A Punch to the Gut 👊

Investor Mindset
5yFollow

A Punch to the Gut 👊

Blake H.
Investor · Santa Barbara, CA · Member since 2021 · 76 posts · 67 votes

Just received news that I am not permitted by the city to purchase another property due to the affordable housing covenant im contracted under. Not the news I was hoping for and this will severely impact the financing I will be able to get to invest in real estate.. Demoralizing to say the least, but I knew this was a possibility and must move forward.

plan B, C, D, etc

B: Sell current house and get 70k to put towards the 300k student loan debt that has had me stuck in month to month living for the past 10 years. Find a new place to live with no cash available

C: Stay put, see what financing my wife can get and we invest in her name (She makes 30k/yr)

D: Form LLC with my investment group, using my wifes name because I'm also not permitted to be in a corporation, see what we can invest in.

E. Find a partner willing to team up with someone with skills and determination but no cash/financing

Other plans/thoughts?

Any pick me ups appreciated 🙂

5Reply
330 views

Most Popular Reply

Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
5y

Plan B.

Let's be realistic. You have $300,000 in debt that has held you down for ten years. I'm assuming your wife has been around for most of those ten years and she's still only making $30,000 a year?

You should not be investing, period. You're only fooling yourself into thinking you can build wealth when you can't even get out from under the debt you incurred ten years ago. You shouldn't buy a primary home. You should be living cheap, riding a bike, eating beans and rice, working overtime or a second job, selling your plasma, and doing everything you can to pay off that debt that's holding you down. The borrower is slave to the lender.

Read Financial Peace University and attack this like your life depends on it.

The DIY Landlord Book4.7248 Reviews
WebsiteView Page
43Reply
See this reply in the discussion

90 Replies

Jump to latestLatest
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    5y
    Originally posted by @Blake H.:

    @Bruce Woodruff good advice, I've kept a"book" for in and out for years and it has been quite helpful

    Blake, how much debt did you start off with 10 years ago?

    0Reply
  • Mike Smith
    Rental Property Investor · Denver CO · Member since 2020 · 6 posts · 3 votes
    5y

    @Blake Henderson

    Blake, you totally missed your plan A1:

    Get out of California to a free state where you can be an active, free American and prosper!

    Forgive me if I'm missing something but it boggles my mind that you would allow a lousy city to enslave you.

    Mike Smith

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    5y
    Originally posted by @Blake H.:

    @Bruce Woodruff good advice, I've kept a"book" for in and out for years and it has been quite helpful

    Good for you...a great first step! Look, you'll be fine, just get a plan and stick to it....you got a lot of great free advice here and hopefully some of it will work for you.

    I admire your courage in even bringing your case to us for advice...this will take a while but it is doable, A quick story.....at age 37, I was worth $1million - business, house, Etc. I'll skip the horror story, (I lost everything) but at age 38, I went to an ATM to get $20 for a beer and was denied. I stood there and cried......

    But I'm ok now, you will be too.

    1Reply
  • Blake H.
    OP
    Investor · Santa Barbara, CA · Member since 2021 · 76 posts · 67 votes
    5y

    @Bruce Woodruff I have no shame in sharing my story. I mean isn't part of the purpose of the blog to share our stories!? I am super grateful for all the advice, priceless and appreciated. Thanks for sharing your story too! I'm glad you are here continuing to fight the fight

    1Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    5y

    @Blake H. You're welcome.....Consider a move, I know its tough if you have family/friends but gosh, I wish I'd done it years ago. Cost Of Living...$20k a year x 5 years = $100k. Plus buying property at half price, etc, etc...

    0Reply
  • Account Closed
    Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
    5y

    I think people have been a bit harsh on @Blake H.. He is no different than millions of other Americans. Student debt is a crime. Banks get free money from the fed, make loans to people who they know can never pay them back at high interest, have the loans backed by the govt to eliminate risk of default and commit daylight robbery. And for all the blatant political "get out of California, its a communist ********" get real. California generates more wealth than any other state. It drives Technology and Media that all of you happily consume and is probably one of the best places to create wealth on the planet. Yes, you can move to Ohio and buy a 100K house but so what? How does that help you become a millionaire? 

