Providence, RI · Member since 2018 · 29 posts · 409 votes
7y
Having just recently bought my first property, I know for myself what was holding me back was the fear that I would overpay, especially in this type of a market. I would get analysis paralysis and basically talk myself out of every property I looked at.
Fairfield, CA · Member since 2015 · 79 posts · 26 votes
7y
@Frank Patalano
Started a business. Can’t get a heloc due to this. Banks don’t like business owners. Have to either sell house, refi with a larger payment, or get a Sba loan through company. Not as “easy” as these guys on podcast’s talk about. They need to talk more about the struggle.
What's holding us back? I would say is lack of confidence and fear of failure and getting ourselves in trouble with a large amount of debt. Also, we want to get into the multi-family investment strategy but 25% down payment for a duplex as an investment property is out of the ballpark for us. We already own a SFH which we bought for a really good price in 2015 (this was before we even thought about REI) and have a good interest rate locked in so we don't want to sell it.
With that being said we are actually in the process of buying our first investment property which is a duplex. My husband now qualifies for a VA loan so we plan on house hacking with $0 down. We'll be renting our SFH and moving into the duplex were purchasing for a year or two then plan to move on from there.
One side of the duplex has a large 4 car attached garage (880 sq ft). Instead of charging an additional $100-$150 for the unit attached to the garage we plan on converting it into an additional 2bd/2bath unit and collect $1200 for rent instead. Is this a bit ambitious being that we are newbies and this is our first property? We've never worked with contractors before so honestly I'm a bit scared but also really excited at the same time to be doing something. For those who have worked with contractors before and have done the same I would love to hear about your experience.
That's awesome with the VA loan.
Ambitious? Yes. But I like it.
Have you spoke to Zoning yet? Some cities are pro growth others will fight you tooth and nail. I would double check with them before lifting a hammer. Sounds like a great way to increase value.
That's a great point. No, we have not checked with Zoning yet but that will be on the list of to do's once we close. Thanks!
I would have to say, not having enough money saved. I think this is fear rearing its head in my circumstance = and rightfully so. I think it would be best to have a nice cash cushion prepared before jumping and making an investment.
I currently own a home, that also makes it a bit more of a challenge, fearing that I may not look like someone a lender could trust or that I may be shamed for ”owning a home and wanting another.”
" fearing that I may not look like someone a lender could trust or that I may be shamed for ”owning a home and wanting another.”"
Throw that fear right out the window right now. I have never heard of a lender thinking that way. I haven't counted lately but last year I had 17 mortgages. Lenders fight for my business.
Read some books on Mindset. Think with an abundance mindset. You are living in a scarcity mindset.
You should have an emergency fund in place but you have to save more to invest.
@Frank Patalano I am afraid people won't take me as serious because I am only 20 years old. I am also afraid of making a mistake, even though I know I just have to get out there.
I wouldn't worry about your age, especially if you are house hacking your first property. If you still see it as a problem I would consider finding a partner who is a couple years older. Besides that you gain experience by taking action. I still make mistakes once in awhile in real estate. Mostly when I get too cocky about a deal.
What's holding us back? I would say is lack of confidence and fear of failure and getting ourselves in trouble with a large amount of debt. Also, we want to get into the multi-family investment strategy but 25% down payment for a duplex as an investment property is out of the ballpark for us. We already own a SFH which we bought for a really good price in 2015 (this was before we even thought about REI) and have a good interest rate locked in so we don't want to sell it.
With that being said we are actually in the process of buying our first investment property which is a duplex. My husband now qualifies for a VA loan so we plan on house hacking with $0 down. We'll be renting our SFH and moving into the duplex were purchasing for a year or two then plan to move on from there.
One side of the duplex has a large 4 car attached garage (880 sq ft). Instead of charging an additional $100-$150 for the unit attached to the garage we plan on converting it into an additional 2bd/2bath unit and collect $1200 for rent instead. Is this a bit ambitious being that we are newbies and this is our first property? We've never worked with contractors before so honestly I'm a bit scared but also really excited at the same time to be doing something. For those who have worked with contractors before and have done the same I would love to hear about your experience.
That's awesome with the VA loan.
Ambitious? Yes. But I like it.
Have you spoke to Zoning yet? Some cities are pro growth others will fight you tooth and nail. I would double check with them before lifting a hammer. Sounds like a great way to increase value.
That's a great point. No, we have not checked with Zoning yet but that will be on the list of to do's once we close. Thanks!
If renting out that third unit will make or break the deal you should talk to them now. If you are happy with the deal With or without the third unit then it doesn't matter.
Well since she stepped back on this I am trying to figure out if there is a different way to make something work. I was more thinking syndicates etc. HML maybe something to look at also.
Hi @Frank Patalano to answer your question I’m currently trying to raise capital to fund my first deal out of state. Also not sure what market I will be buying seeing that my market is out of my reach right now. I currently live in the Santa Cruz Ca.
Learn as much as you can. Raising money from people that you don't know is the big hot-button issue right now with the SEC. Depending on how you word the opportunity it may be considered a security. The people that I know in California are mostly investing in Arizona Nevada and Texas.
Well since she stepped back on this I am trying to figure out if there is a different way to make something work. I was more thinking syndicates etc. HML maybe something to look at also.
