If you had these resources...what would you do??

Starting Out
11yFollow

If you had these resources...what would you do??

Joel G.
Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes

My wife and I want a different life...where we are not accountable to anyone but ourselves...who doesn't right?

If you click on my bio you will see our basic background and goals...short...I promise. 

We are not beholden to any REI discipline and do have some skills.

We have a SFR in Las Vegas that is rented to a family member for cost...so no cash flow, but well kept and debt pay down and has approx $70k in equity and can be disposed of as necessary. We have a home in Silicon Valley with approx $200-250k in equity (depending on which RE Agent we speak with) and which we are willing to sell to help bankroll our business. In addition, we have approx. $250k in 401Ks we are willing to structure in a way that will allow us to get at...at least 50% or more (at least that is what we have read here). We would love to leave our jobs but are willing to stay to facilitate things. Our salaries are around $200k combined.

Tammy and I are in our mid/late 40s and our goal is to be able to have enough freedom to travel and take care of our families while we still have our health and are young enough to enjoy those experiences...whether that takes 5 yrs or 25 yrs. 

We aren't strangers to hard work and are willing to do so to get started.

So if you were starting over and had these resources and the willingness to use them...what would you do??

4Reply
253 views

Most Popular Reply

Arlen Chou
Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
11y

@Joel G. I am in my 40's and just started seriously getting into REI recently, but I had been planning for a long time. When I say planning, it was not just reading books and listening to pod-casts. I started with "house hacking" and building up cash for a very long time. I used the appreciation in my primary residence and dove deep once I had the financial strength to make a meaningful purchase.

Replacing $200k of income is pretty large gap to fill.  Not sure if you are considering NET or Gross income as the $200k target, but both are achievable.  My intent is also to get to a point where I can travel and enjoy life.  For me, that means not being active, but collecting passive income = buy and hold strategy.  For others it might be a different strategy.  

Cash flow is the key to reaching a passive REI business... This then leads to the debate of cash flow vs appreciation. In principle I think real estate investors all seek cash flow, but how we each get to that cash flow is really core of debate. For many it is to go out of state and look for cash flow right away. Personally, I believe the limitation of that strategy is that ability to accumulate assets is limited by your access to cash. Meaning you either need to either work your W2 or go looking for investors to build up cash to buy additional properties. I feel that by investing in a strong market, you can take advantage of both cash flow and appreciation and accumulate assets at a faster rate. The barrier to entry is much higher, but once you get past that barrier, I believe that appreciation can give you the cash freedom needed to purchase more properties.

Please note, I invest locally and trade my time for sweat equity in forcing appreciation.  I don't do turn key purchases because I believe that the lost appreciation is too expensive.  There are couple of threads on BP about the appreciation I have seen over the past 10 years along with my referencing strategy.

This is an active strategy for me so I really cannot say what I would have done different yet.  Perhaps the only thing I would have liked to have done was taken the leap at a younger age.  But there are many things that I wish I had done when I was younger...hahaha!

Good luck!

-Arlen

6Reply
See this reply in the discussion

89 Replies

Jump to latestLatest
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    11y

    Hi Joel,

    Normally I'd advise starting small, in your backyard, doing all the work yourself, and focusing on cash flow. This let's you learn the business while the stakes are low, then scale up once you know what you're doing (and prove it).

    In your case, though, because of where you live this may be difficult. If you like Texas and have friendlies on the ground there, I'd start by looking there. If you can find jobs there, even if you have to take a pay cut, what about moving before you retire? You could likely buy a house for cash from proceeds from your CA home, and the gains (up to $500k) will be tax free if this has been you and your wife's primary residence for more than 2 yrs. Living mortgage free will allow you to save like mad and invest in rentals in your new, better cash flowing, Texas backyard. A big move, to be certain, but a low risk, potentially high reward option for getting started. As an added bonus, when you leave your CA jobs, you can roll your 401ks into a self directed IRA and invest in RE as well (notes and/or rentals, tax free income if you turn it ROTH).

