I have all the time in the world, better than average rehabbing skills, live in an area (Memphis) that’s somewhat flat, but after several months of research I am really unsure how to do the most damage with my savings.
I would like to know what you would do.
Real estate is a business. The worst time to start a business is when you need money from that business. So what I would do is get a job that paid the bills, and did not require me to spend a lot time at it. I would then start my real estate business. In this new credit era (sub prime mess) you may have a harder time getting no doc loans.
I would not use my $150,000 except to show as proof of 6 months of PITI
I have no debt except my $557/mo mortgage which is covered by my rental (left to me by my grandmother). I’ve always been frugal (no cable, no expensive cell plans, no gaming, rarely need new clothes, eat in mostly, go out to one movie every other week, etc.). My wife makes plenty of money and could cover years of emergencies.
I’m sorry I didn’t provide all of that info with my first post (I’m new at this forum).
I just wanted to leave the question wide open to get many viewpoints.
So, if it’s difficult to get any financing other than HMLs, would you use some of the money, rehab, and refinance ( to hold), get cash back and repeat the process?
What I’m asking everyone is, “If you had to be involved fulltime, what would you do?”
Thanks in advance.
I would concur that you should continue to have a separate income stream (ie. Job) rather than relying on your RE business for income. However I would not necessarily agree that its any harder to get no-doc loans in today’s market. I’ve been a business owner and never had a job for 20 years. All of my loans for RE are no doc. I am closing this week on another one. Never had a problem with no docs if you put down 25% out of your own funds and can show that you have funds in the bank to cover 6 months of mortgage payments. With that, most retail lenders seem to be pretty happy with this. Ours (Countrywide) have had no problem at all with this.
V
I agree with this 100%.
Park that 150 000$ and keep learning the business.
The last thing you want to do is start burning through that 150 000$ doing deals.
And by the way, what I would do cannot be the answer towards what you would do.
If I had to start over again from scratch with 150 000$ I would have taken a much much much much different path. But I can only say that because I have been through many experiences.
It has a lot to do with what you want to achieve out of real estate, or what you want real estate to help you achieve in your life.
When you come up with that answer, than you can gradually start working there and using real estate as a “tool” to get you there.
Everyone takes a different path.
Another thing to consider with all of this is the definition of active vs. passive income. Active is where you have to expend energy to make money, whereas passive doesn’t typically require that much energy in order to make money. The richest people in the world got rich through their passive income investments - where the investment make them money without them having to invest that much time or energy towards it. Such is the case with a good real estate investment.
If you are consider RE as a ‘business’ then (and correct me if I’m wrong here) I am reading this as you want to ‘actively’ invest your money. In other words, you want to replace the time spent working in a job with time spent working in a business. That’s not a really smart idea to me, when you have the opportunity to continue to make money in a job and pay your costs, while a savvy investment of that $150,000 into real estate that is passive income (ie. rental property) would net you dual return - return from your active participation in the job (ie. salary) and return from your passive investment (ie. dividend, cashflow and equity increase).
Passive takes time and patience, but for me is my 100% focus. I don’t want to be bragging at the age of 50 that I’m working in real estate. For me that is a failure. I want to brag at 45 that I’m NOT working but making more money than I can spend in real estate. For me, that is the goal.
Of course, your mileage may vary.
V
Thanks for all the replies. I really appreciate the constructive criticism, but no one can pay me enough to be an employee. I’m 36 and have Multiple Sclerosis. With my condition, I HAVE to start and stop at my own pace and employers don’t like that very much. My grandmother was always fond of saying, “Life’s too short and death’s too certain” and I feel this now more than ever!
So with all of that, I ask everyone again, “Doing only real estate full-time, what would you do?”
If you were relying solely on real estate for income, I’d learn on someone else’s dime. Eg. get a real estate sales license and work for a broker for a while so you can see the inside of the sales process. You’ll make money on commission for someone else’s investments, rather than risking your own.
With knowledge and wisdom under your belt, then you’d be better prepared to be the investor yourself. But seriously if you haven’t done this before and you are looking to make a career out of this, expect 5 yrs of learning before you have ‘been around the block enough’. If I were in your shoes, I’d prefer to do that under someone else’s umbrella.
V
the real estate license approach is how i’m considering entering the rei game…
“redefining”
Thank you for that suggestion. Now we’re talking! These are the options I’m looking for.
Anyone else?
No one?!
Join a local REI and find a good, reputable mentor.
Another thing you might want to consider is ‘wholesaling’ deals. In other words, you look for deals for other investors and if one flies, they give you a commission based on what you find. This way its the other investor who takes the risk, but you are going through the exact same process to identify the deals as if they were yours. But without the risk. Also you can watch what the other investors do with the deals you bring them, and learn from their approach on how to negotiate, process and leverage them.
V
I think Bluemoon above nailed it…generally…of course depending on the deal. %0k would be more than enough to make a HM lender fell warm and fuzzy and that would be about the extent of my moneys involvement unless an extreme circumstance arose.
few043,
I don’t understand your “%0k would be more than enough …”
Is that a typo with the “%0k”?
Thanks for responding, though!
finding a mentor is ESTD!
jparkx1,
Pleeze excuse my lack of abbrevatorial quickspeak but what is “finding a mentor is ESTD!”?
I’m new to the net and everything is longhand for now.
I’m not new and I have no idea what he’s saying either, I think he’s made up his own language. :flush
lol…you guys haven’t ever used that abbreviation??
estd=easier said than done!