Forced into real estate investing due to California market
Hello all! Nice to meet you BP! My name is Kyle and this is what my current venture into my own bigger pockets looks like so far
Short synopsis, Single, 50% custody, [100%]father. Finally had a divorce finalize about 10 months ago. Had to sell the house in the divorce. Made a tidy profit. This money has been sitting while I save to purchase a SFH big enough for my daughter and I and our needs. I am tied to my location and reasonable traveling distance to maintain my half of custody. Long story short I am unable to afford my market in a reasonable amount of time and would really like to get into my own place. Saving the $500-$750 a month (I have been saving) after slashing my spending.... is going to take forever to get where I need to be.
Upon my last bout with lenders and the cost of buying and the monthly mortgage , I realized I need to make more monthly, fall in love and buy with a new girl (uhhhhhhh....rather be independent at this point), save faster, get a higher paying job... etc .... My current job, while not the best paying allows me to work my own schedule so my daughter almost never goes to a sitter when I have her, so I'd rather not get a regular job (while paying me more will force me to sacrifice these formidable years). I have started driving Uber when my daughter is at her moms, and this is a lot of fun and makes some money (with having a paid off Camry hybrid).
So I thought I would start flipping houses. I have enough connections and experience in this area that I started getting excited and doing research in the area....
I started making calls, talking to a trusted real estate agent, coordinating with my construction friends, researching how LLCS work, etc. Spent tons of time watching bigger pockets, Clint Coons, etc on youtube explain how this stuff works
Talked to some lenders ..... the money down and rehab costs would drain my savings on the first go. After the rehab if there was any trouble selling quickly or hick ups in the rehab, I could lose everything. I was distraught and felt helpless.... I was not comfortable putting all of my savings into my first, very expensive, venture into this side of real estate.
Right as I was hearing another contractor give me very general costs of how my bank account was going to be at $0.... I discovered "roofstocks" and my horizons immediately changed, and now I am looking to invest in rentals with cash flow out of state. I would love to have 4 investment properties before 2021 and if I have less than 2 , I will have not met my goal.
The market in California, is just too expensive for a newbie without a massive operating fund to start out. Due to their limited stock of roofstocks, I have begun reaching out to real estate agents in markets I have been looking at.... more on this later. Also feel free to give pointers on using roofstocks, I love their business model and would love to use it
Short synopsis? Maybe not ...
So where I am currently at ....
---I am ready to start an LLC in Wyoming today! I want a nominee manager for total anonymity. I am pretty sure this requires a partnership , producing a 1065, and a k-1.... but I don't have a partner in this ... I would love to jump on an automated service and get this set up with out having to pay lawyers a ton of money to do it for me! SOMEONE HOLD MY HAND !! Lol. So since I am so new at this I have been signing up for consultations that are typically 2 weeks out. I want to know its done right. Is it as simple a a "legal zoom" 10 minute click through? Don't get me wrong. I am not against paying lawyers, but I want to expedite cash flow before I put a lawyer on pay roll as a recurring expense.
Then of course setting up the second LLC (owned by the first LLC) in the state I look to invest in. Much less worried about pitfalls here.
Then when I have the property I need a trust set up to transfer the property into the LLC .... well, how do I do this if it's just myself running this operation and I want to maintain anonymity. Again I am still waiting for my consultations for professional advice.
Would really like to avoid paying thousands if this can easily be done on my own using a click through system like legalzoom, incfile, etc.... until I have the cash flow velocity I am comfortable with
---Second has been lending. The automated lenders on zillow, roofstocks, etc. dont like loans below $100k.... I could get one or 2 properties through these style of loans but that makes me nervous and after any repairs puts a serious crunch on my savings. There is a ton of houses in the markets I have been looking in that will have great cash flow below this $100k mark. I would love to get 3 or 4 instead of having all of my eggs in one or 2 baskets, while still having a good chunk of nest egg to deal with unexpected repairs, vacancies, etc. I have reached out to a couple lenders in markets I am looking at, I am waiting for them to call back. But curious about loans that dont require 25% down quickly draining my operating capital, while creating cash flowing. That way I could get more investment properties faster. I have heard something about "grants" where cities are offering free money to help rehab neighborhoods. What about 3% loans ... Fanny loans? Lenders havent mentioned much about these when talking to them. Not asking for a loan, just some pointers or maybe something I haven't mentioned. I am guessing the local market banks would be my best bet. Any types of loans I should look for or steer clear from?
--- Third has been which market. I have been looking in Orlando, Jacksonville, Indianapolis, Milwaukee, Detroit, KC, some places in AL. I am really leaning towards Indiana since I have family there. Using roofstocks seems great! They have property managers lined up and guaranteed rent, and a 30 day buy back ... but again the their inventory seems limited compared to what I have been seeing on zillow. Waiting on a real estate agent in the area to get back to me with local lenders ....
Anyway ... I am waiting by the phone to talk to professionals .... My biggest worries at this point is the legal aspect of all this and setting up the LLC properly and have more than once been one click away from forming the initial Wyoming LLC. Thank you in advance for your time and look forward to reading your responses