Unemployed with 80k burning a hole in my pocket

Member since 2018 · 14 posts · 8 votes

Hi,

I'm a single mom with a six month old baby. I have 80-100k of equity in my house I can easily pull out. My plan is to stay home with my child to raise her. I can't get a new mortgage being I am currently unemployed staying at home raising her so buying where I am local in Colorado is not an option. I would like to invest out of state. I've been looking at roofstock.com, but open to other directions. The goal is to build a portfolio of ten houses over the next ten years. Maybe Morrisinvest.com? I'm open to suggestions. I'm going to make this work, I just am starting to get a grip on the details to make it happen!

PS, I'm borrowing a 150k from my grandpa to flip a house down here. Should give me another 50k or so to work with in the next year.

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

You are unemployed, and you want to put the equity in your home by taking on one of the riskiest investing ventures possible, investing out of your local area. This sounds like a recipe for disaster...and I think I am justified in that assessment since one of the places you have considered investing is with a company that are complete scam artists.

All investing is a risk based activity, but people need to learn and understand better risk assessments and mitigation.

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Jackson Pontsler
Flipper/Rehabber · Salt Lake City, UT · Member since 2016 · 211 posts · 174 votes
8y
@HAILEY ERSKINE I admire your gumption. I have a six month daughter and she is a light in my life and also alot of work. I want to level with you 100% because I don't want anything bad to happen to you or your daughter and to be honest if your not careful you will lose your shirt in real estate.
1. It will be hard to get a new house if you are unemployeed even with a turnkey company because they will either act or connect you with a bank to purchase the house.
2. That leaves us with you pulling out your money and buying a house in full. I'm assuming its some sort of HELOC because if you refinance the bank will once again look at your financials and employment. If that is the case be very careful that your HELOC (with interest payments) will be paid with the rent from the new property by a healthy amount to help for tenant turnover and repairs. This is much easier said than done.
3. If you want my honest opinion. I wouldn't invest in a rental right away keep your money and keep with the house flipping but do it smart. Use the BP calculators build up the income so you and your daughter can live off of it and hopefully as you scale you will progessively have enough cash to purchase a rental a year.
It isn't as sexy but for me and my family safe is sexy. I can only tell you want I would do if I was in your situation and ask you to be careful of your next move. Many people go completely in when they don't have too, thats not what they teach us here at BP.
5 Reply
Kevin Grinstead
Realtor · Denver, CO · Member since 2016 · 499 posts · 129 votes
8y
Hi Hailey, would work with a local Realtor in the cities you are interested in. There are a lot of opportunities in Tennessee and Ohio that might work for you to buy outright. The Realtor in the area can suggest a property management company to help protect your investments. If you need help locating a Realtor to assist you let me know and I can find one for you.
3 Reply
HAILEY ERSKINE
OP
Member since 2018 · 14 posts · 8 votes
8y
Thank you to both of you. I appreciate both of your responses.
1. I agree that flipping is the way to go, but in my area, I can't buy much. I just happened to uber score with the one I found being across the street from my house and by far the worst house in the neighborhood. Maybe once this one is done, I'll find another, but my grandpa is charging me a lot to borrow the money and I'm not sure how sustainable it will be. My first flip, so some what just winging it.
2. I've been looking in Ohio, Tennessee (but worried about crime in Memphis), Pennsylvania, and NC. Maybe I try and flip a house from afar? It seems like A LOT to take on as a single mama, but when there is a will there is a way.
3. I've certainly considered the cost of a HELOC. I figure it will cost me about $500 a month to borrow 80k. The properties I'm looking at rent for about $1000, so there is profit there, but then I need to account for management fees, vacancies, and repairs. It seems wise to diversity though instead of owning one house, what not own two!