    0Reply
  • Joel G.
    OP
    Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes
    11y
    Originally posted by @Arlen Chou:

    @Joel G. thanks, but that picture was taken WAY after 29...hahaha.  

    I don't actually look for such high LTV on my refinancing. I only pull out what I need to reach my goals. With that being said, my 2013 purchases basically doubled in appraised value, so I did not need to go to 80% LTV to get my cash back out. There are 2 reasons that I don't push for the max value out: to keep my monthly payments down so I can cash flow, and secondly I don't really have a good place to park my money until I find another deal. If I had too much cash sitting around I would probably do something stupid like buy a new car or go on some expensive vacations...hahaha. I have a pretty tight criteria on the type and max price for my target properties. In my plan, once I have acquired a certain number of my current property type, I will go up a step and target a higher/larger asset class.

    The logic behind my financial strategy, generally speaking, is to have a balance between cash flow/equity/cash on hand. Once my cash flow and equity have reached a target point I plan to shift to higher cash on hand to re-balance. My belief is that this should then allow me to reach that next asset class. From a personal growth strategy stand point, buying into MFR right now allows me to test my skills and learn about renovations and property management. I strongly believe that having a basis of hands on knowledge will allow me to better manage from a distance. Once I get to a target number of doors, I plan to off load all PM and maintenance/renovation duties to others and get fat laying on beach while sipping on fruity drinks. I hope that is enough for you to open up a beer for dinner tonight ;-)

    -Arlen

     Thanks for the info Arlen...the beer was great! 

    Your advice was even better though...it is very inspirational to myself (and I'm betting others) to know that there are folks succeeding in this business to the degree that you are!

    Your plan is very sound and well thought out and certainly a blueprint to follow...Tammy and I were reading these posts tonight and she mentioned that your plan of string at each level til your are ready to move to the next one was great advice...I agreed...BTW I always agree with her...better to swim with the stream...but she was right...sound plan solidly executed and certainly something that we will try and emulate. 

    Thanks again for your advice! I owe you a drink my friend!

    1Reply
  • Joel G.
    OP
    Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes
    11y

    We will also make sure that we don't over leverage ourselves...and speaking of that...what percentage of our net worth would be considered safe to invest. Tammy and we're talking about this after reading your post and didn't have an idea...and granted there are probably many different thoughts on the matter...but what do you feel is a safe percentage to invest...might be a good question to open another post with. 

    In other words...If we have $400k available to invest...what amount could we invest that would give us the greatest chance to succeed, yet still be considered not over leveraged? 

    In my head I want a cushion, and would only be putting 35-40% of that amount to work at any one time....and as our account grows the percentage working may grow as well...but it seems to us that throwing it all out there at once with nothing to fall back on would just be reckless...like betting on red every time in Vegas....you may win for a while, BUT in the end you will lose it all...think 2008. What are your thoughts on this subject?

    As far a the Lamborghini goes...I will leave that choice up to you...but I will take a ride in it with you someday though...for me I'm more of a truck guy...just a reliable ol' pickup truck and my girl pulled over next to me and I'm all set...I did see a '65 mustang convertible that would look AWESOME wrapped around me though ;)

    Thanks again for all your thoughtful comments!

    0Reply
  • Joel G.
    OP
    Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes
    11y

    Minh, not sure how it happened but part of my last post looks like your quoted post...I have no idea how that even happened...except computers hate me...so maybe that's it...but there is a little more at the top of that post back to you! 

    0Reply
  • Joel G.
    OP
    Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes
    11y
    Originally posted by @David Nolan:

    @Joel G. Hi Joel and welcome to the world of REI for a living.

    I would suggest the following as a start. Write a detailed business plan of what you want your business to be. This is a business so treat it like one. Pay particular attention to the SWOT analysis. Strengths, Weaknesses, Opportunities and Threats. Your Strengths and Weaknesses are unique to you and are basically under your control. The Opportunities and Threats are what the market controls. You would be wise to be sure an have a plan to take advantage of the Opportunities and mitigate the Threats.

