Seeking Wisdom! Frustration is getting the best of me!

Keep your head up! Here is my advice, I hope it helps.

1. Don't expect a steady, 40 hr week type job in real estate. If you really want to succeed in investing on your own you will need to put in the long hours and understand that money may not come at first. But if you put in the necessary time and effort I guarantee you will see significant returns.

2. It is important to have money in the bank in case of an emergency but also extremely important to get that debt down asap, as it sounds like it may be standing in the way of what you want to do (see #4 on how to get it down).

3. Although you may not be in a position to buy and hold the multiplex at the moment, remember there are other ways to apply the knowledge you have acquired and interest in the industry than just buying and holding. Perhaps try to find a partner who has the money, but lacks the time and experience to do the deals himself. Whatever you can do to add value and credibility to your name (even if it wasn't all your cash) will pay big dividends. Put your name and your goals out there, you could have a buddy or relative, etc who wants to invest in this but had no idea you are interested simply because they had never heard it from you.

4.Rather than buy and hold on the first property I would suggest trying to assign contracts to other investors, that way you don't tie up all of your capital in one deal and wait for it to cashflow positively. With a few hefty assignment fees you should be able to pay down some of your debt, not only easing your tensions but making you a more attractive borrower in the eyes of the bank.

Best of luck! Feel free to message me with any questions.

2 Reply

Nnabuenyi Anigbogu

Chicago, IL · Member since 2015 · 298 posts · 261 votes

11y

Hello @Dyryl Burnett

I have one idea that you can consider with a grain of salt. If you have never owned your own property before (first time home buyer) there are some great down payment assistance programs that may allow you to buy up to a 4 flat. They are usually income restricted but im assuming (maybe incorrectly) that working for CPS you will not be above the income threshold (some are up to $80,000 a year for a single person).

I assume you are paying rent and if you could convert that rent to a mortgage and get DP assistance that might be a viable way to start investing while saving up money. I know a person who did this personally while he had issues similar to yours and not much if any money.

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Mindy JensenPro Member

BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes

11y

Hey @Dyryl Burnett! Welcome to BiggerPockets.

Jumping in can be difficult. Since you work in education, perhaps there are programs in place to help get you started with financing?

How is your credit score? With medical bills piling up, it may have taken a hit. Have you contacted the providers to request a payment plan? I was able to negotiate a payment plan after the birth of my daughter.

There are Chicago area REI groups, check out the meetup forum to find one that is close to you.

FHA loans are available for up to 4-unit properties as long as you live in one of the units. FHA loans can be had with as little as 3.5% down, which might be able to help.

Take a hard look at your personal expenses. Is there any place you can cut back? Bring lunch from home rather than eating out? Get a lower-cost cell plan, cut or cancel cable, change the setting on your thermostat at home, turn off the AC when you aren't there. Any way to cut money leaving your pocket so you can use those dollars to pay off your bills and start saving. Good luck!

Steven Skinner

Flipper/Rehabber · Rome, GA · Member since 2015 · 46 posts · 25 votes

11y

One of the simplest strategies you can put into play for yourself without any sort of cash to provide upfront, would be to work with a master lease, or a "sandwich" lease. Find distressed properties in your area, perhaps ones with grown up yards or broken windows, then proceed to contact the owner of the property; pre-foreclosures are ideal, as well. Figure out what they owe on the property, if anything, and present to them an opportunity to have their property rented out for either takeover payments of their mortgage, or a monthly cash flow amount. You're responsible for the management, repairs, etc., but you'll have a strong cash flow from each individual property in that you get the entire amount leftover after their mortgage payment, or the amount predetermined by you and the owner if they owe nothing.

e.g., $700 rent - $391 mortgage payment = $309 cash flow.

Another option you'll have, is to rent the property out on a lease-purchase/lease-option, or a "rent-to-own." With this, you'll receive a nonrefundable option-fee upon the tenant signing their lease. This amount varies anywhere from 1-5%, typically. Now make sure you only do this if you have a lease-option with the owner, rather than a regular lease, otherwise you won't be permitted to sell the property at all. Though, if this is how you choose to work it, you'll also receive an amount at the expiration of both leases, provided your tenant signed a lease-purchase or decides to exercise their option to buy on the lease-option.

e.g., $70,000 tenant purchase price - $52,000 your purchase price = $18,000 profit.

