Seeking advice...ultimate goal is to have over 30 properties

Justin Harris

Akron, OH · Member since 2016 · 1 post · 7 votes

10y

Hey John!! I know right now it seems like your goal is pretty far away but keep your head up and you'll be there soon enough. I would just like to share my story with you because I believe your situation is similar to mine. I officially closed on my first home last year on August 28 2015 at the age of 26 years old. One day away from my birth date. That year and the year before I made around $38,000. At the time I owed over 57,000 in student loans, $3000 on a car loan, 2000 in credit cards. Instead of waiting to pay down my balance on the credit card I just got a new one. Doubled my credit limit which shot my score up 30 points or so. I now had a beacon of 709. I went through several banks, around 5 to be exact. I finally found one that approved me for a house up to 135,000. I then went shopping. I probably looked at around 100 houses before I found this beautiful 3 bed room 1.5 bath with a double garage for 31000. That's right 31000.... It was a forclosure property, and with the bank that approve me we did a renovation loan (conventional) for a total of 60,000 including all repairs. The house appraised for 102,000. To get the loan I had to live in the house for a year but only had to put 3.5% down. I currently rent two of the bedrooms out for a $100 profit a month while I still live there. There's always a way to go. Doesn't matter how many people tell you no. The bank I used was prime lending if you want to try them. Let me know if you have any questions! I'd be happy to walk you through what I did and even warn you about what I should have done better.

7 Reply

Mark Kelley

Investor · Raleigh, NC · Member since 2016 · 82 posts · 34 votes

10y

Hi @John Burtle. Thanks for your service.

I'm not a financial adviser. You seem to have the right idea though. Getting rid of the credit card debt is a good first step. The value of that truck seems really high relative to your income. You mentioned refi, though it may make sense to sell it and get a less expensive car to free up some debt for real estate purchase.

As far as the first house to purchase, you might seriously consider 'house hacking' an $80k duplex. Live in one side and rent out the other. The rented unit might cover your entire PITI for the duplex, putting your cost of housing to near zero. In the meantime, use your income to build up reserves to purchase another house (or duplex, triplex, whatever) in a couple years. If you move out of the duplex into that new place, then you can have a duplex renting both sides, and you are 1/15 on your way to 30 units.

3 Reply

OP

Real Estate Broker · IL · Member since 2016 · 284 posts · 178 votes

10y

Thanks everyone I greatly appreciate it. I'm going to look into the advice I've been given!

As far as selling the truck. I've thought about it. But getting rid of the truck and getting a truck with higher miles could be risky. I have a feeling I'll run into issues with getting it worked on etc. My truck now is a 2011 crew cab diesel with under 80,000 miles. If I can get it refinanced and lower the payment down to $400.00 a month, I feel I'm better off keeping it. I know I can get rid of it and buy a 5-10K truck and pay $200.00 or more a month for a few years, but I don't know yet. I risk having to dump money into it/braking down on the side of the road. Needless to say I need a good dependable truck. If I have to end up selling it then I'll have to sell it. I planned on keeping it for the next 10-12 years. Generally diesels are good for 300,000 miles with minimum maintenance.

I will look into duplex's. That would work out pretty well if I could rent out the other side and pretty much have it pay the mortgage while I save up money to buy another property.

OP

Real Estate Broker · IL · Member since 2016 · 284 posts · 178 votes

10y

@Rebecca G. I'm not looking to buy right this second. Next year, yes. Thank you for the reply. I have to get my credit card debt cleaned up. That's my number one goal right now. I quit using the card over 8 months ago. Now I need to get it paid off and not use it again.

Chris T.

Investor · Downers Grove, IL · Member since 2015 · 1k+ posts · 955 votes

10y

@John Burtle

I agree with your decision to keep your truck, if you get another truck with higher miles, repair costs could go up. At least with what you have, you know what you have.

There are 4 things you need to do. Pay down debt (starting with the highest interest first), set aside money for an emergency fund, increase your income (if possible, a side business that you're interested in?) and/or lower your expenses.

1 more important thing is to continue to get RE / Financial education here at BP or at your local library.

When you buy next year, house hacking is definitely a viable way to

1. Build equity

2. Lower your cost of living (get others to pay your PITI)

3. Become a landlord and get some hands on experience for your future acquisitions.

Good luck in your RE journey! To your success.

OP

Real Estate Broker · IL · Member since 2016 · 284 posts · 178 votes

10y

Thanks @Chris T.

Do any of you suggest applying for a Chase bank 0% interest credit card for 15 months ?

That way I can avoid interest while I pay off the 1,900? I plan on having it paid off in the next 5-6 months. I wouldn't be using the card for anything else.

Chris T.

