Another Newbie from Milwaukee!!

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Another Newbie from Milwaukee!!

Nicole Pettis
Flipper/Rehabber · St. Louis, MO · Member since 2008 · 489 posts · 300 votes

Hello Pocketiers!

Another newbie from Milwaukee (a.k.a MILL-E-WAH-QUE according to Wayne's World:))

I am finally sending out my intro post after many months of reading and listening to the excellent podcasts and just soaking up all the knowledge that you all have graciously offered.

A little bit about myself...I am a wife and mother with a 2.5 year old toddler boy that keeps me on my toes constantly!

I have been a graphic design/web design professional for the past 15 years. And while this industry has been very good to me I am ready to move forward to my new adventure...which is REI. I have been extremely interested in REI for the past 10 years, I was just waiting for the right time to do it and I feel that time is now!

Although I am conflicted and have done much soul searching to follow this path. Why is that you may ask? Well, my husband and I are avid Dave Ramsey followers and we have been working diligently on paying off our debt these past few years(we have paid off $30k so far) and while the snowball is picking up and we are going through the debt. I have a HUGE overwhelming student loan that without increasing our income significantly it will be around for awhile & I don't want that.

So this where I am torn and have been going back and forth on all of this...for those of you who are not familiar with Dave Ramsey, he believes in no debt & to pay cash for everything. Even for a business. His philosophy is that debt=risk and that risk can hurt you in the long run, to whereas if you bootstrap your business, then risk is minimal and if you don't make it then you haven't put you and your family in a mess.

However, in order for us to get into REI we would have to take on a loan and if we flip successfully and make some good money, then we will be able to pay the home loan off and put money towards the debt, however if we don't flip successfully, then I have added to the already gigantic debt we have. Does this make sense? Basically I am afraid of taking that much of a risk. And that is why it has been difficult for me to take action.

Its not that I don't know or understand the industry/business. In my 20's I worked in the construction industry. I did everything from demolition to building. I know how to drywall, trim, paint, wallpaper, tile, faux paint, refinish floors and furniture. I have a design background, so I know how to stage and design an interior that will sell. I know marketing, advertising and branding along with setting up a website. And of course the knowledge from BIGGER POCKETS!!!

I am an entrepreneur at heart, I want to be home more for my son. I want to do this with everything that I have and give it everything I got. Its just been a very hard choice for me and that is why I decided to write this post...hoping that others have gone through this thought process and where they came out of.

I am here to learn, grow and take that next step. My goals are to join the REIA in town and really dig and get to know people. There are already 3-4 properties that I have my eye on, along with 2 distressed properties that I might try to wholesale.

So that is my story so far:) Sorry for the long post! And thank you for listening!

Nicole Pettis

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Brian K.
Rental Property Investor · Buffalo, MN · Member since 2010 · 511 posts · 92 votes
13y

Welcome to BP Nicole Pettis. Yup, I can relate those 2 year olds will keep you on your feet for sure. I think you should just keep pushing forward with what your are doing and that's great you have goals, something to shoot at. If you really want it bad enough you will make things happen. Make some connections at your local REIA and there's a few here from the Milwaukee area.

Best of luck Nicole.

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  • Nicole Pettis
    OP
    Flipper/Rehabber · St. Louis, MO · Member since 2008 · 489 posts · 300 votes
    13y

    Dave Carpenter,

    Thank you!

    No, they are actually on the Tosa/Milwaukee border, right by Menomonee Falls Parkway. So like Washington Heights...which I love. They are near Tosa, but they don't have the high property taxes & the neighborhood is family friendly.

    Great starter homes for sure!

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  • Annette Hibbler
    Real Estate Consultant · Brighton, MI · Member since 2013 · 607 posts · 251 votes
    13y

    Hi Nicole,

    Welcome to BP. Loads, and loads of learning opportunities from good folk. Sounds like Dave Ramsey is promoting the "consumer mindset" mentality of debt free living. I've since graduated from that, lol. No offense intended.

    If you're going to become a serious investor, you need to know how to make money work for you. Investors are risk takers, they calculate debt to income ratio and use short term debt to help them acquire assets (in this case real estate). If the profit more than covers the monthly payment its a win, win. They look for financing deals such as seller financing, hard money lenders and many other methods of using other peoples money to secure your income producing investments. Investors ledgers lean heavily on the ASSET column and are light on the LIABILITY column. ASSETS put money in your pocket, LIABILITIES take money out of your pocket.

    As an investor, consider how you can make the transition from a "wage earner" to living entirely off your "passive income" if you so choose. If you want to continue working a job, it's not because you have to simply because you want to. This is what I and many investors define as true financial independence.

    Regarding good books, I highly recommend you place "Why A Students, Work for C Students and B Students Work for the Government" by Robert T. Kiosaki at the top of your reading list. He is also the author of "Rich Dad, Poor Dad". That book is an education onto itself and will help you start thinking like an investor.

    Good luck to you!

    1Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    13y

    Annette Hibbler I completely agree with you in the sense that using leverage to your advantage can get you further along.

    But, at the end of the day, we only have one life to live in this world. And if using leverage, or using debt, decreases your satisfaction in life, then it's not worth it. The goal is to be happy, so you need to be comfortable in whatever you do.