    Once you have done those things then set some goals. Be sure your goals are in line with your values, lifestyle choices and financial capabilities, one of which is to understand your personal risk profile. This means can you live with a lot of debt, some debt or no debt and be at ease with yourself. If you cannot handle being in a lot of debt then be sure not to overly leverage your deals. Then set a realistic budget, and stick to it.

    After you have done these things your path should appear a little clearer as to what types of deals you might like to do and where you might like to do them. This would then lead you to one of the most important aspect of REI. Understand the drivers of property prices in your chosen market. Simply following the crowd as many do and relying on the market to drive prices up, with little or no knowledge of how it is happening, what is driving it, is very dangerous indeed for a anyone in this business. You NEED to know what drives your market. Is the market at the bottom of the cycle or the top? Can I add value to this deal? Is it the right property for my objectives as per my business plan? What are my risks both financially and emotionally? Do I have confidence in this deal? These are all questions I would ask before I do a deal.

    Property markets are cyclical, they move up and down. Please do not fall for the false belief that property always rises in value, it doesn't. Develop a sound business plan and stick to it. Learn as much as you can about the market you choose to work in. Don't over extend yourself financially, emotionally or physically. Stick to what you are capable of and you could enjoy a great career as an REI.

    Good luck on your journey!

     Thank you so much for your thoughtful advice David! 

    We will definitely invest time for a proper business plan...and your template is very well thought out indeed. Our strengths and weaknesses will be obvious to us when writing our plan...BUT is there a system you use for determining a markets opportunities and threats, like a pros and cons type list, or is it just learning to sense the way a market will react as an overall analysis of the ,armed itself...more like an economist would?

    I'm a real news and stat junkie when it comes to an area I'm interested in and have always had an innate sense of which way a market will go...ie. We got out of the stock market in January of 2000 before the crash in April of that year...we didn't buy into the San diego housing market in 2004 feeling that it didn't have long til it went sideways...the problem with that was timing...isn't everything...the stock market thing was obvious to me anyway...the housing thing made sense to me but I missed the timing by years...when it finally fell apart...it happened EXACTLY as I had been expecting for years...the other problem is I don't always know WHY I know something...and that is a a real problem...that being said is there a way to start quantifying these things I know so that I can be a little more in tune with the markets or do you use certain indicators that just help show where a markets is in the cycle? Would love your thoughts on that.

    Our goals have evolved since our kids have started getting to young adulthood...so that's another aspect that we will have to reconsider as to what we really want.

    Would certainly love to hear your thoughts on the things I mentioned above, but wanted to say again how much I appreciate the time you have taken to give us your very well thought out advice.

    0Reply
  • Joel G.
    OP
    Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes
    11y
    Originally posted by @Radhika M.:

    @Joel G.

    Welcome to BP. It is a great place to learn about RE investing. I am pretty new my self and learning.

    We are investing locally because that is what we are comfortable with. 

    I typically am nervous about investing out of state but in your case since you plan to move to Texas eventually and seem to know the area  I think that could be a goop option.  

     Since you seem to be open to selling your house to start your investing one thing to consider is house hacking in a duplex/triplex or 4 plex.  That way you get still live in a property you own and have your most of your mortgage covered by the tenants. 

    Good luck.

     Thank you for you thoughts.

    Moving back home is certainly one goal we have as it will be nice to get back closer to family...but don't get me wrong the Bay Area is really nice...and we will miss it when we leave someday...but will write it up as a wonderful chapter in our lives!

    Your advice on a MFR is a VERY interesting one...when we sell this home...we have been trying to figure out what our next step would be...as it puts us in a bit of a dilemma...we stay and keep our jobs and the security/opportunity it affords us for REI but we wind up renting (not happy with that...but a means to an end) OR we move and now we have no job history and have to start building again from ground zero...but possibly live in an area that we can really start digging into properties and working our plan.

    BUT...working here and possibly getting into a MFR could wind up being the best of both worlds...if we can find one that is...never really looked in the BA for that kind of situation.

    I will DEFINITELY bring this up to Tammy tomorrow...I think she will like the idea! 

