All Forum Posts by: Brandon Durkee

Good Afternoon All! 

I hope you are all having a wonderful Friday.  The weather is beautiful out here in Southern CA today! 

I have been learning everything I can about real estate investing over the last few months.  I am a few months away from making my first move.  I came up with an idea that I thought could give me 2 deals instead of 1 right off the bat. 

So, originally my plan was to house-hack. I have saved up $20,000 and should have about $25,000 or a little more in the next couple of months. I wanted to use that money for a down payment (FHA) on a duplex. I found an example home that seemed to work and ran a hypothetical deal:

$2,800 Monthly Cost (loan, PMI insurance, maintenance, taxes, etc.)
Each unit would do about $2,100-$2,300 in rent.  (my calculations use the conservative $2,100)

I want to live in one unit for 1 year and rent the other.  After collecting $2,100 in rent, this would allow me to live there for $700 a month. 

What I want to do is instead, find an private money investor who would lend me $20,000 for 36 months at 15% instead of using a personal loan, as I read you are not able to obtain a personal loan to use as a down payment for an FHA loan. I would use the 20K as my down payment.   (Obviously I would need to find somebody to accept these terms, not sure if it is even feasible!)

I would then be on the hook for roughly a $693 payment to the investor every month.  With the negative operating cost of $700, it would cost me $1,586 per month to live in the home. 

This is actually much better than the $2,300 I pay in rent every month as I live in Southern CA.  So for 1 year I would live there for $1,586.  Then after the 1 year, I would want to invest in another house-hack and move out.  This would mean I would have 2 units renting for $2,100 per month ($4,200 total). At this point I would be cash flowing $807 a month for the next 2 years and once the investor is paid off, it would cash flow $1,500. 

I want to use the other money I personally have saved up and use it as a down payment for a home for my parents.  I want them to simply pay the mortgage and expenses on it until they are done working, by that time I will allow them to live there for free.  They did not do well financially and this is a way I feel I can help them out, while also build equity in the home. 

I am not sure if this even sounds feasible, but those were some initial thoughts and wanted to see what some more of the seasoned investors think.  Bring me back to Earth if you have to! 

I sincerely appreciate the time and the thoughts! 

Brandon

Thank you all for taking the time to respond!  It means a lot!

Good Afternoon! 

This is officially my first post in the Bigger Pockets Forum.  I am looking forward to learning from the site and forums here! 

I am very new to real estate investing.  I came from your typical middle-class family that lives paycheck-to-paycheck.  I learned a lot from my parents, but a solid financial education was not one of them. 

A couple of years ago I decided I wanted more for my life and embarked on a personal development journey.  Along the way I discovered Rich Dad, Poor Dad and the rest is history.  I have decided that I want to give real estate investing a shot!  I have spent many months reading, listening to, and learning about real estate investing.  I feel I have a pretty solid base when it comes to technical knowledge, but I know there is much more to learn. 

Anyway, the point of my post is to get advice on my current situation and the early stages in my plan to start investing.  I unfortunately do not have anybody in my personal circle I can bring this to, which is why I am here.  I do hope to change that through networking and real estate investing clubs. 

I am 28 years old. 
Employed full-time with $100K annual income 
Net: 6K per month
Fixed monthly expenses: $1,800 
Cash on hand: 20K 
Total Debt: 42K 

A few years ago, I messed up my credit and defaulted on a few credit cards that were sent to collections.  My current credit score is 630. 

With all that being said, my plan: 

1. Learn as much as possible about RE investing 
2. Continue to work on my credit score, my goal is to get it over 700 in the next 6-9 months.  I have hired a credit repair company that is working on getting the collections accounts removed from my report. 
3. I have officially paid off all credit card debt. 
4. Continue to pay my debt off.  The remaining is a car payment and student loans.  My plan is to snowball the debt and apply big payments in order to pay it all off within the next 2 years. 
5. Continue to save.  I am currently averaging $1,200 saved per month. 
6. I am aiming toward making my first investment a househack and finding a duplex or tri-plex.  I want to turn the other unit(s) into short-term rentals. 

I am also currently doing rental arbitrage and have cashflowed about $500 per month on a 1 bedroom unit. I actually did not intend to make much money with this. I did it so I could learn more about STR as I want to have a good portion in my eventual portfolio and really love hospitality. I have learned a ton about Airbnb, VRBO, etc. I have a 5-star rating and am a qualified Super Host. I am really enjoying it and learning a lot.

I feel like in 6-9 months I will be in a better position to actually make a move to invest.  Do you feel like this plan and path that I am on is a good path?  Is there anything else I should be doing or not doing in order to position myself well to start investing?  

I want to say thank you all so much for taking the time to read my post and reply!  It is much appreciated! 

Sincerely, 

Brandon