Newbie Needs Solid Advice

20 Replies

Hey Everyone! I am a new pro member and I have been educating myself over the past few months. A while back I was a landlord for about 3 years on a property I owned, and I am looking to get back into it as well as do a few flips. I have been a full-time IT Professional and Manager since 2001. My career has progressed well, and I have done OK. What woke me up to needing to do better was being diagnosed with MS late 2017 and having my first child that came 3 months premature that same year. My last two jobs haven't been all that great and I need to create financial stability and freedom for my family. I just turned 36. Currently living outside of Baltimore Maryland. I am still mobile but need to plan for the worst.

I just have a few concerns (not excuses) preventing me from getting started. I am willing to take action and do what is required to put myself in a better financial situation. 

  • My current primary residence is eating up my debt to income ratio. I am currently at 75% due to my wife being home with our daughter. She is looking to go back to work which will help but I know that will create a huge challenge for getting mortgages if they just look at my income. I probably wouldn’t even qualify for a line of credit even though both our credit scores are 790 or better.
  • All our cash is tied up in our primary residence. The current equity in the home is basically all the cash we’ve put it in, and we’ve had in on the market to try to recoup that cash to begin investing. We didn’t have any luck and might try again early spring 2020. Ideally, it would be nice to stay in our home. Our mortgage is our only debt. No car loans, school loans, credit card balances or anything like that.
  • We have little cash currently for a down payment on another property and have been trying find deals where that cash can chip in for a flip (with a partner) to start gaining small returns and build it up.
  • I think I’ll have a hard time finding good contractors that won’t eat into profits. (This might be a poor assumption from someone that has never done a rehab)

A few things on my side:

  • I can manage debt very well and have recently learned I shouldn't be over spending or trying to live it up until I realistically can. My dreamer years have ended, I've enjoyed myself. Its time to buckle down. 
  • I have been through the mortgage process, refi process and HELOC several times, so I know the drill
  • I don’t miss payments and can stay organized if multiple lenders are involved
  • Willing to sell my primary residence if we do not take a big hit on our cash in.
  • Willing to travel, move around and be in multiple markets. I have family owned property in upstate New York and in South Florida. I’m also noticed the Jacksonville Florida and Atlanta look like promising areas. I’d probably stick with the east coast for now. I have been looking at apartment buildings in Baltimore that I could probably buy if I didn’t have my current home. I could continue to work, and owner occupy the building to start growing a business. That was one route I have been thinking about.
  • I’m eager
  • Excellent Credit
  • A supportive spouse willing to go on this journey
  • Willing to learn and work with other investors
  • Understand that I also need to put things in place to protect myself. I'd like to create a trust and an LLC within that trust. I have a business entity name picked out and am thinking about filing in Florida since that is where we would like to end up one day providing I can afford proper education for my daughter living there.
  • I have also recently become a rentometer pro member and have been thinking of joining foreclosure.com. Do you all see value in that? I've also found several leads this year driving past homes, running the numbers and even sent two direct mailings. No good deals yet or just haven't thrown offers out there due to the details above. I also probably need pre-approval letters and some deals have been cash only. I used currentforeclosures.com for a bit to send my father-in-law some leads to go in as a partner but I didn't renew. Also been browsing Roofstock and have some cash in Fundrise. 
  • I know I need for firm up a strategy and market to focus on first

I hope this post isn't all over the place and I really appreciate the time people spend reading posts like this. I'd love to hear from other investors that have ideas, advice, or maybe got out of a similar financial situation to get started and where you are now.

Thank you!

Go to your local real estate meetups and talk with people! You might find an opportunity that you can work with there.

Also, check out Brandon Turner's book How to Invest in Real Estate with Low and No Money Down. That'll get you pointed in the right direction for using creative finance strategies.

Your situation reminds me of Ben Leybovich, and he's killing it right now.