    Thank you again for your thoughts!!

    0Reply
  • Joel G.
    OP
    Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes
    11y
    Originally posted by @Alex Morstadt:

    Congrats on jumping into the fray @Joel G.!

    One of your biggest assets is having a spouse with the same goals and positive outlook that investing in RE as you do. It took being very successful in our first investment to truly get my wife involved. Lucky for me, she is way better at all of this then I am!

    You've got the goals, now write down a plan that will help you get those. Make sure it starts within the next hour. The first thing you have on your "list to do" can be something that you do immediately and can cross it off. That way you get the satisfaction of moving forward today and not putting it off tomorrow.

    Good luck... I'm looking forward to your success!

    Alex

     Thank you for your advice, but first...and more importantly...thank you for your service  and your family's service to our country. Tammy and I love all of our servicemen/women and families and give thanks for them daily as not only our heroes and protectors, but as the very fabric of what makes our country great...truly...thank you!

    Now onward...KAILUA...are you kidding me THE...MOST...BEAUTIFUL...BEACH...IN...THE...WORLD!!! How can you even stand doing anything but looking out on the MOKs and Flat island and not just stare all day long??? I would never get anything done if I lived there! Tammy and I LOVE that beach...a miraculous place on earth.

    I have always given that my wife is smarter than I am...and things are much quieter in our home given my position on that subject...and it sounds as if you may have found the same secret in your union as well :)

    It is wonderful to have a partner that shares in your hopes and dreams...it will 25 years of marriage for Tammy and me this November...and as I always tell her...its been the shortest 40 years of my life...lol.

    Your goal plan makes a lot of sense and we will put that on paper asap. I would do it now as you suggest...but at this time of the night...it would be me that gets scratched off the list...so tomorrow it is!

    Thanks for your advice and welcome to you as well on BP.

    0Reply
  • Joel G.
    OP
    Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes
    11y
    Originally posted by @David Faulkner:

    Hi Joel,

    Normally I'd advise starting small, in your backyard, doing all the work yourself, and focusing on cash flow. This let's you learn the business while the stakes are low, then scale up once you know what you're doing (and prove it).

    In your case, though, because of where you live this may be difficult. If you like Texas and have friendlies on the ground there, I'd start by looking there. If you can find jobs there, even if you have to take a pay cut, what about moving before you retire? You could likely buy a house for cash from proceeds from your CA home, and the gains (up to $500k) will be tax free if this has been you and your wife's primary residence for more than 2 yrs. Living mortgage free will allow you to save like mad and invest in rentals in your new, better cash flowing, Texas backyard. A big move, to be certain, but a low risk, potentially high reward option for getting started. As an added bonus, when you leave your CA jobs, you can roll your 401ks into a self directed IRA and invest in RE as well (notes and/or rentals, tax free income if you turn it ROTH).

     Hi David, 

    You have hit on the one factor that we are having the most trouble figuring out. BA REI seems out of our reach...but good incomes approx. $200k between us...OR moving back home (Tx) cash in hand to be sure but probably a haircut down to $100k per year if we're lucky, but more affordable properties to be sure...hard to decide.

    You do make a compelling argument for moving back home though, and brought up some points that we have yet to factor into our decision...thank you for that feedback.

    The 401k rollover is something we know we will need to do...and some of the rules concerning its use in investing are pretty difficult to cut through...have you found a good resource for learning the ins and outs of using a 401k for REI?

    Thanks again for your thoughtful insights!

    0Reply
  • Scott Gray
    Chattanooga, TN · Member since 2015 · 24 posts · 24 votes
    11y

    As someone just starting out, this has been an excellent exchange of ideas and information.  Just what I needed as a newbie.

    I understand you can rollover your 401k to a self directed IRA and use these funds to invest in real estate. There are some restrictions though. Someone with knowledge of this will chime in hopefully.

    Thanks for the insight. 

