Getting my feet wet? 12 posts by 8 users

Posted: 01/21/2008 at 11:28AM

Alright guys, maybe I should get the ball rolling. I'm hoping you all could help me along the way!

So I was chatting with one of my friends last night and we talked about maybe going in on a deal together as an investment home. I have been reading through a lot of threads and so far the consensus seems to be go it yourself, but I think he could be extremely beneficial for me for a few reasons. He's already in the real estate business, he works for a company selling townhomes in the N. Raleigh area. He also has many close contacts with contractors and he is certain he can get the best deal because he does so much business with them and the company he works for. His brother is also a contractor too. He also has taken real estate classes, and his experience in the field goes back for ~5 years.

We thought that as a first investment, to maybe find a home we could live in for a few years, and then sell it for a potential profit. He suggested duplexes might be a good idea because we could both get our own 'home' to live in, and when we are ready to move out, we could either sell it, or if need be rent it out.

He also advocated flipping homes because of its short term nature and he thinks he can get cheap rates for contracting. I am also willing to learn how to do repairs to try and help keep some costs down as well.

As far as $$ we both have some access to funds to help us. We're both pretty sure we can get loans from our parents for a good rate, and his credit is really good so he can get a good bank loan if needed. I honestly have no idea what my credit is. Someone who looked it up for me in '06 told me it's normal for my age (it was my landlord, and I'm 25 now). He also talked about setting up an LLC and having the house tied up with that. I forget what he said the benefits to doing that were

So that's kind of where I'm thinking right now. I'm a little worried about flipping as an alternative, just because I recently had a friend do that and I don't think it's going well for him at all. He also rushed into it really quickly, though, and his inexperience is costing him.

I looked at another thread on real estate and got these rates, which apparently are pretty low (not sure what they mean exactly, but i can take a guess).

wachovia custom mortgage 30 yr fixed rate on friday was at:

5.125 % + 0 + 1.
5.250 % + 0 + .5.
5.375 % + 0 + 0.

What do you guys think is the best way to help me get started? And at the same time, any bird dogs in the raleigh area that could maybe help me find a good deal on a home to live in? THANKS!!!!

Posted: 01/21/2008 at 02:18PM

A couple of things you need to decide on.
1. The rates you had posted are not for LLCs. Research and decide if you want to get one.
2. If you both can afford to buy 1/2 of a duplex, why don't you just ask your friend for his support/contacts to get you through your first deal.
3. It narrow's down you potential deals if you are looking at only duplexes.
4. You need to do a bit more research regarding the market in the area you are lookin at. Is it a Flip area or a rental area. This will determine how you rehab the property.
5. Look up your credit score for free at www.myfico.com or a similiar site.
6. Never consider a property a " home" . Your emotions will get in the way of a good vs a bad investment.
7. Read everything you can about investing in Real Estate. Go to the library. Keep reading different threads on this site.

That should get you started BEFORE you buy.

rdinvestors

Posted: 01/22/2008 at 09:30PM

Sounds like a good strategy until you said live in it. Living in an investment is fine and dandy but not realistic if you wish to make money now or if you want to be a serious investor. If you find a deal that you must purchase for yourself then do so, but be realistic.

Find a starter lipstick rehab and go for it, don't underestimate repair estimates or patience, they'll both eat you alive.

Good luck

Posted: 01/31/2008 at 10:59AM

Living it it is ok. It just depends if your intention is to stay for 2-3 years (estimated time frame when housing will be back to normal) or flip it within 30 days before your first payment.

Posted: 02/05/2008 at 06:38PM

Honestly you sound like your looking for a place to live, not something that is going to make you money.

And with your 1300 a month, no, your not ready to buy. Between mortgage, taxes, insurance, maintenance, yadda yadda, you can't afford it.

Keep saving, and rent for awhile. Learn your market, what you want, etc before you put your name on the line.

Good luck.

Posted: 02/05/2008 at 08:49PM

yeah, i'm starting to see it too. I sat down with a couple buds last night and we went over what I was looking for and weighed the options, and it just looks like I don't think I'm ready to own a home yet, at least something in the range of what I would like to live in. Time to go back to the drawing board, lol. And I just can't get stuck in a situation where I'm dependant on having a roommate to afford to live in my own house. That's just flat out irresponsible.

Tim, those small properties I don't believe would be something I'd want to live in myself, but you make a good point about researching more and looking for positive cashflow in a rental. Perhaps I can take a second look at what I can really afford and make a smart go at it.

I've got time, and I understand that patience is key to making a smart decision. When I jump into something, I want to be confident I'm making the right move. I'll be keeping my options open!