This may or may not be the place to post this but since it is my first post here we go!
First a bit of a background story before I ask my question. I was able to purchase my first home that needed work. I was able to purchase the house for $62,500 with closing cost included in the price. A lot of this was possible thanks to a great real-estate agent I used. He saved me $20,000 on the house and the local back was going to let me to an in house loan to do repairs and i had to put 20% down. Agent was able to change it to 10% as he knew the management there.
After a year of working on it bit by bit I was able to get the house how I wanted it. House appraised for $125,000 and I put about 20K into repairs, upgrades, appliances, etc. 18 months later I have been paying $300.00 extra a month towards principal and I now own $56,000 on the loan. And that brings me to where I am now.
Things went great with the house and I would now like to try to do a fix and flip using the equity in my house (HELOC) So my thoughts are getting that set up, seeing what places I can find or my agent can show me and if the right place comes along try to do it all again. I still have a good relationship with the bank so if they allow me to do the 10% down then I believe my HELOC would be able to cover that along with the repairs. In this case I would be hiring people to do the work on the house instead of myself as it can get done quicker and I won't get burnt on working on it every day after work. I do know a good painter, electrician, flooring, and for the things needed for people i do no know I do know a good contractor that I can trust.
If this works out I do not have crazy dreams of making a ton of money when it would sell. I intend to use this first attempt as more of a learning experience. If I could profit $10,000 off of this first attempt after paying everything then, I would call that a success.
Sorry this is so long but I figure it would help with getting an answer. Any advice would be appreciated. Thanks.
Sounds like you're off to a great start and the strategy makes sense. Make sure to run your numbers and you should be good to go.
I agree that sounds like a great plan! Tapping into your personal home's equity is a great way to start the ball rolling on your Real Estate Investing journey. Only thing I would say is expect to pay 20% down since the property you are looking to purchase will not be owner occupied and 20% is typically the standard for investors.
I plan to along with knowing the prices houses are selling for in the area. Even though things worked out great with my house, I did not want to rush to the next without tons of research. Pretty much been doing that for the last 1 1/2 years, and feel like I just need to gather the courage to do it. According to www.nerdwallet.com Chase bank has it to where on their HELOC there are no closing or application fees and charges a $50 origination fee and $50 annual fee. Think im going to take a trip there after work today and see what they have to say. If it all sounds good then I will get my house reappraised and go from there.
20% is what I have been seeing. My local bank took a chance with me doing the 10% down on my home to do repairs. Never missed a payment and they had no issues during the year I was rehabbing it. I am hoping since they did it before with no issues maybe they will work with me again knowing that I would be a repeat customer. Also my bank account is there along with a small loan on a car. I could pay the loan off any time but like to show a good payment history on items.
Well could not make it to the bank today. Weather was real bad when I got off of work. Will try tomorrow.
Updated almost 3 years ago
Once I go there and get info ill post it here and get peoples thoughts on it.
Bit of an update for anyone interested and for anyone who wants to give advice...So I did finally make it to chase and I am pretty happy with the terms. Have not started it yet though. Also there is a chance I may be able to only put down 10% on an in house loan at the local bank again.
Things are coming together. Now its just a matter of getting the courage to pull the trigger and to start looking for a place.
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