My Starting Out Plan

4 Replies

I just attended my first local REIA meeting and enjoyed it so much. I met so many people who literally gave me the courage, that I've been lacking for awhile, to do this. So, I've decided, after about a year of research, and a miserable year at the JOB, to jump in with an initial plan.

I lived in this house for about 5 years now. It started out as a couple of friends renting a "party pad". I had no idea that I'd be here so long. Well, the owner of the house has been trying to sell me the house for the last couple of years. But, I've always come up with an excuse why I couldn't do it. (The last one is that I just bought a new $30,000 car [before I took charge of my financials]:shock:)

This is a $200K+ house if it were rehabbed.

I was under a L/O contract with him for $132K. He wasn't the smartest of landlords as he didn't ask for ANY option money! Needless to say, I didn't go through with the purchase. I guess I'm not the smartest invenstor now am I. :cry:

Whooahh. Let's FFW a bit here.

In the last six months, this house has developed MANY flaws. So many that the owner is fed up with the property. There is no backyard fence, there is no landscaping whatsoever (it IS really ugly but, the ugliest house on a nice block.), there is a water leak in the yard, the ceiling in the bathroom collapsed from a storm (the insurance company half-assed the repair), now the roof is still leaking and there is water damage on most of the ceilings. I could go on but, truthfully some on the minor damage is just normall wear 'n' tear for a house that's been rented to a bunch of guys in there twenties.

Anyway. My plan is to offer $110K to him and not go above $120K. I have a good suspiscion that he'll agree to somewhere in between.

So. In that case, I may have my start in REI.

My plan is to buy the $200K+ house @ $115K, refi, pay down all my debt, and use the huge chunk of freed-up money to buy my next. When, I refi the next property, I can then use that money to buy my next and so on...

I think, if all goes well and, I stick to my guns, I could be rid of the JOB in about a year and get out of the rat-race in around 2-3. Truthfully, with no more debt, I'd be out of the rat-race as soon as I could leave the JOB.

Does this plan seem plausable to you guys or am I asking for trouble?

Your brutally honest opinion matters to me. :lol:

Ohh...And I finally joined this board after reading it for the last couple of months. I love it. It's one of the best on the 'net. I'm happy to be here.

Chris

Hi Chris,

And welcome to the forum!

Your plan sounds to me like you've put good thought
into it.

You mention rehabbing it. Of course, that is the rub!

You tell us: will the deal be a great deal if it costs
$180,000 to rehab it? OK...a little extreme...but...

You get the point. You need to put pencil to paper
on the exact rehab cost.

My plan is to buy the $200K+ house @ $115K, refi, pay down all my debt, and use the huge chunk of freed-up money to buy my next. When, I refi the next property, I can then use that money to buy my next and so on...

As you said ... "This is a $200K+ house if it were rehabbed." How do you get it rehabbed to get the refi money?

I suspect this is a pretty stock plan for the rehabbers on this site.

Good Luck,

NavyDoc

Originally posted by "navydoc":

As you said ... "This is a $200K+ house if it were rehabbed." How do you get it rehabbed to get the refi money?

I suspect this is a pretty stock plan for the rehabbers on this site.

Good Luck,

NavyDoc

With the original loan money. I don't equate "buying the house money" the same as "loan money".

You see. I would get a loan for $115K + $20K (or so for rehab+holding). So I would really refi the $135K.

I would never think that I can rehab a house for free. I doubt anyone here thinks that either.