    0Reply
  • Marcin Talaga
    Real Estate Broker · Chicago, IL · Member since 2015 · 102 posts · 53 votes
    11y

    Joel G, Let me share with you my retirement plan; maybe you'll find some interest in it.  Right now I am working as a Realtor and General Contractor.  All the money I'm making in this business is earmarked for rental properties.  I believe the key to being wealthy and happy when you get older, at least for me, is owning many buildings.  I think of a rental unit as a bank.  Instead of putting money into an account at your local bank and having it sit there and depreciate, you put it into a building that pays itself off and hopefully a building that goes up in value over time.  When I get to 5/6 or 7 buildings, or more :), whichever amount I know will provide me with a 6 figure income just from the rents, I plan on "retiring."  I put "retiring" in quotes because my plan then would be to quit my jobs and be a full time property manager for my buildings.  Cut the grass, shovel the snow, clean, chit-chat with the tenants, etc.  Run my buildings as my full time job.  The beauty of this plan, if all goes well of course, is if I'm making a good enough return, I could hire a property management company to run those buildings and my wife and I can spend time traveling, racing cars, doing whatever it is we'd love to do and still have 6 figures coming in.  For me, that is the ideal dream.

    If I were you, I'd start with one building, maybe a 2 or 3 flat just to get your feet wet.  If you find a good one the rents should pay the mortgage, taxes, insurance, etc. and there should be a few hundred left over which you should save for repairs or for the downpayment for the next building.  Once you're comfortable being a landlord, and you think it's what you'd like to do, purchase another one.  Then another one.  Before you know it, the left over profit each year will accumulate quick enough to where you'll have a downpayment for a 4th.  Then you can use the profits to pay off the 1st one you bought and leverage it to buy a 5th!  Etc, etc.  Sounds easy and far fetched to many, but I've seen it done and really hope I can get it done too :).  Not sure if this post will be helpful, but hey, maybe it will be.

    0Reply
  • Franklin Romine
    Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
    11y

    @Joel G.

    I would leverage your day job income/credit and accumulate more good debt... quickly.


    Frank

    1Reply
  • Andrew R.
    Los Angeles, CA · Member since 2015 · 59 posts · 8 votes
    11y

    Nice problem to have :). I buy in cash in the under 100k house market, and then seller finance, sometimes rent. About 10k in rehab and then resell. Straight cash flow. I like buy and hold cash flow and that's how I invest. Good luck ! 

    0Reply
  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    11y
    Originally posted by @Scott Gray:

    I understand you can rollover your 401k to a self directed IRA and use these funds to invest in real estate. There are some restrictions though. Someone with knowledge of this will chime in hopefully.

    Here is what IRS says about Prohibited Transactions in an IRA:

    http://www.irs.gov/Retirement-Plans/Plan-Participa...

    0Reply
  • Justin WindhamPro Member
    Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
    11y

    @Jack Butala

    Wow, that's really impressive! I'm going to check out your ebook.

    1Reply
  • Nancy L.
    Philadelphia, PA · Member since 2014 · 178 posts · 64 votes
    11y

    Welcome! Interesting way to pose the question... My experience is that it's harder to get residential mortgages after quitting the full-time job (I did so 3 yrs ago, and yes, it's as awesome as it sounds :). All other types of income need a 2 yr history. However, DO check out commercial lenders if you go this route and haven't already. I don't know why this hadn't come to my attention sooner and wish it had!!!

    Also worth crunching your DTI numbers to see if one of you staying salaried help you with this, and one thing that has been helpful for me in budget balancing during this transition was doing some part-time and/or consulting type work.

    Hope this helps!!!

    0Reply
  • Joel G.
    OP
    Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes
    11y
    Originally posted by @Scott Gray:

    As someone just starting out, this has been an excellent exchange of ideas and information.  Just what I needed as a newbie.

    I understand you can rollover your 401k to a self directed IRA and use these funds to invest in real estate. There are some restrictions though. Someone with knowledge of this will chime in hopefully.

    Thanks for the insight. 

     Hi Scott,

    We are interested in that very subject as well...it would be great to not be held to only certain investments as we are at this time. We plan on learning a great deal about this in the near future as it seems the structure of using these funds is almost as important as what we will ultimately invest in. 

