unloading. Personally, I can’t THINK of a better economic indicator than used boat sales.

What??? Boat sales??? Maybe this guy SHOULD be taken off this forum??

Now let me explain…When times are good people buy NEW boats. 3 years ago a friend of mine who sells new boats COULD NOT KEEP UP with demand. THAT HAS ALL CHANGED. Now people are selling those boats so we have an INCREASE in used boat sales and a DECREASE in new boat sales. (I can already hear the comments on that theory, but I’m telling you it has never let me down) Want to get a good read on your local economy???Check out boat slip availability at your local Marina. Mine’s offering INCENTIVES and PLENTY of SPACES!!! NEVER SEEN THAT BEFORE. Gee I wonder what’s going on here??? Maybe, just maybe, those crazy spending Americans ARE really slowing down??? Maybe they’re worried about SOMETHING?? Oh I forgot, be POSITIVE!!!

Getting back to the topic…Before it gets bad unload some of this stuff and turn it into cash. All business requires some PAIN. Now, if riding that Harley keeps you off the bar stool then KEEP IT!! But…if like most people out there it’s a little used toy SELL IT, same with boats, jet ski’s, anything that you can replace later at the same or better price.


WHY??? Because in my opinion we will soon see lending go back to NORMAL. That doesn’t mean I think no one will get loans. What it does mean is you better have one of those things banks used to call a GOOD DOWN PAYMENT!!!

Next UP…CREDIT. Get squared it away NOW!!!
If you have good credit, GREAT, go out and get a line established on your home. Your gonna need it. I know that’s scary to some, but think about it. A bank gives you a $100,000 line on your house and a check book. It’s ready when your deal is. JUST MAKE SURE it’s a GOOD one. Remember what your risking. Also remember that is EXACTLY what banks are going to start doing…putting the RISK on you!! They took too much of that risk a few years ago and now they’re paying BIG TIME. BUT…The ADVANTAGE we have is WE are buying these homes at BIG discounts, they paid RETAIL!!!

Just some POSITIVE thoughts!!!

Hope it helped SOMEONE.

Sorry for any errors in spelling, grammar, punctuation, or proper use of the English languauge.

So what Pete is saying in the next few years a down payment will be necessary to purchase any real estate. I couldn’t agree more, even HML are changing their tunes to make borrowers put skin in the game.

Its going to weed out all the get rich quick investors pretty quickly.

Will the average money required for down payment likely be at least 10%? I am just getting into this and was finally starting to save…I called the lender for my primary mortgage and told him I was thinking about buying another property and wanted to get info regarding the current rates, etc. He asked how much I wanted to borrow and how much I wanted to put down. I told him, that I didn’t want to put any thing down (because a this point I don’t even know how much I want to spend on a property, etc. I just thought it’d be a good idea to get the ball rolling for financing). Anyway, he said “Oh no, you have to put at least 10% down.”

As I said before, I finally started committing to save 100 every two weeks (yea I know it’s not much, but it’s a start) but if I buy one property all of my savings is already out the door. I figured since I have always paid my current mortgage early, that would be seen as a plus and give me a few points, but I guess not. Is it going to be this way every where I go to try to get financing for another property? At least for a reputable company? Am I trying to get into this at the wrong time considering I don’t already have 50,000 dollars cash on hand to put down on properties?

I figured since I have always paid my current mortgage early, that would be seen as a plus and give me a few points, but I guess not.

Unfortunately the only benefit is that it helps you build equity a little quicker. Credit reporting agencys only track if it is on-time or delinquent. If you have yourself disciplined you may want to look into paying bi-weekly as it will pay the mortgage (principal) balance down quicker.

To be able to get 100% financing - you need the credit score, at least mid 700s. IMHO - your credit score is your most important asset. It will open doors to you as an investor that will not be open to those who have poor credit. Granted, those doors are fewer in number - but they are still there.
I believe the days of ‘no cash, no credit, no problem’ are long gone for investors - even with hard money.

This all makes sense. My problem is finding property where the rent can pay the mortgage. I’ve been searching the net and found nothing so far where I think I can buy something with no negative. Everything I’ve seen so far has a $2,000 or more negative on a 90% financing.

Any thoughts?

I was talking to my mortgage broker this weekend about this same issue. What he said is (like propertymanager says all the time) buy at a deep discount and the rules have not changed that much. The required credit score is higher, but if you find a house that has an ARV of $100,000 that you are going to buy for $65,000 needing $10,000 in fix up. You effectively have a 25% down payment with no money down. I can find them every day.

See I guess that’s where I’m still trying to figure all of this out… I was under the impression that you still had to have 10 percent down. So if you buy a house for 65,000, tack on an extra 10,000 for repairs so your loan is for 75,000…Don’t you have to have 10% of that 75,000 even if it is already worth 100,000?

You need to talk to your mortgage broker. With mine, I don’t.

I’ll give you my personal experience, just food for thought for you to see another point of view for what another investor (i.e., me) does…

I bought 8 houses in Va. in one year (my last year of working in corporate)…Prices were generally around $200k (now selling for $300k+), rates around 5.25-6%, and rents covered the mortgages wonderfully (except for the last 2 I bought, which were basically break-evens cashwise but the appreciation at that time in Va. was such that they still turned out to be wonderful investments)…

So there I was with a total of 10 houses in Va., great appreciation, and good cash flow…But the interest rates were rising, home prices were way up, and it was no longer viable to buy properties in Va. without having a negative cash flow…And the realtors were snapping up all the potential flip properties before the public found out about them…I wasn’t savvy enough to figure out how to pluck some of these out before the realtors got them, so flipping was out…

That’s when I found out about Buffalo…Houses/duplexes could be bought for $10-20k (bought one for $4700)…All of them pretty much needed complete bathroom/kitchen gutouts, some electrical, lots of plumbing, water heaters, furnaces, only a couple needed new siding and roofs, ceramic tile/carpeting, paint, some moulding, etc. and overall I was investing a total of $40k or so for a duplex in like-new condition which was bringing in a net cash flow of $1000 per month… After rehabbing, I refi and get most of my cash back, so my roi is hovering around 100-150% per property after accounting for the mortgage (I do a lot of my own work)…

Buffalo is a tough town for investors in some respects (permits/inspectors!!) and the weather SUCKS (and so does the city, quite frankly), but I have a pretty good system down now and my contacts pretty well intact, but am tired of the city and ready to move on to a city to do flips instead of the rehab/rent deal (which is the only viable thing to do in Buffalo due to the prices)…Houston’s probably going to be my next move…

In other words, I don’t limit myself to my own back yard…When I find out about a good market, I go there and do what what works…

Just wish I wouldn’t have sold that 7 unit building in Los Angeles a few years back…:frowning:

Just FYI that there’s different markets with different situations and investing in a different city can work out for you if you’re able to do the travel…