Investor · Downers Grove, IL · Member since 2015 · 1k+ posts · 955 votes

10y

I am not an expert in credit score reporting but I think whenever you open new CC, your scores get dinged a little. Mine did when I got several company credit cards.

If you're ok with that, I think it's a great idea to save money on the interest, as long as you plan to pay it off ASAP. It also depends on how much Chase charges you to transfer the balance?

OP

Real Estate Broker · IL · Member since 2016 · 284 posts · 178 votes

10y

@Chris T. Chase charges $0.00 for transfers. My credit score is 697 right now based off my capital one credit report. I just figure maybe it would be best to try Chase to avoid interest charges. I don't see why I can't have the $1,900 paid off within 5-6 months. My good friend owns a farm and I'll be helping him harvest in a few weeks. I'll make an extra $200-300.00 a week doing that. That's the money I'm going to use to pay the card off.

Chris T.

Investor · Downers Grove, IL · Member since 2015 · 1k+ posts · 955 votes

10y

there you go! great way to lower your interest payments and get some side income as well.

If you have another vehicle to use, there is a website call turo that allows one to rent out their vehicle as well. I have no experience with them nor am i endorsing them. But if you can rent out your truck a few days a month, there's extra income right there.

I tried listing my minivan but my wife shot down that idea pretty quickly. Maybe when I can afford a nicer car in a few years I can rent that out instead.

Rocky V.

Rental Property Investor · Arlington, TX · Member since 2012 · 788 posts · 640 votes

10y

Look into this program for law enforcement, teachers, firefighters and emts

https://www.gnnd.com/

Steve Vaughan

Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes

10y

That truck is insanity if you plan on ever getting ahead. Drive a beater to your first closing with pride! Reliable vehicles can be purchased for much cheaper and won't have a payment attached - while it drops in value - like a rock.

I've had over 30 doors for a decade and haven't had a car/truck payment that entire time. Make your choice @John Burtle

4 Reply

OP

Real Estate Broker · IL · Member since 2016 · 284 posts · 178 votes

10y

Thanks again for the replies. I ended up getting approved for the Chase credit card. The limit is 2,500. 0% for 15 months. The problem is if I transfer the 1,900 to the card won't that screw with my credit because the card is almost maxed out at that point? The credit limit on the capital one card is around 6,000.

Martin Kruger

Saint Paul, MN · Member since 2015 · 19 posts · 13 votes

10y

Hi John, I am an underwriter with yrs of experience. You are scored on your total available vs your total balance. Therefore it should not matter where the balance is. Total debt 1900/ total available 6000 = 31.6% revolving debt utilization, right where you want to be.

Matt Gillette

Investor · North Charleston, SC · Member since 2016 · 7 posts · 4 votes

10y

@john burtle I highly suggest looking into a multifamily property where you can house hack and have the other rentals cover the cost of your mortgage. I am in a very similar situation as you. My wife and I put ourselves through school at whatever cost it took. Unfortunately it was at high private loans and credit cards while working and going to school FT. We bought a quadplex with 3% down through a FHA loan with a 203k renovation tacked on. We are doing 95% of the renovation ourselves while living in it which is tough but one year later we are refinancing and looking to purchase our next property. It's a journey but with hard work we're looking to make it happen. My wife is a teacher and I have run my own business on nights and weekends while working FT as well. The only time we spend together right now is with a tool or a fork in our hand but it'll be worth it.

@John Burtleundefined

OP

Real Estate Broker · IL · Member since 2016 · 284 posts · 178 votes

10y

I've spoken to a few banks and they have told me I will not be allowed to do any type of rehab work. But it seems like a lot of people on here are able too. Not sure how that is? I told my bank I could provide them with references since I use to work for a construction company and my father has built two houses, which would help me on a rehab. They have said no, that will not be allowed. It must be from a contractor they pick.

Again, I appreciate all of the advice! Right now my main focus is getting rid of the credit card debt. Refinance the truck later on, and begin looking for a property to get into. I am going to try the duplex, triplex route etc.....just something that will help me get into real estate.

Ryan E.

Investor · Salt Lake City, UT · Member since 2016 · 287 posts · 270 votes

10y

I understand the mentality of wanting a reliable vehicle but just crunch the numbers...your payment is already over 500 a month. If you dropped your payment to 200 or less your new car could have a 300 dollar break down every month and you'd still be below your current payment. That's obviously not likely. If you had no car payment your credit card could be paid off fast and you'd have a lot of extra money to save for investing. Sacrifice for a few years and if you play your cards right you'll be able to pay cash for whatever truck you want down the line. That payment is wild, bro. Also, I would recommend reading up on the low money strategies. Read Brandon Turner's book about investing with low and no money. Even though it's "low money down" you obviously still have to do it smart and have money saved up etc. If you can work Over Time at your job as an officer I would be picking up every shift possible. Listen to David Greene podcast and check out his blogposts/website. He's also a cop and gives awesome info. Last, I would do more research on flipping. Especially if you have a construction background. Banks won't lend on flip projects for lots of reasons but it doesn't mean you can't get creative, find a partner etc. If you could flip a couple of properties every year this would really speed up your ability to acquire new properties!

