All Forum Posts by: Account Closed

I absolutely won't give up. I thought about getting into RE business for almost a decade. Few months ago I actually decided to do something about it. Even selected some properties that I made offers on. Fortunately, there are hard money lenders in this business and I didn't have cash to purchase and do rehab on my own. They did a great job declining to fund the projects. And that's when I learned that this won't be easy. In particular, finding properties that are worth investing won't be easy. 

The reason I won't give up is that NOTHING is easy. My 9 to 5 job is NOT easy. Going to school and getting a specialized degree is NOT easy. Doing anything that will bring you income is NOT easy. That is, doing anything that allows you to keep your dignity and self esteem.  Why RE investment should be easy? To make things worse, a lot of people seem to be getting in this business lately.  Which is not a good sign. Anytime too many people try to do something things just go South. There are  way too many clueless people who will "compete" with you bidding against you and over-inflating the cost of the property (essentially shooting themselves in the foot , because they can't think of doing anything better). Then there are gurus who are guaranteed to make money while you pay them to learn how could you save your disposable income.  And worst of them all, there is unpredictable market and property prices begging for major correction. You know market will correct, but you don't know when.

And despite all the obstacles and existing conditions I refuse to give and just prepare to work harder on finding my first property to invest. Because I know this should not be easy. 

The other thing that helps me this time around is that I have been in business some ten years ago, and learned back then that it's a jungle out there. So nothing surprises me, hits me hard or overwhelms me this time.  I just expect it to be what it is. And I know that if I just hit the right target, find the right property I will be on my way up. It may never happen, but nevertheless, I am determined for now to do what I can to find that one property which will allow me to start my journey into RE investment world.

My advise to you is this: have a thick skin. Know that nothing will be easy. Be persistent. Persevere and plow forward regardless of how hard it feels at times. Keep your full time job, don't listen to gurus who tell you to quit and do RE investment 24/7. You can't afford to do this unless you have savings enough to keep you afloat for years. Just keep your full time job and stream of stable income while doing all you can to find the right property to invest.

Good luck!

1. Nothing. $0.00 if they accept.

2. $100 or LESS.

 The rule of Free Market is that anyone can offer anything for what they wish and buy for what one wants, as long as both consent to transaction.  Free Market is not a Church. You are NOT obligated under Free Market conditions educate seller about the value of the item they try to sell you - that is THEIR business, not yours. It's extremely irrational to go around pontificating and preaching morals to buyers and sellers, IF we are talking about a Free Market.

The line is drawn with criminal code. You CAN'T rob the person of their possession, you CAN"T coerce them to give it up against their will, you CAN'T willfully deceive them (lie to owner of a gold jewelry that you are an expert in jewelry and that their item is made of cheap metal, and etc.). But you are free to offer a penny on the dollar , say that's what YOU will pay for it, and let them take it or leave it. 

There should also be strong legal protections for people with weak cognitive abilities, as well as elderly, just as we would want to protect children from predators. But, outside of those two exceptions that merit legal intervention, it is totally unacceptable to teach moral lessons to people out to buy goods and try to make them feel guilty about negotiating and paying the least amount they could to purchase valuable goods. How else could anyone in the real estate make a profit and not suffer a loss? This is business, not a charity.

Years back I was in wholesale business (not RE) I encountered highly unethical people whose actions bordered on criminal and it had nothing to do with offering the least to buy what was worth the most. The worst thing you can do in any business is break the trust of someone, to break your word and promise, to act opposite of what you convince the other you would act. Those are bad things, to cheat, to lie, to take advantage of someone's good nature and lack of defense.

But buying stuff for less than it's worth? That's what businessman's prime goal must be! Or else one better not do any business.

I was contemplating getting into RE business for over a decade. Last few months I finally decided to learn as much as I could about it and take an action. Initially I had an assumption that getting funds is the most difficult thing. Amazingly, it's not. As I found out lately, the main thing in real estate is finding deals.

Find great deals and you can start with wholesaling. You don't need a license to do wholesaling and you don't have to have cash to put it under contract. 

Show ability to find great deals, and you may have investors willing to back you up as partners in your projects.

You can also borrow money from friends and relatives. 

