That didn’t go as planned!
Contractor · Orlando, FL · Member since 2018 · 64 posts · 45 votes
That didn’t go as planned!
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Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
8yYou hit the nail on the head. Find the property, manage the rehab, deal with any and all headaches that will definitely arise. Be on site, make sure it goes smoothly, sign for everything. You will earn your 50%, and sometimes you should earn more depending on the project.
Time is the most valuable thing to most people who have money. Your value is giving them a return on their money without taking up their time.
152 Replies
- 8yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Originally posted by @Branden Sewell:
@Nick C.How would a 50/50 split work? What value would I bring to the table with no capital in the game? Do I propose that I do all the work/management of the job?
I’m just a newbie so I’m trying to understand my value other than just being super eager and determined to make money and be financially free.
Is my value my time, my business I own? I’m not sure. I guess figuring that out is key.
I think I need to understand my value and what I bring to the table. But to know that I need to know what is valueable to other investors besides money.
Any insight?
>Is my value my time, my business I own? I’m not sure. I guess figuring that out is key.
It is my belief that finding deals is my biggest bottleneck. This implies that a newbie's biggest contribution is finding a deal. Newbie's labor often ends up being more hassle than it is worth. I cannot make profit by having an apprentice that is just "super eager and determined to make money and be financially free". I can make money if someone finds me a property that meets my buying criteria. If a newbie finds such a property, I would let them partake in the decision making discussions and help with labor if they so desire.
I have had one "apprentice" be a successful RE investor. He was the best handyman (by far) that I ever had. Worked hard, pride of work (sent me photos of his tasks not to inform me of the progress but because he was proud of the job), great attention to detail, could research what he did not know (smart). He would see our purchase through value add. His attention to detail allowed him to know what provided good return and not so good return. He now has 8 units. His house is much bigger than mine (but worth a little less). He has done well.
My points are: 1) finding a good deal will provide your best in 2) there are different methods of learning the skills needed to be a successful RE investor some of which may not be glamorous.
Good luck.
- Real Estate Broker · Southern Pines, NC · Member since 2018 · 28 posts · 4 votes8y@Phil G. Do you have to attend a workshop receive a loan through them?
- Real Estate Broker · MA · Member since 2013 · 361 posts · 297 votes8y
Yes, the process begins with a prospective borrower attending a workshop.
- Rental Property Investor · Orlando, FL · Member since 2018 · 545 posts · 386 votes8y
@Branden Sewell Are you familiar with USDA loans? 100% Financing but interest rates and PMI will make your monthly payments slightly higher. The problem with USDA loans although they are a great option if you qualify for all the income restrictions, DTI, and Credit Score ratios, first time home buyer, but there are geographic limitations. Check out this website and google USDA loan maps for more info on which areas accept that loan. Its a great option still if you plan to house hack and can qualify and can find something in one of the approved areas.
https://eligibility.sc.egov.usda.gov/eligibility/w...
I have a preferred lender who does 100% LTV (100% Financing) for properties you plan to live in without the geographic restrictions. This is the only kind of loan like this that I am aware of in the state of FL. There are DTI and Credit Score thresholds that you have to meet but the requirements aren't nearly as strict and it is literally the perfect option for someone looking to buy but doesn't have 20k saved for a downpayment. Interest rates are only slightly higher than conventional loans as well. I know you'd be househacking which would minimize or eliminate how much you'd spend on a mortgage but it is still important to know how much of a mortgage payment you can afford incase for whatever reason the other unit is vacant for more than a few weeks. We can speak more about this on Friday but feel free to PM me if you want more info on this to see if you can qualify for it.
- Contractor · Orlando, FL · Member since 2018 · 64 posts · 45 votes8y@David Baier I am open to looking at all options. Let’s talk more about these options on Friday. Looking forward to meeting.
- Raleigh, NC · Member since 2017 · 347 posts · 94 votes8y
Originally posted by @Account Closed:
@Branden SewellMSA stands for metropolitan statistal area. So if you are willing to go outside the southeast corner of orlando into outlying areas then you could find a duplex that you can get into for ~200,000.