    Now yes, the OP should pay off the debt and increase his income. That much is clear. But also, he has the right value system in prioritizing time with his family. What kind of society thinks that one has to "earn" the right to spend time with the family? At the end of the day, money is just a made up concept consisting mostly of numbers in a bank. It can be wiped out in a flash, no matter how much you have accumulated.

    5Reply
  • Blake H.
    OP
    Investor · Santa Barbara, CA · Member since 2021 · 76 posts · 67 votes
    5y

    @Anish Tolia thank you! 😊

    0Reply
  • Gustavo Rodriguez
    Newark, NJ · Member since 2015 · 10 posts · 1 vote
    5y

    @Blake Henderson

    Remain optimistic brother. I’m in a similar situation and I know how you feel. I my wife and I had a total of 100k in debt, partly student debt and personal loans. We ended up moving back to my in laws because my wife had lost her job and it would of been difficult to pay for our debts and a $1700 dollar rent. It hurt a lot because we ha even living them before and I thought I was making the right decision to move but life brings many unexpected circumstances. Rather than letting my situation drag me into a never ending depressive pit, I managed to get 25k erased. I definitely could of worked harder and did slack off a bit when paying the debts off, but I’m on the road to hopefully being debt free by this time next year. I can be demoralizing when people see you on your 30s living with family but I am eternally grateful to them and hopefully I can pay it forward when they decide to retire and begin to embark on the journey of real estate. The only from down it up.

    0Reply
  • Blake H.
    OP
    Investor · Santa Barbara, CA · Member since 2021 · 76 posts · 67 votes
    5y

    @Anish Tolia my philosophy with most things is less this or that, black or white. It can be both. I can prioritize family AND aggressively pay off debt AND invest. Will provide any updates along the way

    0Reply
  • Blake H.
    OP
    Investor · Santa Barbara, CA · Member since 2021 · 76 posts · 67 votes
    5y

    @Gustavo Rodriguez You got this! Thanks for sharing, rooting for your success. I know you will get to where you want to be.

    1Reply
  • Logan Vierstra
    Investor · Sioux Falls, SD · Member since 2016 · 72 posts · 20 votes
    5y

    I see a lot of people suggesting not to invest until you are out from under your debt or until you significantly increase your income. I don't exactly understand that. It seems like the exact opposite of the kind of suggestion I would usually expect to hear from BP community. I've heard it repeated a thousand times that a better paying job doesn't make you better off. Most people just up their lifestyle along with their income, and continue to live check to check. Seems to me learning to direct that money towards investments is a good idea. 
    Instead of spending time working a second job, why not spend that time making money in real estate? In the latter situation you still make extra money and you gain experience.

    As far as I'm concerned it's always the right time to invest. It's just a matter of paying attention and investing in correspondence to current market conditions, and according to your unique situation. 

    I like your alternative plans, besides plan B. You came across a road block and you're trying to solve the problem, good on you. I'd say explore all these options. See what financing your wife could get. Talk to different types of lenders (hard money, private money, Flip Line of Credit lenders, commercial lenders, HELOC, etc.) and see what they think about your situation. Talking to other investors who have cash is a great idea also. I've done most of my deals using other people's cash, and I made money that I could have put towards student debt if I had debt.

    1Reply
  • Blake H.
    OP
    Investor · Santa Barbara, CA · Member since 2021 · 76 posts · 67 votes
    5y

    @Logan Vierstra my kind of thinking around investing and my situation and exactly my plan! Thank you for sharing

    1Reply
  • Michael A.
    Investor · Richmond, VA · Member since 2016 · 164 posts · 114 votes
    5y

    @Blake Henderson Lots of feedback has been given. Never lose tour tenacity. I really must concur with the idea that you should live like a pauper until that debt is gone. My wife and I had very lean years starting out and we’re saddled with six figures of student loan debt between us. We worked our asses off, took public transit to work for 8 years while never even owning a car, ate literally ramen and whatever Restaurant.com coupons could get us on special occasions. We barely saw each other sometimes but when we did we knew the broader goal of financial freedom was what motivated both of us. We are debt free aside from our mortgage now and while we are far from financial independence we are both vehemently working toward it.

