Hi, I am still in the education phase of REI but am really hoping that 2015 will be my year that I really break through. I am interested in starting out with fix and flips and wholesaling but I have an idea to kind of jump start things on the side, that I wanted to know if it was realistic thinking. Okay so here it is in a few steps.
Step #1: I just bought my first house; it is a small 3bd/1ba house out in the county with a USDA loan for $80,000. It is cute but in need of a few minor upgrades. It sits on 1.4 acres of land. The lot beside the house is an empty 0.75 acre lot with a large side of it having road access. I believe I can deed off this lot and sell it for $20,000. My boyfriend and I could then put $5,000 into the minor work that our current residence needs, put some aside, and pay off all of our debts with the rest. Raising both of our credit scores for the next step.
Step #2: Next I would like to find a good fixer upper in our area and buy and renovate it with a 203K FHA Construction Loan. (Never heard of anyone using this so any advice will be greatly appreciated on this) From what I have read the renovation part has to be completed in 6 months. So after 6 months we can move into the newly renovated fixer upper and rent out our current residence. We could then use the money from our rental house to finish paying off the mortgage on the same rental property. Hence, the renter would be paying off the mortgage on the house.
Step #3: As for our newly renovated fixer upper we would be owner/occupants living there for a while, so no foul done. However we could then take our new equity from the renovated house and maybe get a HELOC to help out with getting our first fix and flip property done.
So, do you think this is wishful thinking, or what? Do you think selling the land and losing some value on our current residence will be worth it? Thanks in advance!
First Welcome to Bigger Pockets @Chelsea . I am in STL please let me know if you need anything.
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1 sounds like a good plan i would not pay off someone else cc I have been burned in the past.
2 you with your mortgage guy not be able to do a FHA loan since you own a home now.
3 doable but lofty might not be much money to take out.
A little lofty. And you have a lot of working parts it could work and i hope it does. Look at buying a 4 family to get your feet wet live in one and rent out the other 3 while saving up to buy the next. Rentals require to have good cash reserves so make sure you have healthy savings.
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