Also and don’t quote me but I believe you can use a portion of the expected income from renting out the other units as a qualifying factor for your property.
Depends on the lender. Also I believe there is a 3% down mortgage option
- Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes8y
Originally posted by @Branden Sewell:
@Dan BarliI am thinking long term. I would love to start with a duplex. Live in one side with my wife and rent the other. But I just don’t have the kind of capital needed for a down payment on a duplex.
Not too sure what my options are. I would rather do that than buy a single family home.
I have my own business but only have one year under our belt. So we are basically working with my wife's income. We got pre approved based off her income for a conventional or FHA type loan, but to get a duplex at the price we are pre approved for it just wouldn't make sense. Unless we found some kind of miracle deal at $200K.
Any advice given our situation?
200K would go a long ways for an entry level house in Orlando from what I've seen. You're going to have to bide your time and start slowly. Yes, they require money to buy a house, otherwise everyone would do it...Good news is you can get a 3.5% low interest rate loan from FHA for your first deal, then use the equity in that after a year or so to buy another deal.
Personally, if you can't come up with a 3.5% dp for a 200K property, you are not ready to buy a house yet....I feel that if you can't come up with 20% it's the same, but if you have stable income in a secure field, the 3.5% down payment may be worth the risk. Having started your own business, I'm guessing your income is not that high, and they will put you through the ringer for proving your income. W2 income rules for getting conventional loans.
- Leclaire, IA · Member since 2016 · 161 posts · 130 votes8y
My advise is to be patient. Work very very hard on building up your business for the next year so when the income does count it is good. Stay away from credit card debt or vehicle purchases. One year goes a lot faster than you think. Then in one year you should be in a position to buy a nice duplex and house hack.
- Developer · LA, Nashville TN · Member since 2015 · 295 posts · 75 votes8y
@Erin Auman Post the deal details in the forums asking if it's a good deal. Likely investors like me may be interested in funding or partnering.
- Contractor · Orlando, FL · Member since 2018 · 64 posts · 45 votes8y
Thanks for the feedback. My only thing is I am not up for being slow to start and I am not up for letting fear hold me back. I think that is safe to move slow, but I am not sure that it will help me reach my short term goals. Unfortunately I don't want to wait a year. My goal is to fight, take big risks and make it happen by the end of the year and get out of paying this outrageous rent for a one bedroom apartment. If I wait a year then I will be locked into a lease for another year and the rent goes up. That is more money out of my pocket! I need to make something happen by the end of the year. At the very least we will be buying a single family, but our preference would be a duplex that we can house hack. We are actively saving $1K per month and on good months around $2K. By the end of the year we plan to have enough saved to do a conventional, FHA loan. However, if I can use someone elses money and move faster that would be my preference. That is what Im thinking personally.
- Real Estate Agent · Indianapolis, IN · Member since 2018 · 41 posts · 23 votes8y@Branden Sewell wow, looks like you’re getting quite the advice here. Just to add an opinion, don’t rush! Besides the costs of acquisition you will need to be considerate of the costs of rehab, if necessary. The best deals usually require it, as it is one of the easiest forms of distress to capitalize on. Even if you use a 203k that will increase the loan amount of the property, understandably since you qualify just on your wife’s income you have other income to additionally go toward these costs. There is no such thing as a free lunch. The market already did that failed horribly. The qualifications in place now are as much a protector of the buyer as the seller and bank. It’s like using a power tool with a safety guide, yeah you can get around the safety (loan qualifications, bank overlays) but unless you know what you’re doing, the alternatives (hard money, etc) could have you ending up with 9 fingers.
- Rental Property Investor · Overland Park, KS · Member since 2018 · 49 posts · 30 votes8y@Leland Smith Good to know! I think I’ll start diving into offerings a little deeper now!