Podcast Guest on Show #12

David GreeneBusiness Member

Real Estate Broker · San Francisco Bay Area, CA · Member since 2012 · 225 posts · 266 votes

10y

@Ryan E. Hey there brother. Nice to see another fellow public servant trying to make it happen. I know you didn't ask, but I'll give you a little unsolicited advice. Hopefully it helps.

Ryan Evans gave you some great advice. Right now you're in the thick of the woods and can't see the forest for the trees. From an outsider perspective, here's what I/we can see going on.

You are trying to run a race where the winner gets to retire at 40 from a profession that is rapidly deteriorating. The goal is worthy but daunting. I'm running the same race and have been for about 8 years now. Most of this entire community is doing the same.

The problem with the way you're running it is you are trying to run at a very fast pace while still carrying weights. If you want to win this race, you need to set up your entire life to support it. Just like being a cop, you gave up weekends off, you gave up a normal sleep schedule, you gave up your days off to be forced to work, or go to court. You lost a lot of friends becoming an officer. Gave up 6 months of your life to attend an academy. Even made the decision to sacrifice your life to save people who will hate you and then blame you for not saving their life the right way. You did all this because being a cop is worth it to you. You wanted it that bad.

You have to want this just as badly.

You absolutely need to adjust your life to be more conducive to real estate investing. Your DTI needs to be impeccable. You can't have a truck worth almost your yearly salary and also want to invest in in real estate and buy 2 houses a year for the next 15 years. You can't be carrying debt on non cash flowing assets like a credit card if you want to do this. You can't avoid working overtime if you're making 40k a year.

This is an uphill climb you're attempting. Make no bones about it. You can't be carrying any weights other than the bare minimum as you try to run uphill.

Get a reliable but affordable vehicle. Use your friend's trucks when you need one or get a beater you use for hauling things and a cheap civic for commuting. Start working OT whenever you can. I'd even be looking at finding a department where you made a much bigger salary. Your aspirations are commendable, but lofty. You aren't going to accomplish them unless you're 100% committed. Right now you're hoping it will happen, you gotta make some changes to make it happen.

You were very brave for spelling out your financial situation and future plans. I commend you for that. With that said, from an experienced perspective, I can see some ways you're shooting yourself in the foot. A few small changes will make a really big difference in your results 15 years from now.

It feels like a big sacrifice now. But trust me, once the income properties start piling up you won't miss them at all! Don't sacrifice your future on the alter of present day convenience. You got this!

5 Reply

Richard Warner

Portland, OR · Member since 2012 · 66 posts · 30 votes

10y

Congrats on choosing RE as your vehicle for freedom!! My 2 short suggestions... - make 300 homes your goal, not 30. - don't purchase a single family right now, or in the next year. Rent where you live and own what you rent.

2 Reply

OP

Real Estate Broker · IL · Member since 2016 · 284 posts · 178 votes

10y

@David Greene Thanks for the reply/advice. I greatly appreciate it. I do have a lot of weight on myself I realize that. I'm changing for the better. I've had several people tell me to ditch the truck. I realize I'm going to have to ditch the truck. I don't need it anyway. I use my trailer maybe once every few months. The reason I got the truck is because I deer hunt/haul stuff etc...I was just completely out of my mind spending what I spent on a truck to do those things. I guess I tend to be a little too materialistic, and its not a good thing with what I'm wanting out of life. I need to make sacrifices like you're saying or I won't get into real estate. I plan on looking up what my truck is worth tomorrow on my day off. After that I need to get it cleaned up and put it up for sale. How long will it take to sell is unknown, but surely there's someone out there looking for a truck like mine. I'll just take it a day at a time and when it sells it sells. I can always get a nice truck later in life when I can actually 'afford' it.

