Des Moines area- how to start?

[Lisa Blubaugh]

Hi! I've been reading and lurking off and on for about a year. I need help figuring out where to start. I want to try to BRRRR strategy. My husband and I both have credit scores around 650 and we're trying to pay off about $3500 in credit card debt. We started new higher paying jobs recently and we currently rent a house. I guess my question is, should we work on improving our credit scores (how high?) and saving up to get an FHA loan? For locals, is there an area in or around Des Moines that you recommend? I just need a starting point and a general direction. Thanks in advance!

[Darson Grantham]

Hi Lisa! I'm a local agent/investor in the Des Moines area. My suggestion for you is to start househacking/BRRR combination.
Meaning, buy a house traditionally fix it up while you live there and then refinance, rent and move out on to the next househack.  This can be done with Single family or duplex/triplex/4plex if you find the right ones. 


Then speak with a few lenders and get pre-qualified for a conventional loan (not an FHA) You SHOULD be able to find a few around town that will allow you to put down only 5%. The reason i say no FHA is that many houses that would fit the BRRR model will not qualify for an FHA loan due to their condition.

The second is to determine a time frame. Are you in a rental lease for a period of time or are you month to month? This will trigger your motivation to be patient and wait on a really good deal or if you'll need to be less selective due to the timing of your lease ending.

In regards to the credit score, yes try to get that increased, run your credit reports, pay off outstanding debt, my exact suggestion would be to follow the Dave Ramsey baby steps up until step 4 (small emergency fund, pay off debt, 3-6 mo emergency fund, then stop the babysteps). And at this point start saving for a downpayment on your househack/BRRR.
This MAY delay your purchase a bit, but will help you feel much better about the purchase. IMO

Area's of town are completely up to you, but start in the center and move outward looking at properties. A VERY general rule of thumb is the 1% rule, as I'm sure you've read. Make sure a 120,000 house will rent for 1200/mo. This will be very tough to find, but you might be able to buy a 85K house put 12-18K into it (if you do the labor work yourself) it and get it to rent for 1250 ish when you move out.

Let me know if you have any other questions or if any of my rambling above needs some clarity.

[Lisa Blubaugh]

@Darson Grantham thank you so much!! What you said makes a lot of sense. There's so much to learn; it can be overwhelming. Our current lease is month to month so we can proceed on our own timeline. Thanks again!

[Darson Grantham]

Being on month to month, puts you in the driver's seat to start really looking if you are really ready.  Regardless I would encourage you to start looking at the new listings and new sales every day on houses under 150K this will give you an idea of what inventory is being listed and sold.

Look at those pictures and estimate in your head what the rehab might cost.  if you don't know that number, speak to a contractor and read Jay Scott's book (published here by bigger pockets)

Good luck and of course reach out if you want to talk over the phone or have coffee, I enjoy talking RE investing!

[Lisa Blubaugh]

@Darson Grantham I really appreciate that, thank you!! I'll definitely reach out :)