Starting Out

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16
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9
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Benjamin Gonzales
  • New to Real Estate
  • Washington state
9
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16
Posts

Market fueling my fire

Benjamin Gonzales
  • New to Real Estate
  • Washington state
Posted Nov 19 2022, 13:14

For the first time in my life I do NOT fear being in debt! I had tons of bad debt in the past and I fixed it with my current home in Lacey, WA. I refinanced my home and wiped out my bad debt! I owed over 22K to one of my credit cards and over 28K loan that I had on installments.

Now, for the fun part! My new mortgage sits around $4600 a month. Comps around my area would only get me to $3400 based off some analysis I’ve done for rent. I'd be covering the difference, bad, right? For me no! Because the difference I would need to pay to cover my mortgage is beneficial... More beneficial than giving it away to credit card interest. That's how I see it.

Where am I going with all this? I listen to the bigger pockets podcast! Why does that matter? Knowledge... I'll leave it at that. I have a plan to execute because I took a leap of faith! I had to start somewhere, and I was tired of the analysis paralysis! I kept myself from tons of deals because i needed to know everything. The tools on bigger pockets helped me see the bigger picture.

Now, thanks to David & Rob! I ask how can I pay this mortgage? And NOT, I must pay this mortgage. ***MINDSET***

I was moved by Zeona McIntyre & Sarah Weaver's podcast (679) MTR.. It just clicked for me like wow... Anyone can do this! You just need to tweak a few things and make sure all your systems line up. I just started their book "30 Day Stay". I now have cheat sheet to making myself successful and navigate the market with fewer errors. Will I jack something up of course! I love when people say, I made dumb decision and that fuels my fire! How can I make them eat their words? Well for me... I have a plan and I'm going to execute my plan, and fix it where it needs fixin...


I was staying up later than the usual which was like around 1130 or midnight. But I couldn't stop reading and the more information I found, the more time I spent looking up the details.

Here we go...


Current plan-

Move a mid-term tenant into my home. How am I looking? Furnished finder and Facebook currently.

I'm offering a discount for their first month. Then I will start grabbing the markets value for rent, which is $3400.

I'm going to be eating the difference for the mortgage because I am just starting out and that’s okay with me, I already created a budget taking these numbers into account. Once I get started, I feel like this is going to take off like a rocket ship. I know how lucrative this business can be and I am going to make it happen.

Exit plans (not in any specific order)

  • Sell that house, but what does that mean? It means that I would most like have to execute a short sale and then go in bad waters with my lender.
  • Reach out to investors to help cover the cost. What does that mean? I know they would want stake in the equity once the market corrects itself.
  • Hold on to my home and keep eating the difference on the mortgage.
  • Take out equity from my other house in Oklahoma to supplement the difference. Why? To keep my mortgage in good standing.

Things I am still working on.

Marketing… I’ve received some attention on Facebook and Furnished Finder, but nothing solid.

How are you solving this problem?

Managing the property by myself long distance. Reason being I am moving.

How do you accomplish this?

Where are the areas, I can improve my thought process?

What would you do differently in my situation?

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1,204
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Minna Reid
  • Real Estate Broker
  • Jacksonville FL & Middletown CT
506
Votes |
1,204
Posts
Minna Reid
  • Real Estate Broker
  • Jacksonville FL & Middletown CT
Replied Nov 19 2022, 16:08
Quote from @Benjamin Gonzales:

For the first time in my life I do NOT fear being in debt! I had tons of bad debt in the past and I fixed it with my current home in Lacey, WA. I refinanced my home and wiped out my bad debt! I owed over 22K to one of my credit cards and over 28K loan that I had on installments.

Now, for the fun part! My new mortgage sits around $4600 a month. Comps around my area would only get me to $3400 based off some analysis I’ve done for rent. I'd be covering the difference, bad, right? For me no! Because the difference I would need to pay to cover my mortgage is beneficial... More beneficial than giving it away to credit card interest. That's how I see it.

Where am I going with all this? I listen to the bigger pockets podcast! Why does that matter? Knowledge... I'll leave it at that. I have a plan to execute because I took a leap of faith! I had to start somewhere, and I was tired of the analysis paralysis! I kept myself from tons of deals because i needed to know everything. The tools on bigger pockets helped me see the bigger picture.

Now, thanks to David & Rob! I ask how can I pay this mortgage? And NOT, I must pay this mortgage. ***MINDSET***

I was moved by Zeona McIntyre & Sarah Weaver's podcast (679) MTR.. It just clicked for me like wow... Anyone can do this! You just need to tweak a few things and make sure all your systems line up. I just started their book "30 Day Stay". I now have cheat sheet to making myself successful and navigate the market with fewer errors. Will I jack something up of course! I love when people say, I made dumb decision and that fuels my fire! How can I make them eat their words? Well for me... I have a plan and I'm going to execute my plan, and fix it where it needs fixin...