Again, this is contingent on each of you having a lease-purchase/lease-option agreement in place. So, realistically, you can be as involved as you'd like. Keep in mind a typical term for this sort of lease is anywhere from 2-5 years. You stand the potential of receiving cash upfront, monthly cash flow, and a large lump sum at the end. All without having to fork over any of your own money. Hope this helps!

Podcast Guest on Show #244

Gilbert Dominguez

Investor · Chicago, IL · Member since 2015 · 677 posts · 309 votes

11y

I can understand what you are feeling. However you did not start out with establishing a real estate career from the start. Your current situation is not ideal for starting out in real estate investing. If you listen to Brandon Turner he recommends you take a systematic, methodical, well calculated approach to establish a good foundation that you will build on.

Starting out in real estate investing when your finances are shaky and when you are suffering the stress that can come from a difficult close personal relationship such as a marriage that is not working out and children that need great care can make it very difficult if not impossible to objectively analyze, evaluate, and finance real estate deals. No one is superman and you need to keep a cool head, your emotions have to be in check and whatever you do has to make good sense.

One of the most important first steps in real estate investing is getting educated and you are already doing that. This may not be how you would like to start now that you have discovered real estate investing and have determined it is something you could be passionate about and also that you feel strongly that it make good sense to you as something to use to build your finances around but everyone should start with what they can do and not what they wish they could do.

Have you taken the time to read several posts here in all categories. You can see that people are having all kinds of problems with their real estate and some are not having problems but are having difficulty determining what their next step should or could be. Some people are having problems with contracts, others with over extending themselves, facing cost overruns, maxing out their credit cards, some are having problems dealing with tenants, etc. The point is there are real obstacles to learn from and overcome even when you have managed to successfully become the owner of a piece of real estate and doing it profitably.

Take time to sit down and write down everything about your current situation and turn that into numbers and time frames required to adequately address any financial issue. Then learn about and consult with those that can finance a deal for you. Lay out a plan of how you can replace your current career with one in real estate investing. How you will make the transition and what kind of time frame will it take realistically? Set achievable goals. Learn about deal and financing structures available to you so that you start to build a tool belt as it were applicable to real estate investing.

Ask yourself if you can network and/or partner with others and what role or contribution you can make to any kind of association or joint venture. Ask yourself if that is something you can benefit from. Offer to tag along to learn when and if you can. Everything you can really do will be part of your plan. That can help you deal with the frustration you are feeling now of wanting to participate in real estate but not able to in the manner you want.

We here about people winning lotteries. We would all love to be the one to win a lottery. However that is not in the cards for the greater majority of us. View real estate as something you will build over an extended period of time.

A systematic and methodical approach. That is what has proven over the years to produce the best results.

Even after 30 years in the business I get frustrated I cannot do something or some deals I really want to. For me I do not think that feeling has ever gone away.

4 Reply

Linda WeygantPro Member

Investor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes

11y

Is it possible to get a second job to help pay down the bills and then use it to save after the bills are paid?

Armond Wright

Investor · Indianapolis, IN · Member since 2009 · 178 posts · 26 votes

11y

I really like everyone post on here they are very insightful and helpful. However check check check it out. You don't need any money or credit to get started in this real estate game. You have to acquire the skill. If you got the will..I mean the will. Something that is so great that is within you that nothing you come in contact with will stop you. If that is you..PM me...Lets bring your business into a new reality. Lets work..

Hartsdale, NY · Member since 2015 · 874 posts · 218 votes

11y

if it were me I would certainly keep my job and work around it in real estate. I don't think I could handle the stress of being without my current career and comfort zone. Maybe when you resolve some of your issues you will be in a better place to make the move into Real Estate full time. The move now sounds premature.

Hartsdale, NY · Member since 2015 · 874 posts · 218 votes

11y

if it were me I would certainly keep my job and work around it in real estate. I don't think I could handle the stress of being without my current career and comfort zone. Maybe when you resolve some of your issues you will be in a better place to make the move into Real Estate full time. The move now sounds premature.

If you can move I think the advise to move into a Duplex with a FHA 3.5 Mortgage is the best idea to get started. Your one tenant will help pay your mortgage and you will be on your way. It sounds like a pretty painless way to gt started in your real estate career, still keeping your job.

Mike Baker

Contractor · Blackfoot, ID · Member since 2013 · 149 posts · 52 votes

11y

I completely understand. My wife and took the plunge and are getting into our first duplex (house hack style). It has had serious ups and downs, and if I don't shoot someone before the whole deal is through it will be a miracle.

