Newbie w Equity- DFW texas

10 Replies

this is my first post so forgive me if its lengthy.
My wife and I bought our first home 3 yrs ago and after making repairs and upgrades, along w the market working in our favor recently, we believe we have approx. 50-80k in equity in our house.

We recently decided we'd like to start investing in real estate with hopes that over the next 10 years or so, we will possibly be able to make a living doing this full time.

We are very new, and very green, but willing to work hard to achieve this. And we'd really like to be able to provide and example to our four kids that you don't have to be born into wealth to create it on your own.

Here are a few questions we have:
Should we consider flipping or renting for our first deal? (I realize that this really comes down to our preference but I'm looking for some of your personal opinions)

Would it make sense to use the equity in my home to help cover expenses?

What resources should we make sure we read or watch before attempting our first deal?

Should we consider proposing some form
Of a split with a more seasoned investor that would be able to walk us through our first deal?

What other questions should I be asking?! I don't know what I don't know ????

Welcome to BP!  You live in one of the best markets in the US to invest in.  Before spending any money on 'learning,' you should probably start with these guys:

http://www.biggerpockets.com/forums/521/topics/165...

This is your back yard!  Subscribe to the Bigger Pockets podcast (free) and start at #1 and start listening to them every time you are in the car.  Set up keyword alerts, such as:  DFW, Fort Worth, etc. on the forums.  Start going through the forums and learning.  

Flipping is a job.  Wholesaling is a job.  Granted, good pay comes along with the hard work and persistence.  However, just jumping right in and throwing money around is usually a recipe for smaller pockets in the long run.  As they say, lessons cost.  Good lessons cost lots!  This site is full of lessons and can be learned for free, with the investment of your time.  Good luck on getting out there and getting started.  

It is in my opinion that if you are looking to build long term wealth, you should keep the asset.  Is it a get rich quick scheme? Absolutely not but over time you will achieve that goal if you build a nice rental portfolio.  There is less risk in holding on the property. Renters are normally less picky than a person looking to purchase the home. As the DFW area continues to grow people are going to need a place to live. 

An option that I see possible to refinance your current property pull out that equity that you have to use to buy  more properties.  I do not know what your finances are like that is a quick way to get come capital to start creating a rental portfolio. 

Or if you are looking to move and have some cash on hand  then you can keep your current residences and have a tenant pay off the rest of your mortgage and you will own that property free and clear sooner. However, there are some taxes incentives to keep a mortgage on a property. 

There are so many different ways to skin the cat. I hope this is helpful.

Originally posted by @Stephen Salerno :

It is in my opinion that if you are looking to build long term wealth, you should keep the asset.  Is it a get rich quick scheme? Absolutely not but over time you will achieve that goal if you build a nice rental portfolio.  There is less risk in holding on the property. Renters are normally less picky than a person looking to purchase the home. As the DFW area continues to grow people are going to need a place to live. 

An option that I see possible to refinance your current property pull out that equity that you have to use to buy  more properties.  I do not know what your finances are like that is a quick way to get come capital to start creating a rental portfolio. 

Or if you are looking to move and have some cash on hand  then you can keep your current residences and have a tenant pay off the rest of your mortgage and you will own that property free and clear sooner. However, there are some taxes incentives to keep a mortgage on a property. 

There are so many different ways to skin the cat. I hope this is helpful.

 This is extremely helpful, thank you. Regarding our finances, she's a stay home mom and I make around $100k. We bought the house at $169k as a fixer upper and similar homes in my neighborhood are averaging around $250-$300k. 

Schools here are fantastic and we are certain we'd be able to rent this house at a very good rate. Man, thanks for this idea, this hadn't occurred to me. 

@David Britton  

Welcome. Time to build the foundation below.

Two Great reads, I bought both J. Scott The Book on Flipping Houses,The Book on Estimating ReHab Costshttp://www.biggerpockets.com/flippingbook

Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and all the cash buyers (rehabbers) you will need.

You might consider Niche or Specialized Housing like student housing. Rents can be 2-4 times more. Remember you don't have to own a property to control it.

Download BP’s newest book here some good due diligence in Chapter 10. Real Estate Rewind Starting over

http://www.biggerpockets.com/files/user/brandonatbp/file/real-estate-rewind-a-biggerpockets-community-book

Good luck

Paul

Welcome to the sitie @David Britton  

My wife and I are in almost the exact same spot.  We bought our home as a live in flip in late 2011 for 85k, did a a ton of work on it as we came up with the cash and now comps are running 160k+.  We are looking to buy at least 10 single family rentals in the next ten years and I've started doing wholesaling on the side in the hopes that my wife can stay home much sooner than otherwise.

If you can handle the debt payment after you pull the equity, I would go for it.  In tx you can only cash out refi once per year and only up to 80% loan to value.  That includes home equity lines of credit, which is part of what were considering using for our investing.

Before getting too far into any deals I would listen to as many bp podcasts as possible and try to identify the strategy that fits your goals.  There's a new bp meetup that's going to have its second meeting next month.  You're officially invited!

@David Britton

I did not read through all the responses so I apologize if this has been said before. 

IMO, I don't think you should look nearsighted at any potential deal...your job is to find a way to monetize it. If you look at it only as a wholesale, only a flip, etc., you will throw away a lot of opportunities. You should partner with someone who can also see a potential deal from numerous angles so that IF the deal can be monetized, he/she will know how to do so at the highest level. 

Knowing how to make money several different ways on a prospective deal is one of the most important keys to succeeding as an investor.

Hey David,

Welcome to the forums. I only entered the forums last week so we are in a pretty similar situation. I am currently trying to learn about Real Estate Investing. I have some capital either for my home purchase or hopefully a home plus a rental property, but over the next couple of months at least, I mainly want to learn, think and find wise people who I may be able to walk besides.

Also @Tim Bishop  & @David Britton , count me in if you guys set up a BP meet up. I will be finding a meeting or two with some local REI groups, but one that features some other BP sounds even more appealing.

David we can help each other and learn together in the future.

- Kevin

@David Britton  If you have $50k equity, you should probably leverage it on a few more houses where you can buy with little down and hard money loan or take over the seller's payment with a little down. If you control five of these homes, and each one appreciates at least 5-10% over the next 5 years, you can double your money. If you link up with a veteran investor, who know what they are doing, you can double your $50K in one or two years. Don't ever use your equity for anything other than making more money or more equity. You can partner with an experienced investor for your first few deals so you can learn to do it right. You might even pick up some free training from my website.

thanks for the info Toyin, I'm definitely going to visit your site.

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