Hey Fellow BP'ers!
I'm taking this 90 Day Challenge to task (my apt lease is up Jan 4th anyway), and just got my first loan pre-approval letter yesterday. Considering that I didn't realize I needed one until two days ago, I'm stoked! The info here on BP has been so helpful that every time I've wanted to post a question, I find it's already been answered elsewhere. So I thought I'd just share on my progress thus far..
I have an idea of my strategy (house hack with conventional financing), prices, and areas I'm looking for.. and the next step is finding an awesome agent, learning more about specific mortgage options, learning about foreclosures, and deal analysis.
I've been working on my credit score for a few months and it's paying off with these pre-approvals. My debt to income ratio is not the best, however, my current reserves and credit score are allowing me access to loans. The FHA loan was a consideration but I'd feel most comfortable starting with higher equity in the property and don't want that additional insurance for the life of the loan, plus removing the additional evaluation on the property to meet FHA standards should give me a few more options. Having cash or other financing options will definitely be a goal in the future though!
There wasn't much activity on people's progress in the 90D Challenge, so maybe this will help others who may be a little unsure about committing to it. Yes, Dallas is a hot market, and deals are hard to find, but I'm confident I'll find one by January. If not (because no deal is better than a bad one), I will have learned a lot just to get that far in saying "NO" to deals.
Anyway.. it's been great interacting with the BP community so far, and I'll be sure to share how things progress!
EDIT: Title was crummy "Newbie Progress In Dallas - 90 Day Challenge" but you too can be successful with poor spelling lol
Yes, yes, yes! Jerry, my husband and I used this same method when we purchased our first duplex about 4 years ago. I am so excited for you to begin this journey with real estate! I know it will change your life as it has mine and my husbands.
I am a licensed REALTOR and investor in the Dallas area myself. You're correct in saying its a hot market - BUT people are closing on good deals every day. We just closed on a duplex in downtown McKinney (super hot area if you aren't familiar with it) that was an awesome deal. Thus far, we have two duplexes and two single family properties. All done in the last 4 years in this hot DFW market, so its definitely doable! The first single family I purchased was a foreclosure so I understand what this would entail. I'd love to discuss possibly working together. Feel free to reach out to me if you're interested.
A few thoughts on some of your other points. Starting with higher equity is always a great. I used an FHA loan in order to get my first home, but refinanced to conventional after about two years once we had made improvements to the property. So, if you have to do FHA - refinancing is always an option down the road. Good luck to you!
@Jerry Thompson Welcome and I'm happy to see more young folks such as myself diving into the realm of real estate investing! It took me a little longer to get started than most but now I'm staying busy with investing in my portfolio and it's been a blessing seeing how much REI can change your life. I'd be curious to learn more about what you're looking for and what your short term / long term goals are.
@Jerry Thompson , lots of positive energy from your post. Thanks for sharing your progress thus far. I commend you for all you're doing to get your affairs in order and begin your REI journey. The 90-day challenge is a great way to help people develop inertia and positive momentum, and I hope it helps many people jump start their REI journey. However, I wanted to emphasize your comment that no deal is better than a bad one. There are plenty of benefits of putting a timeframe to a goal, but the risk is settling for a bad deal just to mark the goal complete. With so much at stake, I'd hate to see anyone rush into a situation they'll regret. So full steam ahead on notching that first win by the end of the year. But if it doesn't work out and you've learned how and when to say no, then I certainly wouldn't call that a loss! Looking forward to hearing how things progress for you. Best of luck, we're rooting for you.
@Jerry Thompson Good luck on your journey! Look forward to seeing your progress. I am somewhat jealous of the young, single investors just starting out as you have an incredible opportunity to set a foundation for future wealth with creative house hacking that gets more difficult once you add a family to the mix.
Thanks for all the support and feedback you guys! I've been busy analyzing deals, understanding comps, and shopping around for lenders. I found out I'm eligible for down payment assistance as well so I'm going to try to take advantage of that. My credit score is helping greatly. So far I've found 3% down payment assistance on a 30 year note at 4.5% fixed rate.
Also.. the way I see it, rental comps completely dictate purchase price for cashflow, right? I think running a few deals through the BP calculator helped me see that. I can't pay $300k for a SFR if the comp is only $1,200. It was kind of my round about way of understanding the 1% rule.. I've actually been working it backwards:
$1200 (rental comp) / .015 (1.5% rule aka cashflow positive in my market) = $80,000 (max purchase price)
As an avid listener of the podcast, I'm finding dozens of mini steps in between the big events of a purchase. So much to learn :)
@Shannon Beatty - will definitely reach out about foreclosures, I'm seeing the limitations of conventional financing even for on-market properties
@Kenneth McKeown - Would be great to meet up and just chat. I'm taking the slow and boring road to investing. A property a year, or faster. If I stay in the DFW market hopefully that will be good to pick up a great deal each year and build a foundation for financial independence. I'm an early retirement guy, it's time I got started!
@Chris Jensen - YES! No deal is better than a bad deal.. I think I'm being conservative, (underestimating rental rates and adding in costs like future property management even though I'll be managing it myself for now) but I will definitely post my "deals" on the analysis forum to get feedback and see what I've missed. Just found a realtor/investor and waiting on comps as we speak.
@Andrew Herrig Thank you, trying to leverage what I can! Will keep sharing the progress. It's been a learning curve for sure.