My point is. We needed this. We stepped out there, and now we have the bug. We are looking at, and running numbers on properties constantly, not because we can buy them, but we need to learn, and we need to believe we CAN do it.

First things first. Decide How you can do it, and get rid of the "I cant".

You sound like a smart guy who doesn't want to let his daughter down. If that's true, be the positive person you want her to be, and she will follow.

You can and will do great things

Joe Moore

Rental Property Investor · Los Angeles, CA · Member since 2010 · 804 posts · 230 votes

11y

Is it possible you an extra room you can rent out? This is probably the fastest and most doable route. You can put the room on craigslist and start to get quick response.

OP

Involved In Real Estate · Chicago, IL · Member since 2014 · 52 posts · 8 votes

11y

(sorry for the tardy response) Thanks alot!

@Sean McNamara I will into #4. I know right now, the "pre-newbie" phase that I HAVE to buckle down and keep pushing towards the goal.

OP

Involved In Real Estate · Chicago, IL · Member since 2014 · 52 posts · 8 votes

11y

@Gilbert Dominguez sincerely thank you sir! Really needed to read that.

@Nnabuenyi Anigbogu I am looking into alot of DP assistant programs. Being in CPS does have advantages with that regard! Do you know of any that you would recommend?

@Mindy Jensen Thanks alot. I am a nerd with my budget and finances (love running numbers). The biggest thing or hurdle to overcome is the debt! The frustration starts IN the debt, but I am learning that the mess I CREATED, if done properly, will aid in my endurance and diligence. I just have to keep fighting thru it.

OP

Involved In Real Estate · Chicago, IL · Member since 2014 · 52 posts · 8 votes

11y

@Steven Skinner thanks. To be honest, I need to research your strategies. Alot of those terms, I've never heard before.

@Linda Weygant I have 3 jobs as we speak (reason it took so long responding to everyone lol).

OP

Involved In Real Estate · Chicago, IL · Member since 2014 · 52 posts · 8 votes

11y

@Mike Baker thanks alot! I would love to hear how you and your wife overcame the obstacles? I love to hear couples diligently attacking their financial prosperity.

@Joe Moore I am currently living with a relative right now. So I have the advantage of low rent, which has allowed me to pay off some debt. This summer I am planning to SAVE SAVE SAVE. Thanks Sir!

@Barbara G. Appreciate the words! Alot is premature regarding real estate for me. The more sensible step at this current moment, is to continue to educate myself and save money.

OP

Involved In Real Estate · Chicago, IL · Member since 2014 · 52 posts · 8 votes

11y

Thanks everyone! Really appreciate the words of encouragement and help!

Hartsdale, NY · Member since 2015 · 874 posts · 218 votes

11y

I really think house hacking (in a multi family duplex or quad) while keeping your job and all its wonderful benefits would be the way I would go if I were in your situation. You have your salary, you have your future pension, you are in the "Cat Bird's seat"

That's an FHA mortgage at 3.5. If you need renovation you can get that with it. If you are able to do it in addition to renting out the other apartments you can even rent out a room or 2 in your own apartment.

Please let us know what you think about your "House Hacking"

Hartsdale, NY · Member since 2015 · 874 posts · 218 votes

11y

let's try to figure this out with you Dyryl!!

@Dyryl Burnett

If you buy a $200,000 multi family you would need a down payment of approx $7,000.

Is there anywhere you can get $7,000??

What are your present living arrangements and how much do they cost that you are paying right NOW?? Are you renting an apartment and how many people will have to live with you if you house hack?

If we know this perhaps there is a plan somewhere for you on BP

Nnabuenyi Anigbogu

Chicago, IL · Member since 2015 · 298 posts · 261 votes

11y

One of the best ones i know of is the NHS (http://www.nhschicago.org/)

I know an acquaintance that was able to use it to purchase a 2flat with no money out of pocket and he moved in and fixed it up. He just finally finished up the second flat and the rent from that will cover the entire mortgage plus expenses. I believe they can also help you clean up your credit and they teach you about owning a home.

I wish i could take advantage of it but i am past the income threshold. Look into it and see if you qualify. There are also a couple of other Illinois specific ones that i have explored. Ill look up the info and send them to you later (at work right now)

Bill Gulley

Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes

11y

As an educator you should know the value of an education, learn real estate before you try to deal in real estate. Stay away from the jump right in types, you don't have money to lose.

