WWYD. I want to get started but unsure how

10 Replies

I'm looking to get started in the REI world, but am kinda in a position that, based on a lot of forums I've been reading up to this point, is a little unique ( maybe not-I'm new). I have a full time job that I'll never quit because I believe in it...it's a public service job, but It doesn't pay worth a crap right now( about 42k/ year). I have 720 credit score, low debt other than my student loans, which are about 90k. I plan on using a down payment from an old 401k plan that I have, about 7k and I am a first time home buyer. Because my student loans are so high it's hard to get a loan, and actually I'm having a hard time getting pre-approved for any more then about 70K. However, I'm in an income repayment plan and because of that my monthly payment is $0. Also, because of my public service job, in 10 yrs ( I'm 3 years in) the balance of the loan will actually be forgiven. I'm looking to get into renting out condos eventually. I live south of Denver where it's difficult to find anything less then 170k for a condo and I need to stay in the area for various reasons. I plan to live in it for at least a year with a small family, so I plan on at least a 2b2b. After a year I would like to starting renting it out and move into something bigger. My question is, what would a seasoned investor do in a situation like this. I pay 1400 a month in rent and can definitely afford this, however the banks won't approve me for anymore then around 90k. I know there are alternate forms of lenders out there, however I'm worried about crappy rates. I have my 401K but I'm going to take a hit from the taxes and fees when I take it out, so I won't have much to put down. Any advice? Next question is, is this a good time to buy a traditional long term investment right now in the Parker area? I'm afraid that if I buy now in a few years I'll be under water? Is the market peaking, or getting close to it right now? Thanks for reading! And any advice is welcomed!

I understand how hard it is to get something worthwile in public service. I have my emt but work in a strip club to pay bills. I dont know if your police but I believe there is a police credit union in golden just down the steet from the prision before the high school, or atleast was there 10 years ago. even if your not PD they may work with you a little better then a regular bank. If you dont have to live within x miles due to responce requirements can you look at the elezibeth or franktown area?

As far as good options for investing, You will probably have to go to the springs or maybe north. most of denver is high rent and you wont find much for sale cheap.

@Drew Oesterle you have to figure out a way to make more money and get way smarter about RE. Both take time. Real Estate takes two of the following, knowledge, experience,  and money. Without knowing specifics of your situation it's hard to know what your "unfair advantage" is. If you haven't listened to the podcasts you may not know that term but it's basically that thing that is unique to you that can be leveraged to get you a toe hold in Real Estate. You need to start looking at yourself and see what about you would give you that point of leverage into real estate. Use that to pry your way in.

@Drew Oesterle ,

You're right that you are in a tough underwriting situation.  Most banks will only allow you to spend 36% of your gross monthly income on debt payments.  So if you're making $42k, then that works out to $3500/month and you could use this to support $1260/month in total recurring debt (like car payments, credit cards, and housing).  You could realistically finance about 200k if the house payment was your only loan.  Unfortunately, the bank isn't going to ignore the student loans to allow you to do that.

I think Bill is right about you needing to earn more money.  You could consider taking a second job for a few months and then applying for a mortgage.  If you can find a way to earn another $1500 per month, you'll be able to afford about another $100k in property.

The way to show more REI hustle would be to look for and even market to people willing to owner finance and/or people willing to give you a wraparound. These options or any others that take the bank out of the equation are really the only way you can avoid the most basic issue here -- that you don't currently make enough monthly income.

If you're not up to speed on all the concepts I've mentioned, then Bill is correct about a second point... listen to the podcasts... all of them.  I've made it to #101 myself.

@Jake Holmes,  I've looked at frank town and Elizabeth, but my concern is the ability to find renters in those areas, what kinda draws me to the Parker area is the need for rentals and the desirability of those areas. Would frank town and Elizabeth still have that? I will have to look into the credit unions. Thanks for that!

@Bill S, thank you for the advice, I'm still having a little bit if a hard time figuring out what that "unfair advantage" is for me, other than a decent instinct at recognizing patterns in the market, so maybe I need to spend some more time figuring that out before moving on. That being said, from the research I have done, it seems to make more sense to be making payments on a condo I own, as opposed to renting, especially when a mortgage would be cheaper than rent? So the problem still arises, how do I find that financing?  Thanks for the "tough love" though. 

@Eddie Dumire, thanks for those ideas, I have looked at owner financing, however it's been difficult to find anyone so far who is interested in doing this. The one little thing I didn't mention in my original post is that I am guaranteed, as long as I do t mess anything up too bad, in getting a 10k raise each year on my anniversary date for the next 4 years. So does this mean I need to wait, or is there a way to get in now, and stop paying someone else's mortgage?

@Drew Oesterle , you might also want to consider partnering with someone in the market you want to invest in. If you're in a job where you can offer your time in a partnership in exchange for someone putting the loan in their name that might get you to where you want to go.

Partnerships can be amazing, but like looking for a good deal you will likely need to "interview" many before finding the right one.

@Drew Oesterle I really think you should just get a part time job as a Wal-Mart greeter for a few months.  Once the income is verifiable, the banks will approve you for the loan you need and you can add to your down payment without cashing out your 401k.

so I already deliver pizzas at night so I'm hoping that will help.  But its not really enough for a down payment in a few months?

Most lenders will allow 5% down so on a 200k residence that should set you back 10k.  You said you already have $7k so a couple months should get you close.

How about researching special programs targeted to those in public service, for example,


The HUD Good Neighbor Next Door program. There are also usually many local first-time home buyer assistance programs that help you if you are willing to owner-occupy for a few years. My son used the Virginia program 2 years after college, had to take a class on home ownership, and after paying for inspections and application fees, I think came to closing with like $12. If he sells the home or turns it into a rental within x years, think it's 3, then he would owe money back to them.

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