You are looking to be an active sponsor in a syndication, or investing as a passive investor?
Started a business. Can’t get a heloc due to this. Banks don’t like business owners. Have to either sell house, refi with a larger payment, or get a Sba loan through company. Not as “easy” as these guys on podcast’s talk about. They need to talk more about the struggle.
I agree that too many people make it sound easy. The top of the market makes it easy to wipe out mistakes. I worked two jobs for over a decade not counting my real estate. We've lost money on a few deals.
perhaps you can wholesale a couple properties? Or partner with someone that has cash?
Investor · New York, NY · Member since 2017 · 4 posts · 1 vote
7y
@Frank Patalano
I definitely agree. Investing abroad can be tricky. I live in Brooklyn and invest here. I also invest in Pittsburgh PA. Out of the 4 that I bought in Pittsburgh only 1 was a profit experience. The other three which were multi family buildings were a disaster. If I had been living there I would have known not to buy those 3 buildings! Fortunately I sold them at not too bad a loss from what I bought them for. But I’d been losing monthly trying to rent them. (Total of 29 apartments). I’d buy more in Pittsburgh if I can find a good deal like the single fam I still have. I clear $500 after expenses monthly on the house. Paid $18,000 and put about $12,000 into fixing it up.
I would have to say, not having enough money saved. I think this is fear rearing its head in my circumstance = and rightfully so. I think it would be best to have a nice cash cushion prepared before jumping and making an investment.
I currently own a home, that also makes it a bit more of a challenge, fearing that I may not look like someone a lender could trust or that I may be shamed for ”owning a home and wanting another.”
" fearing that I may not look like someone a lender could trust or that I may be shamed for ”owning a home and wanting another.”"
Throw that fear right out the window right now. I have never heard of a lender thinking that way. I haven't counted lately but last year I had 17 mortgages. Lenders fight for my business.
Read some books on Mindset. Think with an abundance mindset. You are living in a scarcity mindset.
You should have an emergency fund in place but you have to save more to invest.
Thank you Frank for your insight. I will take your advice immediately!
I definitely agree. Investing abroad can be tricky. I live in Brooklyn and invest here. I also invest in Pittsburgh PA. Out of the 4 that I bought in Pittsburgh only 1 was a profit experience. The other three which were multi family buildings were a disaster. If I had been living there I would have known not to buy those 3 buildings! Fortunately I sold them at not too bad a loss from what I bought them for. But I’d been losing monthly trying to rent them. (Total of 29 apartments). I’d buy more in Pittsburgh if I can find a good deal like the single fam I still have. I clear $500 after expenses monthly on the house. Paid $18,000 and put about $12,000 into fixing it up.
I'm sorry that you have had such a bad experience. Who was the weakest link in your Pittsburgh team? Or did you try to do it all yourself?
@Frank Patalano The biggest thing holding me back is credit or more specific lack thereof. Since I was 18 I've always used a debit card. It was only about 9 months ago that I started learning about real estate that I even started to building credit.
I've been told I need at least 3 lines of credit that lasted at least 12 months to qualify for the FHA loan.
Rental Property Investor · Albuquerque, NM · Member since 2019 · 9 posts · 0 votes
7y
For me it's loosing my saving over and over again. No matter how much I saved, things happen and I go back to nothing. I save 20 percent of my income and each 6 month I'll lose it to 0 dollars again.
Rental Property Investor · San Diego, CA · Member since 2019 · 290 posts · 254 votes
7y
Really the only thing holding me back is that I'm trying to build somewhat of a team before I jump in and buy something. I'm an OOS investor and would like to have everything/everyone lined up before I take the plunge. Hopefully in the next couple months I'll be ready!
San Jose, CA · Member since 2019 · 20 posts · 19 votes
7y
@Frank Patalano my biggest struggle at the moment is finding a way or lender to finance a property/deal. Mainly why this is a problem is that there’s so many different lenders such as big bank institutions, credit unions, private lenders, hard money that I’ll have to do my research to narrow down a lender. I guess it’s not very much of a struggle as it is taking the time to do my due diligence to find the “right” lender.
If anyone has advice how to narrow in on a lender, please let me know, thanks in advance!
@Frank Patalano The biggest thing holding me back is credit or more specific lack thereof. Since I was 18 I've always used a debit card. It was only about 9 months ago that I started learning about real estate that I even started to building credit.
I've been told I need at least 3 lines of credit that lasted at least 12 months to qualify for the FHA loan.
I have done an FHA mortgage so I am not sure. You should double check with at least 2 mortgage brokers. Also sometimes your local housing agency might offer similar but easier programs.
For me it's loosing my saving over and over again. No matter how much I saved, things happen and I go back to nothing. I save 20 percent of my income and each 6 month I'll lose it to 0 dollars again.
Murphy's Law or a hole burning in your pocket?
Just kidding. Things happen but you should always have an emergency fund.
You dont have to have money to get started. But if you dont have money you have to have time to work for others.
Really the only thing holding me back is that I'm trying to build somewhat of a team before I jump in and buy something. I'm an OOS investor and would like to have everything/everyone lined up before I take the plunge. Hopefully in the next couple months I'll be ready!
Set goals. Speak to at least 2 possible team members per week. Some team members might be able to recommend others.