Medical bills are the least sinful of all unpaid bills, I suggest you find a HUD certified counselor and go over your finances with them, they won't be selling you anything and it's free!

You might consider getting your license too, you can chum up with a mentor who can split commissions with you to get you started.

BTW, there are no large assignment fees, go beyond what a Realtor may charge, like 10%, you're getting into predatory issues and you certainly don't want to do wholesaling as a business in IL.

Take a step back, find the priority of the problems and clear your plate one issue at a time.

Getting custody means having a better environment and financial solvency than the child is already in. It also means time available, having 5 jobs the judge will ask about (or consider) the demands on your time.

No one likes bankruptcy, but it is part of the game, just ask Donald Trump! Medical bills are the number one reason and it is something beyond your control. If you do have to go there, you won't get a new mortgage for 2 years, not really that bad. You need to rebuild the credit, a counselor (not a bankruptcy attorney) can address this route.

Learn RE from credible sources, RE schools, take a local college course, get a text book that Agents use to pass the exam, in 3 weeks you'll be ahead of most on the internet or chasing some system. After that, then look at strategies, you'll understand them much better after learning about the basics of RE. Good luck :)

Victoria Winters

Laguna Beach, CA · Member since 2014 · 263 posts · 140 votes

11y

It took courage to write about your personal situation and to ask for help. From the view point of a reader, your story is a set of circumstances common to many people. Your work in education serves and uplifts the minds of your students. Your contribution in this area is vitally important and perhaps it is wise to rethink dimming the light you shine on others in this way.

Real estate investing can be a great way to earn your financial freedom. It requires knowledge, planning and taking action. Turn your attention to your goal of purchasing your first property. You may find it a refreshing change to focus on building your investment business and to look for ways to invest in yourself as you respond to the challenges of every day life. The moment you do something, pay a bill or complete a task, it is done and you get to choose to do something different in the next moment.

Energy flows where attention goes. What is the point of reinforcing all the reasons why you can't do something? That is how everyone stops themselves and creates obstacles. It is a vicious cycle. But, because it is a cycle, you can just as easily create a different cycle. Go in the opposite direction.

Talk to people who are doing the things you want to do. Get involved in more conversations about building a business, and ask questions about the things you want to learn. Inspire and encourage yourself in the same way you do this for your students. Use your imagination for the purpose of creating a new vision and remember your goals more often than your woes.

2 Reply

OP

Involved In Real Estate · Chicago, IL · Member since 2014 · 52 posts · 8 votes

11y

@Barbara G.

So here is my strategy:

House Hack Property

3/4 unit Multifamily South Side Area (Bronzeville, Hyde Park, Grand Crossing, South Shore, Chatham) of Chicago

Must need a renovation

Numbers must produce cash flow (to fund reserves and second property)

I am looking into doing the NACA program, where they usually offer 1% to 3% interest.

No closing cost

203K loan can be included in the mortgage

They require to bring $5-7K to the table.

Currently living with a relative, so my rent is cheap. I just paid off another debt. I am stopping my debt snowball and going back to saving!

OP

Involved In Real Estate · Chicago, IL · Member since 2014 · 52 posts · 8 votes

11y

Originally posted by @Bill Gulley:

Take a step back, find the priority of the problems and clear your plate one issue at a time.

That REALLY resonated for me sir! I have really been reflective and focusing on that very point. Sincerely, thanks for that!

OP

Involved In Real Estate · Chicago, IL · Member since 2014 · 52 posts · 8 votes

11y

Originally posted by @Victoria Winters:

Energy flows where attention goes. What is the point of reinforcing all the reasons why you can't do something? That is how everyone stops themselves and creates obstacles. It is a vicious cycle. But, because it is a cycle, you can just as easily create a different cycle. Go in the opposite direction.

BEAUTIFUL WORDS! Love the kindness and energy of hope. Thank you very much!

Hartsdale, NY · Member since 2015 · 874 posts · 218 votes

11y

Everybody has suggested a different approach.

Everbody understands their own approach so I suggest that each person that has suggested something just write up a step by step hypathetical situation that illustrates how their approach will assist this man @Dyryl Burnett

and DYRYL should respond and say what he likes about that approach and why it might work or why he can not do it.

Only he knows if any of these suggestions can work for the place he is at now. Also Dyryl should suggest some of the things that he sees as doable. Then perhps a real plan can be mapped out.

Does his job have any benefits that they offer him? Somewhere there is a solution so he can go forward now