I was staying up later than the usual which was like around 1130 or midnight. But I couldn't stop reading and the more information I found, the more time I spent looking up the details.

Here we go...


Current plan-

Move a mid-term tenant into my home. How am I looking? Furnished finder and Facebook currently.

I'm offering a discount for their first month. Then I will start grabbing the markets value for rent, which is $3400.

I'm going to be eating the difference for the mortgage because I am just starting out and that’s okay with me, I already created a budget taking these numbers into account. Once I get started, I feel like this is going to take off like a rocket ship. I know how lucrative this business can be and I am going to make it happen.

Exit plans (not in any specific order)

  • Sell that house, but what does that mean? It means that I would most like have to execute a short sale and then go in bad waters with my lender.
  • Reach out to investors to help cover the cost. What does that mean? I know they would want stake in the equity once the market corrects itself.
  • Hold on to my home and keep eating the difference on the mortgage.
  • Take out equity from my other house in Oklahoma to supplement the difference. Why? To keep my mortgage in good standing.

Things I am still working on.

Marketing… I’ve received some attention on Facebook and Furnished Finder, but nothing solid.

How are you solving this problem?

Managing the property by myself long distance. Reason being I am moving.

How do you accomplish this?

Where are the areas, I can improve my thought process?

What would you do differently in my situation?

I am seeing a lot of future problems from renting at a loss of at least $1200/month (this will be way more after expenses). Why do you want to keep this home? What is it worth and what do you owe? 

This is a loser rental for you. Sell it if you can. No investors will be interested in the future equity at this point in time. Values are dropping. 

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21,101
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31,994
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Nathan Gesner
  • Real Estate Broker
  • Cody, WY
31,994
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21,101
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Nathan Gesner
  • Real Estate Broker
  • Cody, WY
ModeratorReplied Nov 20 2022, 05:35
Quote from @Benjamin Gonzales:

I love the enthusiasm, but not your current actions or plans.

You cashed out equity to pay off your debt. You took no action to gain that equity, it was pure luck with a crazy market and some of it may disappear. You essentially borrowed money to pay off borrowed money and now you'll be paying it back for 30 years.

I don't know what your goals should be except for this: get your debt under control and learn to be financially responsible. If you can't handle what you currently have, you won't be able to handle investments and it will all come crashing down.

  • Property Manager Wyoming (#12599)

User Stats

16
Posts
9
Votes
Benjamin Gonzales
  • New to Real Estate
  • Washington state
9
Votes |
16
Posts
Benjamin Gonzales
  • New to Real Estate
  • Washington state
Replied Nov 20 2022, 18:35
Quote from @Nathan Gesner:
Quote from @Benjamin Gonzales:

I love the enthusiasm, but not your current actions or plans.

You cashed out equity to pay off your debt. You took no action to gain that equity, it was pure luck with a crazy market and some of it may disappear. You essentially borrowed money to pay off borrowed money and now you'll be paying it back for 30 years.

I don't know what your goals should be except for this: get your debt under control and learn to be financially responsible. If you can't handle what you currently have, you won't be able to handle investments and it will all come crashing down.

 I'm in the driver seat and you're correct! Get my bad debt under control "100%" agree. Can I ask you a question? How calculated was your leap of faith? 

While people love being in their comfort zone... I no longer want to be that person! It's a game of which bank will lend you the most or based off who you know. While my debt was wildly out of control, I never missed a payment. "If you can't do the time...Don't do the crime". I was a prisoner to my dumb uncalculated mistakes. 

I love your challenge about handling my investments! I'm going to ask you to put a pin, in our discussion and I will reach back out to you.

@Nathan Gesner I love what you do for the forum. 

User Stats

36
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18
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Ashton Karp
  • Real Estate Agent
  • Bonney Lake, WA
18
Votes |
36
Posts
Ashton Karp
  • Real Estate Agent
  • Bonney Lake, WA
Replied Dec 2 2022, 19:40

Putting yourself in the hole $1200 before expenses is not recommended unless you have substantial reserves to weather storms. Are you going to be able to afford vacancies? What if a tenant stops paying and you need to wait 60 days to evict? What if the tenant then damages property on their way out? The story sounds like you can skim by until any problem comes up and then you’re in deep doodoo.

Is moving out of state a guarantee in your life? Are you sure you're underwater for the property? Can you pivot to a STR and lift your income further?

I think letting this property bleed out will set you back immensely. Rip the bandaid off and move on or stay local until you can lower the debt cost or increase the assets income. 

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31
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13
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Marcela Hoag
  • Real Estate Broker
  • Seattle, WA
13
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31
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Marcela Hoag
  • Real Estate Broker
  • Seattle, WA
Replied Jan 14 2023, 14:35

Obviously, I don't have all the info of your financial situation. Are you living by yourself, have family etc?

You may be able to get higher rent if you rent out by room so you can try to breakeven. Not sure how feasible that is for your location though. You will be on the hook for covering some expenses though to attract renters, e.g. furniture, internet, tv, etc.