    So I really agree with the sentiment that patience and every single ounce of sweat you have should be what is getting you closer to financial independence right now. The opportunity to invest will come but you have to be in a position to do so. Stay positive and stay focused!

    2Reply
  • Paul KuhnPro Member
    Rental Property Investor · Virginia Beach · Member since 2012 · 70 posts · 34 votes
    5y

    @Blake Henderson

    Different point of view here, my unique viewpoint…

    Join the military as a RN, very competitive to get in, helps to be an ICU nurse or CRNA. Your joining bonus can pay off almost all your student loans in return for 3-5 years of your life, while making $70+k/year (O1) with no cost benefits except for dependent dental and life insurance. Pay jumps every 2 years along with promotion to O2 (year 2) and O3 (year 4). As an O3 you can be making 100k+ with 1/3 of that not being taxed.

    Also get the power of the VA loan, healthcare for yourself for life, post 9/11 bill that you can pass onto your kiddos(worth 250k) or use on yourself. The military will also pay you to be a student if you want an advance degree as a nurse practitioner(~90-120k ish jobs) or nurse Anesthetists(150-300k jobs). Best of all, all counts towards the 20 year retirement, including time as a student.

    Don’t worry, they don’t deploy medical before infantry. If your shooting a gun, it’s a bad day…

    As a military member, you can see different markets around the country, and depending on the branch, move out there to invest locally. Don’t except to be in Wyoming as a Sailor, unless you do medical recruiting. But the shining seas are nice to marvel at.

    6Reply
  • Blake H.
    OP
    Investor · Santa Barbara, CA · Member since 2021 · 76 posts · 67 votes
    5y

    @Paul Kuhn Good point, i have considered the military a couple times. Would be quite a shock but not completely out of the question. Thanks for sharing

    0Reply
  • Eric Bilderback
    Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
    5y

    @James Hamling

    @Blake H.

    Here is the deal James, nobody teaches kids crap.  Immigrants have been taught what it takes to survive by and large American kids are not.  That is the reason why hardly any American kids can do anything with their hands, are fat, and soft.   "Immigrants are so great you should be more like them."  Immigrants also look out for their fellow immigrants which is more then most native Americans are willing to do for each other.  

    Blake,

    Brother you can dig out.  I would focus on your income and house hack and probably move the hell out of California.  In my opinion that 300k will have to wait just make minimum payments on it and build yourself a business or real estate portfolio maybe both.  I would look at being a realtor (thats just because it worked for me).  If you want PM me there are some free programs out there for new realtors that work wonders.  I believe anyone who follows them will be successful.

    For all of biggerpockets maybe I'm reading this wrong but I don't  get why people come down on folks that are trying to figure out what the hell went wrong.  People all over are doing stupid financial stuff because they have not been taught how things work.  I and many other people on this forum were blessed in being naturally interested in personal finance many people aren't they shouldn't be lectured to or scolded.  I have said many times I wish I could run 4.4 40 and jump 30"+ but I can't the good lord just made me a financial geek.  But I sure as hell don't want to be lectured about how should hang up exercising and just go bowl!  LOL

    3Reply
  • Stephanie Ro
    New to Real Estate · Lockdown Capital of the World Melbourne, Australia · Member since 2021 · 60 posts · 26 votes
    5y
    Originally posted by @Al Pat: 

    @Blake Henderson agree you will set aside about 5-10% for CAPEX. However, I had multiple situations where HVAC went out on a month 2-3 after acquiring property. I also had water heater leak within months. Needed to replace PRV because water pressure was too high. Water main lune leak and needed replacement. Not all with one property but among my portfolio. This becomes easy for someone like me with multiple properties and strong cash flow but of you just acquire a property and in six months need to buy HVAC, it will ruin your plans. Also, I get a deal on my repairs, I buy my own system and have guys install for about $700. You may end up paying more than double of what I can. Bottom line, write down your plan for current situation, have a date for each action like 30k debt paid off by March etc. because without a plan you will not get anywhere or may end up different than what you thought. All plans don't work according to plan. Anyway, follow what Jim and Nathan said, they both are very seasoned. We all have paid off debts bigger than yours but our debts were very calculated and very well vetted. Mine was not the student loans, I hate that one. My MBA was paid for by my employer.

