Updated over 3 years ago on . Most recent reply
Contractor's Wife Dying to Get Into Real Estate
Hi, I am married to a general contractor who does kitchen/bathroom remodeling, decks, drywall....yada, yada, yada and we would love to get into real estate. I feel I am more motivated than him and that is probably because he is more of a cynic than I. Ever since I was little and my mom would take me to open houses in these huge Victorians, I have wanted to get into real estate. We don't want to part without savings for a down payment and are free and clear of the mortgage in the home we live in now. What is the best option as far as getting money lent from a business like a bank or hard money lender? I have heard about hard money loans but it seems like that is scary, but maybe our only option. We have great credit and can do the work! Unfortunately, we have poor friends and family so the option to use them as lenders is out of the question.
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Hard Money Loans are short term loans. You want to be in one for as few weeks as possible. Unless you find a killer deal you are still going to have to come out of pocket for some sort of downpayment. Zero down deals are like finding a diamond in your back yard. You may be able to find one, but you probably won't.
Mindset change is the hardest part about becoming a real estate investor. It is very hard to get out of the Dave Ramsey pay-down-every-debt way of thinking. Instead of telling you what to do, I'll just ask you a few questions.
- How much is the equity sitting in your house earning you? I'm not talking about the appreciation on your house. You get that through ownership, whether or not you have a mortgage.
- Put another way, how much money are you saving by having your house paid off?
- Let's say you find a single family deal that makes you a 10% annualized return (which would be on the very low end of what I have seen) and to buy it you took out a mortgage out on your house at 6%, would you be better off or worse off?