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@Nicholas P. If you do want to stay in your current home, maybe you can access some of that equity through a HELOC. I only had about 20% to 25% equity in my primary residence, but found a credit union that was willing to lend me up to 95% of the value of my primary residence. Most credit unions I talked to only went up to 80% but the 5th or 6th one I talked to was willing to go to 95%. Even if you only have a small amount of equity in your home you may be able to tap into it and use that money for your next investment.


Using a combination of a HELOC and Hard Money (or Private Money) could allow you to BRRR a rental property without having to bring much cash of your own. Good luck with your investing and feel free to reach out if you have any questions.

@Nicholas P.

I think your story is inspiring and admirable and I think it's great you are wanting to do more.

If you decide to enter the Jacksonville market or just move here entirely I would be more than happy to help you as much as I can.

@Nicholas P.

Maybe just risk it all and turn life on its head and hit the reset button and sell your home and move down here to Jacksonville? I have been absolutely crushing it down here for years on multiple fronts and I would be more than happy to show you the ropes.

Nicholas

I moved from Baltimore (inner harbor) to Jacksonville 2 years ago.  Best move of my life.  Real estate values are about 40% of the Baltimore metro area.  About 35% of DC/NVA metro.  However rents are comparable.  If you choose to invest here or relocate I'm sure you will find value and a good return on your investment.

Jerry S.

@Richard Jahnle Thank you! Definitely a possibility I have been thinking about. Probably more doable when my wife gets back to work so we can cover those additional payments until a deal happens. Our home is amazing and would love to stay, but also willing to make any needed sacrifices. Appreciate the feedback!

@Mark Fries Thanks Mark! Really appreciate that! Glad to hear Jacksonville is a great market. We have thought about hitting the reset button and moving to South Florida but I'm willing to travel to the thriving markets for deals and education. I appreciate that offer for the help. I'll actually be in Jacksonville in a few weeks for a work conference and was thinking of taking a look at a few properties while I'm there. Maybe we can meet up. I'll be near Amelia Island Aug 18-21.

@Jerry Sanders Hey Jerry! Thanks, I do have my eye on some Baltimore properties. Glad you are liking it here! I'd like to start investing close to home at this point and then branch out. Do you attend any local meet ups? I'd like to start going to those. Have a great day!

I attend several meetups here.  We have RE meetups of one kind or another most days of the month.  There is a very active real estate community here.  

In your area there is the Mid Atlantic REIA meeting. Also the hard Money Guys have a regular meeting in Columbia.

@Nicholas P. I commend you for sharing this, it is inspiring. And I am sure you are full of fear of the unknown. Which I am too. Its a normal human trait, but something to look at closely.

Everything you listed takes some level of sacrifice.. what is your risk tolerance? Having little accessible cash is going to make it difficult to invest. If you can keep your W2 and pull out a HELOC that might not be a bad route for the time being.

 I am in a similar position as you, with a baby due soon, my girlfriend will be out of work for a while, and I will probably need to cover the majority of her bills too. I want to make a career change because I have hit a crossroads here, but its not something I can be compulsive with. I really need to sit down and weigh out my options, write out all our bills and come up with a realistic figure I need to hit. If I cant hit that figure then I am staying until things settle down a bit. 

I hope you find the answers you need, this is a great place to start. BP has helped me tremendously, Goodluck on your travels!

@Nicholas P. Will you consider change job and move to promising market like Atlanta? We have good It company here as well. If your can rent your primary house out and it can cover your mortgage, you can count that rental income into your income and you’ll be able to get another loan and purchase another house in market like Atlanta where good houses aren’t that expensive yet.

@Nicholas P. You can probably go with a hard money lender and still got raised from 8% to 10% somewhere around there

Started reading Brandon's Book, How to invest with little or no money. Also have a couple leads on some properties. Touring 4 of them, two of which are auctions next week here in Baltimore. Running calculations like a mad man. Hopefully my partner and I can get a good deal. Also looking into REI groups and networking with local investors I am finding on here. Appreciate everyone's input! Hopefully connecting with Mark in August as well!