4. I am a realtor, so shouldn't have any trouble finding one in another state, but again, maybe an all inclusive service like Roofstock.com might be a better way to go in my case.
5. My plan is to buy in a year, so I have time to get my ducks in a line, I'm just figuring out where the best place to start it.
6. Bigger Pockets Podcast is an AMAZING resource. If there are any particular episodes anyone knows of, I'd love the rec.
Thanks to all!
https://www.biggerpockets.com/us
2 Reply
Brandon SturgillBusiness Member
Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
8y
@HAILEY ERSKINE Why not pursue purchase money mortgages...no banks, no credit checks...your energy and cash outlay needs to be focused on marketing, not looking at MLS deals through an agent...or buying retail property...
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HAILEY ERSKINE
OP
Member since 2018 · 14 posts · 8 votes
8y
@Brandon Sturgill this is a very interesting concept that makes a lot of sense to me. You are saying I should spend my money on trying to find my own deals correct? Locally or in other markets? I'm in the Denver/Front Range area. I'm a little nervous in this area with the costs and the competition.
@Account Closed I appreciate your input. When I say 'winging it', it's an extremely calculated 'wing' :)
1 Reply
Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
8y
You are unemployed, and you want to put the equity in your home by taking on one of the riskiest investing ventures possible, investing out of your local area. This sounds like a recipe for disaster...and I think I am justified in that assessment since one of the places you have considered investing is with a company that are complete scam artists.
All investing is a risk based activity, but people need to learn and understand better risk assessments and mitigation.
[email protected]301-893-4635 Podcast Guest on Show #192
District Invest Group545 Reviews
Website View Page
8 Reply
Jack Bobeck
Rental Property Investor · Jacksonville, FL · Member since 2008 · 784 posts · 528 votes
8y
@HAILEY ERSKINE Wait, keep looking, run your numbers, rates are rising, foreclosures will rise with them. There is a glut of homes on the market now in most areas and in my area, all homes over 150k have been sitting longer and longer. By 2020, its going to be a GREAT BUYERS market.
Run your numbers, look at 100 properties to make 10 offers to get 1 accepted. Know your local market and own it! No rush to make mistakes, its how you lose your investment. Best of luck to you!
2 Reply
HAILEY ERSKINE
OP
Member since 2018 · 14 posts · 8 votes
8y
@Russell Brazil that is exactly why I asked! I love your comment! I'm pretty comfortable taking risk and I would never bet money I wasn't okay with losing, but I'm trying to discern what the least risky option is based off my resources.
As of today my thoughts are starting to move towards buying a triplex/quad and occupying one of the units. I can get a loan if I need to, I'll just have to bring my parents on board.
2 Reply
HAILEY ERSKINE
OP
Member since 2018 · 14 posts · 8 votes
8y
@Jack Bobeck There is no part of me that is impulsive whatsoever. I guess I'm trying to narrow down exactly what my plan is so I know the inside and outside of whatever route it is I decide to go. Essentially, I'm writing a 'goal list' but need to figure out what to put on that list first. I have been watching the market cool off ever so slightly, and expect it continue to do so. When the time comes, I want to be ready and educated as much as possible. Thanks for taking the time!
1 Reply
Doug Pintarch
Rental Property Investor · Harrisburg, PA · Member since 2018 · 369 posts · 406 votes
8y
Hailey -
Do your research, study your but off, line up your ducks, and go do it. Good for you.
Respect for being a single mom and wanting to get busy and provide for your daughter!
2 Reply
Dennis Dahlberg
Phoenix, AZ · Member since 2017 · 93 posts · 105 votes
8y
I'm a little confused.... with ...80-100k of equity in my house I can easily pull out.
Who is going to give you a loan (consumer loan) on your home without verify income?
Just curious ..
3 Reply
Jack Bobeck
Rental Property Investor · Jacksonville, FL · Member since 2008 · 784 posts · 528 votes
8y
@HAILEY ERSKINE Good for you, get the ducks in the row, start collecting 1) realtor, 2) real estate attorney, 3) cheap title search, 4) CPA, 5) Contractors (handymen, electricians, plumbers, roofers), 6) Insurance.
Build a list of all the people that can help you, and also start interviewing MENTORS, who have made the mistakes already so that you do not repeat them!
2 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
8y
Originally posted by @HAILEY ERSKINE:

