I’m stuck at my current position

Real Estate Deal Analysis & Advice

I’m stuck at my current position

Nicholas Weckstein

Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes

This post is me blowing off steam or seeing if I’m missing anything.

I currently own a Triplex with an 85k note left on it. I profit roughly $750 a month plus whatever the mortgage pay down is. I’m not complaining.

Where my frustration comes from is feeling stagnant. I’m saving money like it’s going out of style, but I won’t qualify for another mortgage. I went from being a restaurant manager on a salary to a new restaurant as a tipped employee ( the money is better) problem is that the bank won’t consider my tips until I’ve been their I believe 2 years so they can average my income.

So at the current time a loan from a bank is out of the question.

I have about 8k saved myself. My mother wants to invest and has 85k but it’s only 38k in liquid the rest is tied up in IRAs.

I’m trying to think of creative ways to acquire more properties but I can’t come up with anything other than wait and save.

Also when I’m 25 in 2 years I will be receiving a settlement check for 50k. My goal is to have at least 25k of my own to add to that and then with my moms investment make a big move.

I guess I just feel like I’m smart enough to figure something else out and that just waiting and saving isn’t good enough. I’m only 23 but I feel that I should be doing better because I’m absolutely in love with real estate.

Any suggestions ? Some angle I’m not seeing maybe ?

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Contractor · Milltown, NJ · Member since 2016 · 297 posts · 213 votes

8y

Nicholas Weckstein Happy Thanksgiving to you, and congrats on your investing success to date. You know more about the real world at 23 than 90% of the world will ever know. You are on the right path, have incredible discipline and a boatload of know-how to boot. The lesson life is teaching you now is patience. You can evaluate a deal, set a goal for the price range of your next one and keep on saving up until you find it. You can and will do it. One thing I would steer clear of, is Mom's IRA. A deal goes sour on that road, and you lose a lot more than an investor.

