Great, so I've gotten Pre-qualified...now what?!

3 Replies

Hey all,

I know some of you Dallas folks have been following some of my noob post and I'm back with a little more progress under my belt. I've gotten things with my finances and credit score worked out. I recently signed on with Lexington Law firm for credit repair and they have been GREAT! definitely worth it, even if you don't have much on your credit. My student loans are slowly starting to trickle in, but are definitely manageable. I've paid off my credit cards and even applied for two more (just to have the available credit as it looks good - maybe not the hard inquiries but Lexington will take care of those). Last, I decided to pay off my car note and to save up some cash.

Next, I reached out to a mortgage team and got pre-qualified for a hefty amount of 350K (yay!), but I only want to use $150K or less (preferably less than $80K but we'll see what I find). As I've been learning more and more about the Dallas real estate market, I'm seeing that what I initially wanted (which was a duplex/triplex) is not widely popular in my target areas (Addison, Carrollton, Lewisville, Plano, McKinney, Little Elm, the Colony, Allen, Frisco, essentially the far North Dallas area). From what I've seen they're popular in the Lakewood area (near White Rock Lake, between the 75 and 635) but I didn't have any plans on living in that area. Now I'm thinking of back up options to getting started like SFH which sell very well in those areas but how would I be able to make it work. Like do I buy a SFH rent it out and continue to pay rent for an apartment? Or do I buy the house, live through the rehab, and then rent it out later once I can purchase another home that I can move into? These are thoughts I've been battling with - what happens next? I figured you more experienced investors would be able to give some insight as I'm sort of at a dead end or can't think of other ways to make this work out.

Let me know your thoughts!

Thanks folks!

Big props to you!  The buying/investing in real estate gets all the glory, but the pre-work that you're doing is often times the difficult, and important stuff.  So, props to you for doing it right.

I think your next big step should be to accumulate capital - thought the amount that you will need will vary based on your specific strategy.

I echo your small multi-family strategy as the best first-step, but that's a bummer that they aren't common where you live.

In an ideal world, I would target a lower middle-class SFR. Try and buy it around 80% of ARV, with 20% down, with 10K in rehab needed, and with your cash reserves in place. For example, find a house that's worth 100K rehabbed, but is listed for 80K due to cosmetic issues. Try and get it for 70K (~20K down/closing), put 10K rehab into it - and for 30K cash (plus reserves), you have a great investment.

There are plenty of plans out there where don't need that much cash. FHA loans are the most common option.

@Jeremiah B. thanks so much, (sorry for the delay, I've been finishing up grad school). That can be doable, and I just live through the rehab until I'm ready to move on? Is that what many people end up doing with SFH?

Hi JoJo, I'm new to BP and glad I found your post. You have some good questions and I'm looking forward to reading the advise you receive from others. Big congrats on your accomplishments so far also. 

You are correct, SFR in the areas you mentioned are hot right now. You may still be able to find what your looking for but it will take time. I'm thinking chances are good that you would have built in rental income when you do find such property though.

Where are you living now - Dallas? How hard & costly would it be for you to break your lease or when does it end? Does it make since for you to move into the rehab project or could you afford both payments? What is your time line? I'm thinking it might be easier to repair & fix your project property up if you were not occupying it at the time and it might make it easier to get on the market for resale faster if you didn't have to move out first. But on the other hand, it might be a good thing if you got out of your apartment lease (freed up that money), lived in the rehab project while you worked on it (are you planning on doing some of the work your self) and took your time then sold it after occupying it for a year. So, I think it really boils down to what will work best for you. 

I know Lake Dallas and Denton have some small MFR (2-4 units). Would those areas be of any interest to you?

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