    Good luck in all that you strive for!!

    0Reply
  • Joel G.
    OP
    Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes
    11y
    Originally posted by @Marcin Talaga:

    Joel G, Let me share with you my retirement plan; maybe you'll find some interest in it.  Right now I am working as a Realtor and General Contractor.  All the money I'm making in this business is earmarked for rental properties.  I believe the key to being wealthy and happy when you get older, at least for me, is owning many buildings.  I think of a rental unit as a bank.  Instead of putting money into an account at your local bank and having it sit there and depreciate, you put it into a building that pays itself off and hopefully a building that goes up in value over time.  When I get to 5/6 or 7 buildings, or more :), whichever amount I know will provide me with a 6 figure income just from the rents, I plan on "retiring."  I put "retiring" in quotes because my plan then would be to quit my jobs and be a full time property manager for my buildings.  Cut the grass, shovel the snow, clean, chit-chat with the tenants, etc.  Run my buildings as my full time job.  The beauty of this plan, if all goes well of course, is if I'm making a good enough return, I could hire a property management company to run those buildings and my wife and I can spend time traveling, racing cars, doing whatever it is we'd love to do and still have 6 figures coming in.  For me, that is the ideal dream.

    If I were you, I'd start with one building, maybe a 2 or 3 flat just to get your feet wet.  If you find a good one the rents should pay the mortgage, taxes, insurance, etc. and there should be a few hundred left over which you should save for repairs or for the downpayment for the next building.  Once you're comfortable being a landlord, and you think it's what you'd like to do, purchase another one.  Then another one.  Before you know it, the left over profit each year will accumulate quick enough to where you'll have a downpayment for a 4th.  Then you can use the profits to pay off the 1st one you bought and leverage it to buy a 5th!  Etc, etc.  Sounds easy and far fetched to many, but I've seen it done and really hope I can get it done too :).  Not sure if this post will be helpful, but hey, maybe it will be.

     Marcin,

    Thank you sharing your plan with us! We too are very interested in acquiring hold properties for long term cash flow. You have definitely thought through your plan and I believe that is (at least n some respects) the biggest part of the battle...it's much easier to get to Disneyland if you know where you are going! 

    Good luck on your journey...I betting you have good things coming your way...and please let us know if there is anything we can do to help you while on your way!

    0Reply
  • Joel G.
    OP
    Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes
    11y
    Originally posted by @Franklin Romine:

    @Joel G.

    I would leverage your day job income/credit and accumulate more good debt... quickly.


    Frank

     Thanks Frank! 

    Your profile is very interesting and you have a beautiful family.

    I would enjoy the chance to meet you and pick your brain sometime...the Valley has some very interesting opportunities!

    0Reply
  • Joel G.
    OP
    Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes
    11y
    Originally posted by @Andrew R.:

    Nice problem to have :). I buy in cash in the under 100k house market, and then seller finance, sometimes rent. About 10k in rehab and then resell. Straight cash flow. I like buy and hold cash flow and that's how I invest. Good luck ! 

     Thanks for your suggestions Andrew!

    BTW...Your 2 websites are really GREAT...you have an amazing story! Thank you for taking the time to share your ideas with everyone!

    0Reply
  • Joel G.
    OP
    Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes
    11y
    Originally posted by @Dmitriy Fomichenko:
    Originally posted by @Scott Gray:

    I understand you can rollover your 401k to a self directed IRA and use these funds to invest in real estate. There are some restrictions though. Someone with knowledge of this will chime in hopefully.

    Here is what IRS says about Prohibited Transactions in an IRA:

    http://www.irs.gov/Retirement-Plans/Plan-Participa...

     Thanks for the link Dmitriy!

    1Reply
  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    11y

    You are welcome @Joel G.!