    @al pat Upon inspection by a professional house inspector, can't the HVAC system, roof, termite damage...etc., not be detected beforehand? I know there are rules about digging behind a wall and such, but can't looking at rust and leaks alert the buyer that there will be issues down the road? 

    0Reply
  • Blake H.
    OP
    Investor · Santa Barbara, CA · Member since 2021 · 76 posts · 67 votes
    5y

    @Eric Bilderback Preach! I think that is exactly why I had the reaction I did. Thanks for sharing your advice and insight.

    0Reply
  • Eric Bilderback
    Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
    5y

    @Blake H.

    I got you baby!

    2Reply
  • Al Pat
    Rental Property Investor · Atlanta, GA · Member since 2016 · 325 posts · 253 votes
    5y

    @Stephanie Ro some issues can be detected but then others may not be. Two HVAC’s I replaced were installed in 2013. Leaking Coils and compressor failure. Needed to replace coils and condensers. Water heater looked good but PRV on water main went bad that was installed in 2007. Another house had water main line split open. It was polybutylene and had a root under it that was squeezing to a point that it popped. Some of these things are hard to detect in inspection as all it says is the year the systems were made and functioning at the time of inspection. Any leaky system will work for weeks or months if you recharge them.

    2Reply
  • Stephanie Ro
    New to Real Estate · Lockdown Capital of the World Melbourne, Australia · Member since 2021 · 60 posts · 26 votes
    5y

    @Al Pat This makes me nervous! I'm going to need at least 20k in reserves. :(

    0Reply
  • Andrew Carlson
    Rental Property Investor · Rochester, MN · Member since 2017 · 224 posts · 323 votes
    5y

    @Blake Henderson

    I’m also a nurse. The amount of high paying work out there right now is ludacris. Stop trying to buy real estate. Go make some damn money!!! $10,000 a week in Oregon right now!

    7Reply
  • Al Pat
    Rental Property Investor · Atlanta, GA · Member since 2016 · 325 posts · 253 votes
    5y

    @Stephanie Ro depends on how many units you have and what your free cash flow is after expenses. When I had my very first and only property years ago, I had set aside about $8k and that was 11 years ago. As I scaled, I grew a decent reserve and allowed me to do planned capital improvements that reduced emergencies and also cash flow also grows with your increased portfolio and that helps.

    2Reply
  • Blake H.
    OP
    Investor · Santa Barbara, CA · Member since 2021 · 76 posts · 67 votes
    5y

    @Andrew Carlson true and something I've also considered.

    0Reply
  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    5y

    @Blake H., great thread.  It also shows a lot of guts to show your situation.  However not all advice can be sugar coated.  My best lessons came from times I failed, not from successes.  I don't know your situation so these suggestions may or may not apply.  First, your skill is very much in demand.  Look around and see how you can earn more money working the same number of hours or even take on extra hours.  It may mean a traveling nurse job, a shift that pays more money, a different employer at a different hospital, or possibly getting aggressive at getting a raise or promotion.  If you own your house why not house hack and rent out a room?  Maybe add a bedroom where it used to be a dining room.

    While I think a $300K student loan debt is outrageous, I also understand how easy it is to get lured into using them.  The price of tuition and books is obscene right now.  It is the easy student loans that have allowed colleges to charge outrageous fees and get away with it.  You are clearly a good person, but you have made some mistakes here.  You won't learn from them if you don't own them.  

    There is no easy answer, it will hard work, dedication, and persistence at the end of the day.  You have to have a budget and stick with it.  Get a safety fund first.  You don't want a flat tire or blown transmission or busted water heater to make you get behind on mortgage payments.  Next you have to find a way to earn more.  Your wife should look for ways to earn more and possibly consider a different higher paying job.  Next you need to look for opportunity.  That may be at work, or investing, or getting the job of mowing the lawn for a local business.  Opportunity is all around us, we just don't always recognize.

    Finally remember to be grateful, you have a lot of debt and some problems, but you and your family are healthy, you obviously love your spouse and she loves you.  Right there are the best possible things you can have in life.  Let your love of them drive you to be better and more diligent.  Educate yourself, read the self improvement books, the financial freedom books, etc.  Stay the course and keep getting a handle on it by improving every day.

    Best wishes on your progress.

    4Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free