Hi,
I'm a single mom with a six month old baby. I have 80-100k of equity in my house I can easily pull out. My plan is to stay home with my child to raise her. I can't get a new mortgage being I am currently unemployed staying at home raising her so buying where I am local in Colorado is not an option. I would like to invest out of state. I've been looking at roofstock.com, but open to other directions. The goal is to build a portfolio of ten houses over the next ten years. Maybe Morrisinvest.com? I'm open to suggestions. I'm going to make this work, I just am starting to get a grip on the details to make it happen!
PS, I'm borrowing a 150k from my grandpa to flip a house down here. Should give me another 50k or so to work with in the next year.
Will be very difficult to pull out the equity without income. You should focus on getting consistent w2'd income then you can do up to 10 residential mortgages b you'll need to get the income to qualify 1st.
1 Reply
HAILEY ERSKINE
OP
Member since 2018 · 14 posts · 8 votes
8y
@Dennis Dahlberg and @James Wise. My parents are on title with me so they are able to pull out the equity for me :) For my income, I'll have "landlord income" in about 15 months, I was just hoping to not wait that long. I'm lucky to have parents that support my decisions. FYI, I'm using their w2's, all of my money is self made. I know it doesn't matter, but for my own self worth, I need that to be stated.
@Doug Pintarch thank you for the vote of confidence. I know it can be done. It's just a matter of doing it!
@Jack Bobeck I'm a realtor, I have an attorney, I need a CPA, and I've got contractors all lined up, just not in the market I was thinking I would end up in, but I'm not rethinking that. THANK YOU!!!
2 Reply
Mark Sewell
Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
8y
Please don't do what you are considering. Find somebody with some kind of proven track record at flipping and just 'go in with them' on a deal. Sure you earn less, but you learn way more at much less expense. Your first mission is to protect the equity that you have (this is a secured loan, not just some credit cards so extra care is warranted), and your second mission is to find some kind of income to sustain you and your little one while this is going on. I did something similar, while not working, and it damn near ruined me. Get your income situation stabilized first.
And you don't need mentors, unless they have some financial interest in the success of your project. Just partner with people that are doing what it is that you want to do, and work it that way.
1 Reply
Laura White
Rental Property Investor · Milwaukee, WI · Member since 2018 · 7 posts · 1 vote
8y
@HAILEY ERSKINE Hailey, I love your idea of buying a multi-family and occupying one of the units. House hacking is a great way to get started, even in this market. A question to consider: would you consider selling your current house and buying with cash in a less expensive area? I don’t know how much your house is worth, but if you are willing to sell your house and have $250,000 to work with (equity in house + borrowed money from your grandpa), that should be enough to get started house hacking while staying home with your daughter in a different city.
1 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
8y
@HAILEY ERSKINE Have you looked into notes ? You could take your $100k at 4% from the bank and hypothecate it and invest it in a performing note and get 10% - and do not have to deal with tenants, toilets and termites etc.
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HAILEY ERSKINE
OP
Member since 2018 · 14 posts · 8 votes
8y
@Chris Seveney I have not, but I am about to. Thanks for the tip.
@Laura White I'm renting out the house I own and making about $1300 a month extra on it. It would be hard to give up. But I am thinking the house hacking might be the way to go on this one. I appreciate the support and brainstorming.
@Mark Sewell I hadn't considered this as an idea, but I really love it. I would be happy to make less in order to educate myself. I'm absolutely going to look into this!
0 Reply
Gordon Starr
Rental Property Investor · Dayton, OH · Member since 2015 · 312 posts · 273 votes
8y
Maybe Morrisinvest.com? Hailey, you CANNOT go with this company. They are notorious scam artists and you will get a bombed out shell in the hood that needs torn down or something similar.
1 Reply
HAILEY ERSKINE
OP
Member since 2018 · 14 posts · 8 votes
8y
@Gordon Starr I literally just found out about them a week ago as I began my search. You saved me sooooo much time figuring this out on my own. They are 1000% off the options now. Thank you for your honesty.
0 Reply
Jack Bobeck
Rental Property Investor · Jacksonville, FL · Member since 2008 · 784 posts · 528 votes
8y
@Mark Sewell why so down on Mentors? Everycould use someone else’s experience instead of making the same painful and costly mistakes. Most good mentors cost nothing but a cup of coffee. After all words cost nothing, the mentor gives advice, at the end of the day you still have to do the work. Good mentors that invest in notes, deeds, mobile homes, SFHs, MFHs are worth the investment of time. Partnerships are garbage, they never work out in the long run, as people’s priorities change.
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Mark Sewell
Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
8y
@Jack Bobeck nothing wrong at all, with what you describe. That is useful, and it doesn't cost much, if the mentor is willing to help out a bit. As long as the learner is wearing out the mentor, and asking good, concise questions, then probably the mentor doesn't mind adding value here and there.
But I refer to paid mentors. Handing over thousands of dollars to a great mentor, no matter what you pay them, is still not going to serve as a form of an insurance policy or a substitute for experience.
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Mark Sewell
Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
8y
Originally posted by @Chris Seveney:
@HAILEY ERSKINE Have you looked into notes ? You could take your $100k at 4% from the bank and hypothecate it and invest it in a performing note and get 10% - and do not have to deal with tenants, toilets and termites etc.
I think this makes a lot of sense, particularly at the top of a hot market.
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
8y
That is a major reason I got into notes - you can profit in a hot market like now or in a down market since your acquiring the debt at discounts. The bigger the discount the bigger the risk but I have performing assets in my portfolio with a unpaid balance of $20,000 and property is worth $60k, even if pricing fell 50% I still have my investment covered if the borrower were to default. Worst case is if a borrower defaults and you take property back you turn it into a rental or sell it with owner financing.
Being the bank gives numerous exit strategies as you control the asset.
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HAILEY ERSKINE
OP
Member since 2018 · 14 posts · 8 votes
8y
@Chris Seveney so I'm reading about notes now. It's a lot to wrap my head around, but I will get there. Can you tell me a good place to buy them? I did a quick search and so many options popped up. I would like to streamline it. Very very interesting consideration.
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