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes8y
You really need some money in order to do real estate investment. There are no money down strategies, but they're usually low money down strategies and you'll miss a lot of stuff as some things require money (as well as deals not going as planned, which happens). Private lenders can help, but if you really don't have any capital, it would be worth either saving or looking for a partner who could front the money while you do the work and you split the profits. Also, if you save up some, you could do strategies like flipping, BRRRR or wholesaling, which don't require nearly as much money although you will probably need to find a private lender.
- 8yPeter StewartBusiness MemberReal Estate Broker · Indianapolis, IN · Member since 2018 · 160 posts · 168 votes
Have you read through this resource thoroughly?
https://get.biggerpockets.com/nomoneydown/
- Los Angeles, CA · Member since 2018 · 7 posts · 1 vote8y
Really enjoying this thread. Great questions and great answers. Thank you @Branden Sewell and everyone offering the different avenues/options. Great read!
- Real Estate Agent · Orlando, FL · Member since 2008 · 551 posts · 159 votes8y
@Branden Sewell I am a local agent and I can help you get signed up for the NACA program if you wish. I may even have a more streamlined program to assist you with the down payment. Just keep in mind that the Orlando market is extremely tight for small multifamily properties so you need to have a realistic perspective. Feel free to PM me.
- Contractor · Orlando, FL · Member since 2018 · 64 posts · 45 votes8y
@Stephen Jeffers What I am looking at now is the possibility of a 203K on a duplex around $170K. That would give me about $30K to play with for potential repair costs. That is basing things off of getting approved for $200K based solely on my wifes income. However, some really awesome people got me in contact with a great loan officers that is helping me to understand my options better and I think we are going to make a move on a duplex by the end of 2018. We are going to be able to get my wife approved for a little more since we will be including the rent for one side of the duplex as income.
We should be able to save enough for a downpayment by December but we will need a seller willing to pay the closing costs.
Goal: 1st deal done by the end of 2018!
I wouldn't say I am rushing things but I am dont want to be one who sits around and talks about this investing things I want to make something happen. Loving all the great feedback!
- Contractor · Orlando, FL · Member since 2018 · 64 posts · 45 votes8y
Im glad that this post has helped you! It has been extremely helpful to me. I have learned so much from everyone. Such great contributions on here!
- Contractor · Orlando, FL · Member since 2018 · 64 posts · 45 votes8y
@John Kent someone else suggested that earlier in the program and I am actually already signed up for a workshop on the 8th of September. I went ahead and checked it out on my own. My wife and I are looking forward to getting more info on NACA's Program.
- Real Estate Agent · Indianapolis, IN · Member since 2018 · 41 posts · 23 votes8y
Originally posted by @Branden Sewell:
@Stephen Jeffers What I am looking at now is the possibility of a 203K on a duplex around $170K. That would give me about $30K to play with for potential repair costs. That is basing things off of getting approved for $200K based solely on my wifes income. However, some really awesome people got me in contact with a great loan officers that is helping me to understand my options better and I think we are going to make a move on a duplex by the end of 2018. We are going to be able to get my wife approved for a little more since we will be including the rent for one side of the duplex as income.
We should be able to save enough for a downpayment by December but we will need a seller willing to pay the closing costs.
Goal: 1st deal done by the end of 2018!
I wouldn't say I am rushing things but I am dont want to be one who sits around and talks about this investing things I want to make something happen. Loving all the great feedback!
I'd be very interested in how that proceeds. Most time credits toward closing costs don't include the down payment, and with FHA would still be at 3.5% at lowest. Also your offer becomes 'less strong' when asking for closing costs. In no way discouraging, but just providing some of my experiences especially in hot markets.
I wouldn't think a bank would offset the payment against rent until at least a signed lease is executed, and I've heard sometimes up to two years. So to qualify based on an offset mortgage payment against rent seems like a risky proposition for a bank, but I've never done it so Good Luck! Then again I'm not a mortgage broker or loan agent, so there is that.
