intro's, my past strategy and how to move forward

6 Replies

hi all,

i am new to this space, but am a huge fan of boards (i am a member of several others,but none re related) and the experiences members share on them. albeit, i am newer to re investing, i feel i have navigated moderately well . since no one in my family or friends have been involved in re in the level like have, i have had limited critiques on how i operate and  how i should proceed. so, here i plan to lay it all out-as a first time poster, first time real estate board member:-)

a little about my background: my full time job is working for a big four firm. i was a treasury banker, but moved to the sweeter gig i am in now. my goal is to own outright 3 money making properties and my primary. afterwards, i want to teach school.

in 2006 i bought my first house in Charleston, sc, (which i will refer to as house 1). a few months later,  i was relocated to charlotte, where i purchased another house a year later (house 2). neither house cost more than 110k, but still, after 2008, i was upside-down on both, by 20%. i purchased home 1 as a primary, but had my brother move in when i was relocated. i kept a room in home 1 and continued to call it a primary when i purchased home 2. 

now home 2 is right outside charlotte, and in a rougher neighborhood. after living there 3 years, i decided to rent it out and go back to Charleston. i have had some great renters there and have been ecstatic about the setup, outside the fact it is 3.5 hours away. my rents pay PI and PMI, but only half the TI.

my fiancé and i relocated back to Charleston and rented a few months, when in the depths of the recession, a little condo came on the market close to downtown and folly beach. i wiped out my cash savings and purchased it cash for 50k. we loved the location so much, we moved in and have yet to leave, even though my original intent was for it to be a rental. currently, we consider it our 2nd home (pls do not mistake for home 2) as home 1 is occupied still by my bro, even though i have a room still in it.

now we come to today. my fiancé has been starting to talk about the future and kids and wants a house with a yard... yada, yada, yada. okay, i admit i am feeling it too, but i am in kind of a pickle: house 1 is not "rented" (although my bro kicks in 75% of the mortgage) , the house 2 is rented and I'm very comfortable with it, and the condo (let's call it house 3) is not rented. 

now is the problem: how to get financing. house 1 and 2 are ltv at 90%, but the condo is at zero ltv. i plan to rent the condo out once i have a plan in place. right now, i have cash to put 25% down, and we are looking in the 110k-160k. my job is pretty solid, and my work prospects are even better for the next several years. my credit is an "a"

the main question i have is (1)  try to go normal financing route or should i try private lenders? (2) is there advice anyone can provide on how i currently have the properties situated, and suggestions of what i should do? lay it on me folks. i need to scrutinize how this structure before going forward with anymore deals.

thanks in advanced, and if ever on James Island, i'll buy you a coffee.

Charles 

Hey Charles,

Welcome to PB.  I really think you're going to like PB and the great folks that participate in the boards.  I know I have learned so much here.

I have only just started down the REI road about a year ago and I have taken the Rich Dad Coaching course, so please take my advice with that in mind.

First thing - use as little of your own cash as possible.  Let the bank pay for most of the property while you control all the property.  

Second thing - I have had great success buying HomePath foreclosures from Fanny May.  They are only 10% down and the loans go through fast, if you have all your financial info ready up front.  Find the one you want on the HomePath web site.

Third thing - Do your calculations!  You can use the PB property analyzer, it is pretty good.   But, there are others out there.  Get quotes for insurance, figure the actual taxes, etc. to get as accurate expensive data as you can.  The "sweet spot" is not always where you think it is.  The cost of the house is NOT proportional to the rent you will get.  Do NOT buy anything that will not cash flow the day you rent it.  The neighborhood makes a lot of difference.

Forth thing - Get a good team.  For your loans, contact Zach at Prospect Mortgage.  My last two went through in two weeks!  If you need some references, go to my web site for a great RE agent and mortgage company: MarshlandInvestments.com

Let me know if there is anything else I can do and best of luck.

Tim

thanks Tim... lets get together for coffee or a beer!

@Charles Fuss  Welcome to Bigger Pockets!  Dig into the site and you will find your answers, lots of posts and tools.

I am impressed with wanting them paid off!!! Looks like you have your three rentals, here is my outside view...look for the family home and get the three rentals rented for FMV or atleast enough to have them making something. I would focus on using the condo money to build up a repair fund then have it pay off other two rentals. As for the primary, take 50% or so of any raises, overtime, bonuses, etc and pay down the primary. You look to be in a situation that in 5-10 years you can achieve your goal of owning 3 rentals and a primary! Side note, similar to what I aimed for...took 2 years to save down payment and 6 years to pay off primary, of course have moved up a few times, but paid cash for difference and saved buying rentals along the way, just bought another 6 days ago...woo hoo! Best to you Charles! Let us know your decision and keep us updated along the way.

Darron... thanks for the vote of confidence. the condo will actually be a great tool in paying off the other 2. i just need to figure out the financing on the family home. i'll dig in here and see what i come up with.. and hey, CONGRATS on the new property!

You should be able to get a 4th conventional loan as long as you meet debt to income ratios.  You might want to bite the bullet and move in with your brother, rent the conn, and then look for your new place- it will allow you to save up some serious cash for a down payment on your new home.  Also, make sure your are ending to your brother at fair market  rent.

Congratulations, you are off to a great start.

Charleston is a hot rental market. You may want to contact my friend, Jim Algar, at 843realestate.com (send me a private message and I will give you his phone number). He grew up in Mt. Plesant and is an energetic, experienced property manager. He can find tenants for your townhouse. Good Luck! I would also encourage you to attend the "Dealmaker's Meeting" of the Charleston REIA on Mondays if you can. Again, contact me for further details. I admire your efforts and wish you much success.

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