I have read all the advise about being frugal and what not, but I don't know why anyone  would have to be told and/or read a  book about saving the money they already make. I don't have to read a book or listen to anybody to know something as incredibly simple and basic as managing my personal finances and deciding how much of my disposable income I will spend or save :) I seriously doubt anyone who needs to read a book (or be told by others) about saving their own disposable income has enough of what it takes to put their shirt and pants on in the morning. :)

So, back to what I said in the beginning: your main focus should be getting great deals, finding ways to get great deals and once again finding great deals. 

If I knew how to get great deals I would earn 6 figure income by the end of 2019 and seven figures by the end of the next. No matter what hole I was in right now, how much money I was earning and what I had on my bank account today. IMHO, nothing is more important in this business than finding deals. 

Good luck!

I believe most (if not nearly all) mortgage lenders have a minimum $100K requirement for a home loan, so you need to get your income up ($35K or above per year) before you can take advantage of the most first time home owner programs. There is one particular USDA loan which will allow you to buy home with lower income than yours, and it comes with government subsidy, but I wouldn't recommend it to you. It really is for people who can't get a home any other way (elderly, on fixed income etc), their guidelines are strict (most home sellers don't want to deal with it) , and worst of all whatever subsidy is paid towards mortgage doesn't help to build your equity, but must be paid back like a lien once you sell your property.

So, try to raise your income first (drive Uber/Lyft part time after your regular full time job, it should add to at least few thousands in a year, and look for admin/entry jobs in Craiglist and Indeed which pay at least $30,000). This will allow you to qualify for $100K+ traditional mortgages, so you can get your pre-approval letter and start working with a real estate agent to get your first home.  Good luck.

If you are young, make 2K a month, have $5K AND a good credit, you should start with buying your first property using the best First TIme Homeowner program (with the lowest APR, low down payment), live there a year (may be fix it while you stay there) , then sell it for a profit and repeat until you have enough cash to invest on your own and buy a second, investment property.

The main obstacle you will face right now is the amount of mortgage you can qualify for, which with your income could be around $60,000. As you may soon find out, very few if any traditional mortgage companies will want to lend you so little (they will refer you to your local bank to get personal loan), because they don't make much (and actually can loose money) if they lend you under $100K. Then, even if you secure financing, you will see that it's not very easy to find a RIGHT property within that price range. Meaning, it's very difficult to find a property in such a price range in a good/upcoming location where values are stable or going up. I won't say it's impossible (just because I live on East Coast around DC, where house prices are irrationally over-inflated and where wages of the majority of people are less than one eighth of the median house price, I won't say that the entire US is the same), but you will have to do some leg work to find it, and you would have better chances in one of the more average Citizen oriented parts of the country, such as in Mid-West, than on East/West Coast.

Still, your chances to make things work are a lot higher than mine, a home owner with $170K in available resources (including hard money) for investment property, because: 1. you can take advantage of the First Time Home buyer options , and you can also qualify for 203K loan (FHA), these are great loan programs because you get a conventional 30 year mortgages with low down-payment and low monthly payment, and the worst thing that can happen to you is that you will end up owning your home and building an equity in the long term. Whereas, if I invest $170K and it turns out to be a bad bet or market sinks tomorrow I will loose everything.

I can't advise you much about rentals. I personally stay away from it, even though it's a great way to build a long term wealth and asserts. I would buy and hold as many houses as  I could afford to (have enough disposable income to pay off mortgage and taxes on MY OWN), then I would list it for rent. If you get renters - great, someone else will pay your mortgage. If they don't and you have to drag them to court to evict and your property stays vacant half the year, well, you are still going to be OK and even building an equity, as long as you have enough disposable income to pay the mortgage. I personally wouldn't want to get into rental business unless: A) I had enough to pay it off own; B) I had a large portfolio of properties (10 rental units or more), and could afford to sustain certain vacancy rate and deal with some non-paying tenants. As a start-up getting into rental business is a huge risk (in my opinion), and I hear about a lot of people who get distressed and sell their investment property for a lot less than they should because they are too desperate to get rid of it after experiencing a lot of frustration with non-paying tenants. 

Patrick Donnelly, there are many great programs, from USDA 0% 30 year mortgages with under 5% APR to 20% down investment loans. Obviously you don't qualify for some if you want to buy investment property. Others (investment loans) require substantial income (ability to pay second/third etc. mortgage) to underwrite.