- Contractor · Orlando, FL · Member since 2018 · 64 posts · 45 votes8y
Yeah I will let you know how it goes. After talking to the Mortgage broker she said we have a pretty good shot at getting into something. Of course it will be a challenge but I can work with that.
- Contractor · Orlando, FL · Member since 2018 · 64 posts · 45 votes8y
Forgot to mention and you may not have seen it in another post but we can save up the down payment by the end of the year just not down payment and closing costs. For example, if we end up needing $14K we will have $7K of that.
- Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes8y
Originally posted by @Branden Sewell:
Thanks for the feedback. My only thing is I am not up for being slow to start and I am not up for letting fear hold me back. I think that is safe to move slow, but I am not sure that it will help me reach my short term goals. Unfortunately I don't want to wait a year. My goal is to fight, take big risks and make it happen by the end of the year and get out of paying this outrageous rent for a one bedroom apartment. If I wait a year then I will be locked into a lease for another year and the rent goes up. That is more money out of my pocket! I need to make something happen by the end of the year. At the very least we will be buying a single family, but our preference would be a duplex that we can house hack. We are actively saving $1K per month and on good months around $2K. By the end of the year we plan to have enough saved to do a conventional, FHA loan. However, if I can use someone elses money and move faster that would be my preference. That is what Im thinking personally.
I hear what you are saying about moving slow and not caring about risk, but you should move slow and beware of risk. Real estate is at the least slowing down right now. This isn't like buying at the bottom of the market when prices have nowhere to go but up. If you get involved with something you don't have capital for and don't quite yet understand (judging by the fact that you didn't realize you need a down payment) you're going to fail and fail hard and very fast. You may not agree, but 10 years from now you will look back at what I'm saying and understand that this is good advice. I'm an accredited investor and I'm not even buying real estate right now, despite being able to pay my properties off in full or buy new properties with cash, etc. Right now is a good time for you to learn more and bide your time, save money and make sure your credit is good to go for when you find a deal at the right time. It's not just doing the right thing, but also doing it at the right time. Now is not the right time for you.
No big deal about your lease or rents going up. So what. Before I finished my undergraduate studies in my mid twenties, I had enough capital to pay my student loans off in full. I didn't. Mind you I stood on my own two feet and paid my own way since I was 18 so no hand outs, that was all my own savings while I had to pay rent, etc. I sat on the money for a few years, and the market crashed and I bought a house paid in cash. Had I worried about leases, rents going up, or followed the conventional wisdom of paying off my 6.8% student loans, I wouldn't have had that deal. I since sold that house for three times what I paid for it and used it to buy two more. Those two houses made me 185K last year alone, not counting even my other properties. Point is, wait, be patient. Learn more. If you didn't know that you need a DP, then you have a lot more to learn before you buy. And that goes back to my earlier point. If you don't have a 20% DP, you're not ready to buy....I put 100K down on each house I own...I practice what I preach. Because the reality of it is that if you can't save the capital to put 20% down, you also don't have the income to weather storms. And if you buy right now you likely will run into storms. How about a market down turn? How about your roof suddenly leaks and needs to be replaced? Do you have 10K for each of those just sitting around? What if your business doesn't do well and your wife gets laid off AND now you are stuck with a house that is going down in value due to a recession that is pending...which also led to your business flailing and your wife getting laid off, etc. Don't be in such a rush to get involved in something you don't understand yet.
- Contractor · Orlando, FL · Member since 2018 · 64 posts · 45 votes8y
I appreciate your feedback. Can you delve deeper into why you say it is not the right time?
- Specialist · Tacoma, WA · Member since 2016 · 73 posts · 30 votes8y@Anthony Wick I’m in nearly the same boat not enough income and discouraged because disputes the rhetoric no money Is a real pain. Where I dIffer Is I have equIty In a rental house whIch I cant borrow agaInst because of my income and debt to income. I’m wondering if I could create a note and sell that or offer an investor a note for cash and financial statement any ideas?
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