    0Reply
  • Joel G.
    OP
    Real Estate Investor · Sunnyvale, CA · Member since 2014 · 65 posts · 20 votes
    11y
    Originally posted by @Nancy L.:

    Welcome! Interesting way to pose the question... My experience is that it's harder to get residential mortgages after quitting the full-time job (I did so 3 yrs ago, and yes, it's as awesome as it sounds :). All other types of income need a 2 yr history. However, DO check out commercial lenders if you go this route and haven't already. I don't know why this hadn't come to my attention sooner and wish it had!!!

    Also worth crunching your DTI numbers to see if one of you staying salaried help you with this, and one thing that has been helpful for me in budget balancing during this transition was doing some part-time and/or consulting type work.

    Hope this helps!!!

     Thanks for your welcome Nancy! 

    Congratulations on your successes! Keeping our current jobs and being able to qualify for more properties is certainly something we must seriously consider...you and several other successful REI have mentioned that in this thread as part of a plan for success and believe that we would be foolish to ignore that advice.

    Our DTI is pretty good at this time...and as kids get out of college later this year...will hopefully get even better. we will definitely spend some time on our projected budgets to see if keeping one job for now will be an option for us!

    Thank you for your advice and continued good luck to you!

    0Reply
  • David Nolan
    Professional Property Investor · Brisbane, Queensland · Member since 2015 · 165 posts · 160 votes
    11y

    @Joel G. Hi Joel to answer your question regarding a system to identify Opportunities and Threats in order to write a business plan the Opportunities are based on the drivers in your selected area that drive prices upwards. For example properties that present as bargains based on local market metrics, proposed changes to local planning laws, land re zoning, changes to market confidence, changes to access to capital, proposed population increases, shifting demographics, the falling cost of money etc. These and other drivers can create opportunities.

    Likewise the negative effects of those same drivers can create threats, In order to do the business plan effectively you would be wise to understand the key drivers in the markets you propose to operate in. Unfortunately there are no short cuts to understanding these factors. You would be wise to learn from local operators who enjoy success in the markets you wish to trade in and seek their guidance as to what drivers they monitor the most.

    To give you some guide, I am at present, after more than 30 years in this business in Australia, looking to enter the market in the USA. Hence joining BP and I am having to do the same level of research and homework that you would have to do. My vast knowledge base and experience will count for very little if I do not understand the local drivers of any market I propose to enter. All markets are unique in some  regard, but have common factors in many others. Making money in real estate is about understanding what it is that improves a property's value and they are not all necessarily to do with the individual property but more so to do with economies, international, national, statewide and local. The more you understand these things the better your business plan will be.

    Furthermore, you started out asking what you should do with your assets and there are some good pieces of advice here about different ways to make money, however, they only apply if the method suggested fits within your business plan. I would suggest that once you have a detailed written business plan the types of deals you should do will become very self apparent. Once you have this clarity of vision you will see only those deals that will make financial sense to you and the confusion that many new investors find existing because of the vast majority of investment alternatives that exist will subside. The clearer your vision the easier it is to hit the target. The target being your financial goals. A sound, well thought out and researched business plan is one of the the keys to creating good vision in investment decision making.

    If you have limited experience in writing a business plan I would strongly suggest hiring an accountant or business adviser with the experience you lack to help. The money invested will be repaid many times over by having a clear path to follow and one that shows very clear financial objectives and strategies.

    Hope this helps.

    Enjoy the journey!

    3Reply
  • Michael Delpier
    Investor · Houston, TX · Member since 2015 · 176 posts · 121 votes
    11y

    @David Nolan awesome post!!!

    Exactly what I needed to go from "instinctually" knowing my market and target to actually knowing and able to track what I am doing.

    @Joel G. thanks again for this great question. I am learning a lot from the responses.

    0Reply
  • David Nolan
    Professional Property Investor · Brisbane, Queensland · Member since 2015 · 165 posts · 160 votes
    11y

    @Michael Delpier Happy to hear you got some value from my post. One of the greatest gifts you can ever give yourself is the gift of learning. Only you can choose to do it for yourself so thanks again for responding to my post, it is great to know that I have been able to share some of my knowledge with someone who wants to learn.

    Happy investing!

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free