    That's why many people are happy to be earning their 1% in their savings accounts or whatnot. It keeps them happy to have that money "safe" even if it's not working for them to its fullest potential.

    Podcast Guest on Show #29
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  • Cedric Corpuz
    Rental Property Investor · San Antonio, TX · Member since 2013 · 13 posts · 4 votes
    13y

    "Safe" is a relative term, lol. Seeing as how many banks went under in 2007-09 shows they are just as vulnerable as anyone else. Had not the government bailed them out, many more would have followed suite.

    I personally, do not consider my money "safe" in a bank. It's safe when it's in a tangible asset such as....oh, real estate for instance. It's recorded, has a deed, is on a map and has a house on it that I can use for income (rental), collateral and sell it when needed. It's also earning a lot more than 1%. Which, quite frankly, is pitiful.

    Happiness is knowing that I can live comfortably, my money is in the form of a tangible asset and even if the bank closes its doors, my properties are still my own and don't go up in smoke. When I finance, I never finance more than 45% of the value. That way, if I had to pay the balance off quickly, I can and I like knowing that I am a majority holder, not the bank.

    I live entirely off my passive income and have the freedoms that wage earners do not generally enjoy. When I want or need more income, I invest in another cash flowing property that will also boost my net worth.

    So yes, not to digress. If John Doe is happy with his little 1%, getting buy and never expecting anything better in life, then well done. However, judging by the millions of books that have been sold on the topic of gaining wealth, I doubt that represents the majority. :)

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  • Nicole Pettis
    OP
    Flipper/Rehabber · St. Louis, MO · Member since 2008 · 489 posts · 300 votes
    13y

    @Annette Hibbler thank you for your advice! And while Dave Ramsey's main focus is on consumer debt he also talks heavily about business debt as well. The main thing that he has pointed out is that the business that were debt free & had an emergency fund, were able to survive the economic downturn, to whereas business that were leveraged against the hilt didn't. Debt is risk, no matter how you look at it. Its just at what level are you comfortable with is the question.


    I have to tell you, iIts tough going from being a "wage earner" to a full time serious investor, especially when you have been the bread winner for so long and you have been conditioned to depend on that steady paycheck with benefits. I KNOW corporate jobs are not "safe" because I have been laid off, however they still have a sense of security.

    My biggest issue....borrowing money from others(i.e private investors, seller financing) and maybe when I do a few deals and gain some confidence, I will feel more comfortable with those options. I have noticed that many of the successful people on this forum, do use private investors to grow their business.

    Also, I have been listening to Rich Dad/Poor Dad and I can only say, I wish I would have read it years ago. But I'm here now ready to move forward & I will read the other one you suggested as well. I am here to learn


    Thank you again for the great advice!

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  • Nicole Pettis
    OP
    Flipper/Rehabber · St. Louis, MO · Member since 2008 · 489 posts · 300 votes
    13y

    @Dawn Anastasi first of all CONGRATS on the new job as moderator on the BP forum!

    I am in total agreement with you! As my mother says perception is 100% reality. Not everyone is cut out to be an investor & they are fine with their 9-5, 9-6 or 8-6 job and getting paid bi-weekly for said job.

    However in my 20's and early 30's I used to be a risk taker to a fault. I started a few businesses only to go back to the 9-5. I never truly failed, I just couldn't ever really get them off the ground so to speak. And it all came down to lack of education, so now I am educating myself:) But now, I've been in corporate for the past 12 years & I am married with a toddler, so its not about me any longer. Its about us. So that is what was holding me back. If it was just me...then I wouldn't have been so hesitant, but I have others to think about.

    But you probably understand all of that:)

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  • Nicole Pettis
    OP
    Flipper/Rehabber · St. Louis, MO · Member since 2008 · 489 posts · 300 votes
    13y

    @Cedric Corpuz Your are correct "safe' is a relative term. I agree with you whole heartily. However what works for one, doesn't always work for others.

    So this is where I get lost with financing. I've heard many say in the podcast, that banks won't lend on more than 4 mortgages, however there are a number of investors that use portfolio lending. And then you mentioned you only borrow 45% of the value, so that means that you come in with the other 55%....is that money you have saved?

    Also, you mentioned that you live off of your passive income which is fantastic and amazing. And I am curious, because for me to reach that goal(living off of my passive income), I would have to have approximately 30 rental properties with the 2% rule to make what I make now(my numbers could be a little off) but you get the gist.

    So how do build that kind of portfolio? Is it with OPM? Your own, did you save and buy and then save and buy? How long has your process been?

    The reason why I ask those questions is because my goal is to be at home with my son by the end of next year. In order to do that my husband and I have to do the following:

    1.) Pay off all of our consumer debt minus student loans

    2.) And my husband has the job with the great income and benefits.

    However to pay off the gianormous student loan of mine, we still have to bring in close to what we are now...which is approx $8k a month. And currently I am making 60% of that $8k.

    So I would love to learn/understand your business model a little more if you don't mind. Because I would love to be at that point within the next few years.

    Thank you!

    Nicole

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