As far as getting hired on with a department that pays better. Eh, that's not something I was going to talk about, but I will now because I need to put everything on the line in order to get solid advice like you guys are giving me. I have a problem...I was born with an eye issue. Long story short I'm legally blind in my left eye. It will never be able to be fixed. I've seen many Doctors about it growing up and I just spoke to one a few years ago. It can't be fixed, ever. Bigger departments that pay really well require your vision to be corrected to 20/20 etc.....the problem is my left eye isn't correctable at all. It hurts even thinking about it. I've had many sleepless nights and shed many tears over the ordeal. There's nothing I can do about it. Where I am is where I am as far as law enforcement. I like the department I work for, just wish it paid more. Working in a town with under 4,000 people you can't expect a high salary though. So, as far as getting with a bigger department it just won't work. Have I tried? Oh yes, I sure have. I have called almost every county in the state of Illinois and spoke to the Sheriff's etc...Chiefs of other departments. What I've found is the smaller departments who pay what I'm making now don't mind the vision thing as long as the Doctor signs off on it. Which my Doctor has. The bigger departments have told me no regardless what the Doctor signs. I've tried....

I need to get my credit card taken care of, sell the truck, stop living above my means, save, keep working hard and as much as I can, and not give up. In a few weeks harvest season starts. I'll be working on my days off to help my friend harvest. That usually lasts 8-10 weeks. I should be able to put in 20 hours a week farming on top of my 42 hours a week as a leo.

Again, I appreciate the reply and please excuse me on some of these replies. I use the biggerpockets app a lot and it's hard to accurately reply on my phone.

OP

Real Estate Broker · IL · Member since 2016 · 284 posts · 178 votes

10y

@Richard Warner Thank you for the reply.

Yeah....300 does need to be my goal. I have to be out of the house I'm renting no later than September 2017. I can always find another house to rent, but generally houses in my area rent for 700-900 a month. My friend owns the house I'm renting now and he's away at college until Sept of 2017. He's only charging me 600 a month for rent. I have a friend living with me splitting that. I figure next year its time to get started with my own house instead of jumping into a year lease at a high price. A duplex sounds like it could be the best way for me to get started. Right now I have to clean up the credit card debt and take care of the vehicle. Slow and steady

I'm going to stick around and read as much as I can on here while accomplishing my short term goals of paying off the credit card and getting rid of the truck I don't need.

Aaron Treloar

Vendor · Kalamazoo, MI · Member since 2016 · 93 posts · 56 votes

10y

Banks will hold you back right now. Look for a deal off market and make an offer for seller financing. All they can say is no but by going through the process you will quickly learn your market. As a police officer I'm sure you already know which areas to avoid! Good luck.

Darrin Eaton

Bloomington, IN · Member since 2016 · 23 posts · 4 votes

10y

John Burtle thank you so much for your service. I'm so glad to see that you are taking David Greene 's advice regarding the truck. You previous post gave me concern when I read that you were more concerned about the interest on your $1900 credit card versus the hefty truck debt. I am thrilled to see that you have turned that thinking around and decided to drop the weight. In your response to Chris Tan you did mentioned that you had an opportunity to make an extra $200-$300 per week helping your friend, but then mentioned that it will still take 5-6 months to pay off the credit card. It seems like you can have that paid down in two months with this extra pay. Did I miss something there? Continue to focus on dropping every monthly expense that you can. Cable tv, magazines, eating out, vacations... All need to be put on hold until the debt is paid off and you have a decent down payment for your first purchase. Best Darrin

OP

Real Estate Broker · IL · Member since 2016 · 284 posts · 178 votes

10y

Originally posted by @Aaron Treloar:

Banks will hold you back right now. Look for a deal off market and make an offer for seller financing. All they can say is no but by going through the process you will quickly learn your market.

As a police officer I'm sure you already know which areas to avoid!

Good luck.

Thank you! Yeah, I sure do know which areas to avoid. I do have that going for me!

OP

Real Estate Broker · IL · Member since 2016 · 284 posts · 178 votes

10y

Originally posted by @Darrin Eaton:

John Burtle thank you so much for your service.

I'm so glad to see that you are taking David Greene 's advice regarding the truck. You previous post gave me concern when I read that you were more concerned about the interest on your $1900 credit card versus the hefty truck debt. I am thrilled to see that you have turned that thinking around and decided to drop the weight.

In your response to Chris Tan you did mentioned that you had an opportunity to make an extra $200-$300 per week helping your friend, but then mentioned that it will still take 5-6 months to pay off the credit card. It seems like you can have that paid down in two months with this extra pay. Did I miss something there?

Continue to focus on dropping every monthly expense that you can. Cable tv, magazines, eating out, vacations... All need to be put on hold until the debt is paid off and you have a decent down payment for your first purchase.

Best

Darrin

The reason I was saying 5-6 months is because I originally was going to save some of the money from farming, but in reality I just need to get the debt cleaned up and move on to the next obstacle. So, it'll all be going towards the debt now. I don't see it taking more than 2-3 months to get the debt paid off. The advice and reading posts on the forum have completely waken me up and is getting me on track! I appreciate all of it

About 5 minutes ago I picked up a 8 hour shift with another department on my day off tomorrow. I'm going to keep seeking hours and just work as much as I can.