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Account Closed
Phoenix, AZ · Member since 2017 · 96 posts · 66 votes
8y
Originally posted by @Nicholas Weckstein:
This post is me blowing off steam or seeing if I’m missing anything.
I currently own a Triplex with an 85k note left on it. I profit roughly $750 a month plus whatever the mortgage pay down is. I’m not complaining.
Where my frustration comes from is feeling stagnant. I’m saving money like it’s going out of style, but I won’t qualify for another mortgage. I went from being a restaurant manager on a salary to a new restaurant as a tipped employee ( the money is better) problem is that the bank won’t consider my tips until I’ve been their I believe 2 years so they can average my income.
So at the current time a loan from a bank is out of the question.
I have about 8k saved myself. My mother wants to invest and has 85k but it’s only 38k in liquid the rest is tied up in IRAs.
I’m trying to think of creative ways to acquire more properties but I can’t come up with anything other than wait and save.
Also when I’m 25 in 2 years I will be receiving a settlement check for 50k. My goal is to have at least 25k of my own to add to that and then with my moms investment make a big move.
I guess I just feel like I’m smart enough to figure something else out and that just waiting and saving isn’t good enough. I’m only 23 but I feel that I should be doing better because I’m absolutely in love with real estate.
Any suggestions ? Some angle I’m not seeing maybe ?
If you said you were Manhattan I'd say "get outta town" to invest. But come on man, you''re in New Hyde Park! You have so much opportunity within a 30 minute drive you will be busy for years. Forget the bank. Do a search for lease options, wraps, subject to, land contracts, seller financing and let your world explode with choices.
5 Reply
Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
Bill T. I’ll be honest, I don’t have any knowledge of land contracts, lease options, or any of those things. I learned everything about buy and hold I could, and am still learning to this day. I’m learning now as much about commercial financing and the BRRRR method as I can. I guess I just feel stuck, like I have writers block. I know theirs always a way. I just can’t seem to find It. I should have 3 more properties by now. But one year after my first purchase and I don’t ! Can you shed any light on some of the things you suggested ?
0 Reply
Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
Bill T. I invest out of state in PA, where I will be moving in 8 months
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Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
Juanita Superhott well I hear you on that. I’ve been a land lord 1 full year now an wow have I learned a lot. The hands on knowledge I gained this yeah is immeasurable in ROI. The triplex I have, I paid to much for. As an eager pre approved 21 year old who’d been dreaming this dream for 4 years. I found a property with good cash flow, and was exited and payed to much. It was listed at 130k I bought for 120k and It appraised at 120k. HUGE lesson learned. I should have bought more in the ball park of 100k. But it’s still decent. It’s 3 units - 3 and 2, 2 and 1...and 1 and 1. Coin opp laundry on site. 8 car parking lot attached at rear of property. And a 3rd floor walk up attic with a private entrance. Gross rent comes in at 1800$ and tenants pay everything all I pay is sewer and Piti. I have a tenant who I lowered rent by 50$ and cuts the lawn and handles snow. It’s good I just should have more. Ive see so many ways to do It and for some reason I can’t put together another deal. I’ve walked properties that are great buys. But I can’t buy them. Just stuck for the time being I think
2 Reply
Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
Juanita Superhott I do plan on house hacking when I move to the area in 8 months. But still don’t know if I’ll qualify for a loan at that point. My credit is amazing. My income is the part that is tricky due to majority of my money is in tips. It’s a lot of tips also but as far as banks are concerned they can only accept the hourly wage of 7.50. That won’t get me to far
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
8y
"I went from being a restaurant manager on a salary to a new restaurant as a tipped employee ( the money is better) problem is that the bank won’t consider my tips until I’ve been their I believe 2 years so they can average my income."
Why not buy a restaurant and use that cash flow as a springboard to investing?
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1 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
8y
Why not find a job that is better suited to investing. Full time no tips or commission. It would help you in the long run to get a more stable income to qualify with.
Obviously not the solution now but definatly a long term investment in your future.
Honestly I do not even rent to restaurant employees.
1 Reply
Robert S.
Contractor · Milltown, NJ · Member since 2016 · 297 posts · 213 votes
8y
Nicholas Weckstein Happy Thanksgiving to you, and congrats on your investing success to date. You know more about the real world at 23 than 90% of the world will ever know. You are on the right path, have incredible discipline and a boatload of know-how to boot. The lesson life is teaching you now is patience. You can evaluate a deal, set a goal for the price range of your next one and keep on saving up until you find it. You can and will do it. One thing I would steer clear of, is Mom's IRA. A deal goes sour on that road, and you lose a lot more than an investor.
9 Reply
Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
