Hello,
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My name is Linda. I am a single mom and a college student studying business. I’m taking business because I figured lenders will be more likely to finance my project if I am educated. It seems though after reading many posts on this site, that I will know nothing about this business from school and I must look for my answers among the world of REI’s as you all call it. After considering all options I think that I would most like to flip forclosures and rental properties. I guess you could say I could use a REI book for Dummies because I simply don’t know where to begin. I want to actually have a business within this REI thing. I would like my own construction crew, real estate agents, accountant, lawyers etc. I want this to be more than a side job. Maybe I seem to have high hopes but I want to be rich, with the luxury of just collecting money in the end. I came from new york city where building owners must be brushing with gold tooth brushes. Any advice would be so appreciated. I have no money and I need to know how to start that way. My credit is not good but not bad. Who will lend me money? Do I start with one house and work from there? What will I need to “fix” my houses? Who are the professionals I will deal with at first? I need it all from the beggining. Please help me!! ???I have the plan to take my last year of school to prepare my business plan. My first step for January is to get around and talk to experienced investors. I will grow from there. Thanks to all… ???
Howdy Ladydeja:
I would start with some real estate class in your school or a Vocational school just to learn the lingo and get some knowledge on financing, sales contracts, and rehab. Learn all you can in a short period of time and then jump in a do a deal to flip to another buyer or investor. Finding motivated sellers is the key to finding good deals.
One you have some education and experience you can get hard money loans to buy and fix and resell properties. You may even want to be a partner in a deal with another investor or get a mentor even to help with your first deals.
If you’re comfortable with moving around a lot and taking on a decent amount of risk this is what I would do. Start by buying your first relatively inexpensive house/townhouse/condo in a market with high appreciation rates. Live in it for at least a year, then temporarily move out (live with a friend, with your parents, where ever you can) and rent it. Then take out a little equity if you can (or save money) in order to purchase and move into a second property. Since this second property will be “owner-occupied” you will get the best interest rates while you collect rent on the first property. Don’t worry too much at this stage if you’re not creating a lot of cash-flow, focus on the appreciation so you can dip into home equity to make your next purchase. Repeat this step as many times as you can take it.
The goal is to live in each new property for at least 6 months to a year, then turn it into a rental (fyi you must live in it for 2 years in order NOT to have to pay taxes on capital gains once you go to sell). This way you get the best interest rates on the new purchase because it is owner-occupied. The downside is you have to keep moving around. After 5 or 6 years you may own 5 or 6 properties.
The name of the game is LEVERAGE. Just make sure the market you are buying in can support at least 8 to 10% appreciate each year to make it worth while, and keep your credit scores above 700 across the board!! You can’t imagine how important this is when getting a home loan. Just my two cents on how to get started if you’re really ready to do whatever it takes. Rome wasn’t built in a day!
I got booted out of business class… I know personally that I like to help the underdog… If using a HML they really do not care! And if using a bank they really cant care because of that whole discrimination thing!
Hey by the way to everybody thinking about a Business Degree
NEVER ASK THE TEACHER IF THERE SO GOOD AT BUSINESS WHY DO THEY TEACH FOR ONLY 40K A YEAR… THEY DON’T LIKE IT well not on the first day anyway!