I am a noob and a newbie, and someone with very limited resources. I work 9-5 job. I don't make enough to pay second mortgage. I wouldn't want to buy and hold even if someone handed me a 30 yr low APR conventional mortgage with zero down, because I can't afford to pay a second mortgage. If you rent your property you better have enough resources to cover it in case you can't get a tenant ,or get a tenant who is being very difficult to collect a rent from. My sister owned 3 properties in Montgomery County, in Bethesda and Rockville, one of them a condo other a town-home and third a single family house, bought in good times before prices skyrocketed in mid 2000's. She was forced to sell her investment properties because she consistently had trouble collecting the rent from her tenants. At least she had means to pay three mortgages simultaneously and not loose any of her properties. She sold her investments for twice of what she paid for. I don't have means to pay two+ mortgages and would loose those properties in a foreclosure if I owned them and had similar issues with renting.

So, as a start-up I am looking for flip loans and can only qualify  Hard Money only. It's important to be realistic and know what one can get and qualify for. Now, money per se doesn't seem to be an issue to me at this time , I know what I can get (up to $170K) and I know the interest I will most likely qualify for (no less than 12% for a start up with zero experience, but more likely around 13%-14% and no more than 15% for the first project).

What I really look advise for is the marketing. I have read about different types of marketing employed by different advisers: mass mailing, cold calls, driving around, spearing news by word of mouth and etc.

What I wanted to know is if anything at all works for start-ups in the current hot market.  When I hear word "competition" next to "investor" I know I must run fastest I can. I never compete with anyone to buy anything, because that's a sure way to shoot yourself straight in your foot, unless you compete in terms of speed of action and ability to carry through with your offer.

I spoke with my friend who rehabs for living (he has general contractor license, purchases homes around LA, fixes them by himself and his own crew and sells them). He strongly advised me to wait until market crashes,. He predicts that sometime soon it will sink, or correct, the same way that stock market did in October-December of last year. And suggested that I get into the business then. So, I am not in rush.  I would rather wait and get a great deal that will allow me to make a profit than rush to burn everything and get myself bankrupt. 

But I am sure some people will disagree about the market and say you can make money no matter what, even as a start up in this current economy. If anyone has empirical observation of a successful start-up in a current market (in MD/VA/DC/DE area, with low entry level of under $170K for entire project costs), then I am open to hear what marketing strategy worked for them.

 Great points!!

@Russel Brazil, 8% is an awesome APR for a Hard Money loan. But I am afraid it's for seasoned investors who have done a dozen of flips and keep using the same lender while growing their portfolio. I am skeptical of getting such a low rate as a start-up with zero flips completed in the past.

But, by all means, I am eager to get connected with @Andrew Michael and @Jared Sleeth. The best interest rate hard money loan I found so far charges 12% APR if you have no experience doing flips.

Thank you for the referral! I will try to connect with them.

@Jack Seiden, I have entered numbers into hardmoney calculator, I figured that even with 15% interest you can make a decent profit flipping low priced properties. For example, if property has ARV of $150,000 and you need to spend a total of $105,000 to purchase and rehab it, you can walk away with $15,000 - $20,000 profit, your carry-over/interest/closing costs consuming $25,000 to $30,000.

If you purchase property for $50,000 your closing costs are under $5,000 when you buy it and around $7500 when you sell it for $150,000 in 6 to 9 months, and your interest payments should be around $1,187.50/mo (15%, VERY HIGH APR hard money loan), based on $95,000 loaned. I am not using hard money calculator as I type these numbers, they are very raw estimates, but the point is you can make money on low cost property flips IF you buy at good price and IF comps are high enough (purchase at or below 70% of ARV minus rehab costs). You have a problem if comps are too low or if you buy for a retail price, which is what happens when too many investors compete against each other and market is too hot. I believe the main challenge in current market is to find a deal, particularly in low entry price areas. My question is: do start-ups with limited resources under $170 still have a chance in this market? If they do, what marketing strategy works for them the best?

DC did well, almost too well recently, and if I had $400K to invest I would definitely consider it. I know people who can find me a property for under $250K to purchase, and even do the entire rehab for me (they have full time dedicated crew), but I don't have sufficient funds to enter the DC market.

I am here basically to ask what has worked or works for start ups