Joel Owens id love to ! But way above my price range. Restaurants also suffer from the highest failure rates of almost any business. Capital needed to just start up can be in the 6 figure range. Not to mention that you need to be able to survive your first 3-5 years before your likely to see a real income. I would love to open a restaurant one day, but more as a hobby when I’m doing well in real estate. I was lucky to become the GM of a full scale restaurant bar and catering hall at a young age through hard work and a bit of smooth talk lol.
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Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
Thomas S. I did actually explore that option when I left the manager position. To be frank with you it’s not that easy. As a waiter at an upper scale restaurant I pull in between 750-1000 in CASH every week. To match that level of income as a salaried or hourly worker, I’d need to gross around 1100-1400 weekly. That’s between 57-72k a year. Jobs like that don’t just pop up because you want them. I work 30 hours a week and take home what many take home using their college degree. Of which I do not have, nor have any desire to get. It’s hard to get away from this industry. I get that having even a 15$ an hour job would be more beneficial to acquiring a loan than what I’m doing. But at the same time I need to be able to save and pay all my bills. What I’m doing now allows me to do that. Once I have money saved then I may just find a decent hourly wage job to get me a loan.
2 Reply
Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
Robert Soto thank you ! You as well. Thank you as well for your kind words. I struggled young. Grew up fast and had no choice but to pull It together. Funny because everyone I know tells me almost exactly what you just said. To be patient, to not be so tough on myself, to stop and smell the roses. It’s difficult to do when you have this vision and dream for the life style you want. If I stop to congratulate myself for my accomplishments now It would be too soon. While all my friends party and drink and spend money....I’ll work. When all my friends are getting married and having kids. I’ll work. When all my friends are realizing they need to get It together. I’ll be managing my portfolio, have no 9-5, and have the time and freedoms to be able to live how I please. Thank you again !!
0 Reply
Cory Dessauer
Cincinnati , OH · Member since 2017 · 14 posts · 3 votes
8y
Like the other folks said, id look into creative financing solutions. Partnerships, seller financing (admittedly challenging to get), reach out to plenty of lenders to see if you can find someone who can appreciate your goals, private lenders are also recommended by those better acclimated to this field than us. I suggest listening to the bigger pockets podcasts when you can, as I'm learning quite a bit from the seasoned guests.
1 Reply
Amy Beth
Rental Property Investor · Edison, NJ · Member since 2016 · 753 posts · 565 votes
8y
You mentioned working 30 hours per week. That leaves you with a lot of free time. How about getting a part time job which pays more per hour on the side? That will help you to qualify when you are ready to buy. And do not touch your mom’s IRA. Just say no thank you Mom if she offers.
2 Reply
Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
Juanita Superhott I do I do !! I don’t want to run into income tax issues. What I mean is the time issue. Due to my income not being consistent every day. Lenders want to see a certain amount of time to pass so they can look back and come up with an average. I’m just trying to see if I can get around waiting. I’ve got a fire burning under me lol. I need to acquire more lol
0 Reply
Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
Amy Beth everyone keeps saying that about the IRA. Are the penalties really that severe ? Your right. I could probably swing another 20 hours a week with a part time job that may help me to obtain a loan if it’s a set hourly rate. I suppose I will start looking. Thank you ! Jeez I wish their were more hours in the day. Or that I could only sleep 2 hours a night
0 Reply
John Leavelle
Investor · La Vernia, TX · Member since 2015 · 1k+ posts · 865 votes
8y
Howdy @Nicholas Weckstein
A Private Money Lender is your answer. You already have your $8K plus, your Mom's $38K (via private money loan) . Find another PML to make up the difference. Typical terms will be for maybe a year anyway. If you use the BRRRR strategy you will need a seasoning period. Guess what? You will have worked for that extra year both earning tips and as a Landlord. You now have 2 years of experience as a landlord so some of your rental income will count. Let's recap your income at that stage. 2 years tips, 2 years Landlord (rental income), 1 year part time job (maybe). Only thing holding you back at that point may or may not be DTI. Refinance the new property and your on your way.
2 Reply
Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
John Leavelle great advice ! I’ve thought about something along those lines. My only hang up is that I don’t like to play on what if’s. For example. Let’s say I use PMLs to purchase a rental property and when I arrive to the refinance stage I run into issues. That’s what scares me. But I guess ultimately I’m aware of the necessary financial requirements to get a loan so It shouldn’t be a problem as long as I handle my finances correctly. That’s a great idea. Now to find ways to get PML. I’ll make a list of possible options. Maybe I can use some of my moms loan, my money, personal loans, credit cards and what not. Just going to take careful planning to not get in over my head. Many thanks !
0 Reply
John Leavelle
Investor · La Vernia, TX · Member since 2015 · 1k+ posts · 865 votes
8y
@Nicholas Weckstein
Two things.
First, I always get prequalified for the Refinance loan before I even acquire the next property. Establish your exit strategy first. It's safer that way. You also know what the Lenders requirements are, what the rate and term should be. That helps analyze your BRRRR deal more accurately.
Secondly, post something on the Private Money forum to get help with that issue. You already have one property under your belt. You also have skin to put into the game. So both of those will help getting the extra funding.
Lastly, what is the current value of your Triplex? How much equity do you have in it? You may want to eventually try to get a HELOC using that property. Good source of extra investment capital.
2 Reply
Jeffrey Russo
Investor · Thomaston, CT · Member since 2016 · 10 posts · 3 votes
8y
Have you looked into any of the crowd funding options? There are so many now. I have no experience with this but will start inquiring as I'm in a similar situation as you. I currently own four properties but don't have a w2 job right now so the banks can't help me right now.
1 Reply
Anna M.
Investor · Denver, CO · Member since 2016 · 220 posts · 98 votes
8y
- Own a Triplex – Investment Property.
- $85K Left on the note
- Positive cashflow ~ $750/month
- Great credit
- Total possible available liquid funds - $46K ($8K + $38K).
- Additional sources of income:1.IRA (Mother coming in as a partner - I would not recommend liquidating IRA), 2.Settlement check of $50K
From what I see, you have a lot to be thankful for.I love your hunger, keep that hunger as it will drive you to find the way, yet at the same time do not forget to celebrate your wins.You have a lot that you have accomplished, and even more impressive that you have done it by age 23!So it always seems to boil down to money doesn’t it?So as I was reading your post, a few things came into mind and at the same time I decided to read other comments too, just so I can have that information for myself too.I love hearing what others have to say, best way to learn.Okay so a few things I was thinking.
Cash out refinance?HELOC?Rental income to reduce that debt to income ratio.House Hack your way into an FHA.
I loved everyone’s suggestions.Love BP for that. Some really great info from some some seasoned investors, as well as others new.Overall, really valuable advice.Some of the comments that stuck out to me:
@Robert Soto and @Amy Beth:"steer clear of Mom's IRA".I agree and besides, from the look of things there are other options outside of that, that you can pursue for downpayment.
@Cory Dessauer:Seller Financing.
@John Leavelle:Refi.And as John stated, that is exactly what I am doing. I refinanced first then working on the next purchase.I also like that he mentioned HELOC which is the route am also taking for additional funds.
@Thomas S and @ Amy Beth :Find another job better suited to investing or a parttime job to supplement current.I would opt for the later here because again, lenders like to see longevity so perhaps keep current job just supplement it, especially if you have time with currently working only 30 hours a week.
Good luck.Keep that hustle and that hunger, and at the same time, celebrate your wins, you are doing great and an inspiration.Great topic.I learned a lot from this and good to see that I am not alone and also nice to know that the strategies I am using currently are in part what has been suggested here: Refi then do a HELOC.I could have gone with a cash out Refi, but I needed more than what the cashout Refi was going to allow me.Good luck @ Nicholas Weckstein.
3 Reply
Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
John Leavelle great advice ! Yes I learned that exit strategy is arguably the most important part of investing in real estate. I will start calling around to banks and see what their cash out terms are. I have roughly 35k in equity in It as It sits. I did do some work to It and am remodeling an apartment so maybe that will have some value add. I will post this question into the PML category’s but maybe you can answer this. When I was 20 I took a 25k personal “passbook loan” to build my credit. I do recall seeing something that said I can not use the funds to acquire real estate. I was approved last month for a 15k unsecured loan from my bank. Can I use that towards a property ?
0 Reply
Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
Jeffrey Russo I have not explored that option. I don’t know why I haven’t exactly. Not sure I believe in It but I should do some research and gather intel on that. It could be a viable option Thank you !
0 Reply
Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
Anna M. Thank you so much for the kind words! And thank you even more for summarizing all the amazing advice from this post. Bigger pockets has been so wonderful to have as an asset. This site has done so much for me. I will be upgrading my account soon. The least I can do is give back to something that has helped me so much. I often do the same I read others post and comments to learn. It feels great that now I’m able to comment myself at times on others post to offer them advice.
2 Reply
Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
Anna M. I really do need to learn to stop and celebrate a bit. My hunger and drive just won’t let me. My family is all just hard working employees. I find that to be worse than death ! (Not really) but you get my point. I want to build something that my family and children can benefit from. Life is to beautiful to spend your years making some else’s dream a reality. I can’t stop until I do that for mine !!! Thank you again for those kind words. Best of luck to you as well
1 Reply
Nicholas Weckstein
OP
Real Estate Agent · Warrior Run, PA · Member since 2016 · 341 posts · 146 votes
8y
Jake Smith interesting, I find that to actually be a bit fearsome. We all know what happened last time lenders loosened up. Shoot if It happens again I would be ready to buy the Dip !
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