All Forum Posts by: Nick Gauss
Nick Gauss has started 3 posts and replied 15 times.
Quote from @Paul Novak:
Nick, welcome to the group. You are in a great place to get perspective from many of experienced investors with a wide range of strategy, knowledge, and experience. I do like a lot of the perspective that others have shared above. I have been a long term buy and hold investor that has done limited flipping. My strategy has been one where I have put the traditional 20% down, maybe more to protect cashflow, and financed properties for 30 years. My only caution to you is to make sure you have enough cash to protect yourself if things don't go according to plan. From my perspective my first property was the riskiest deal I did. I lacked experience, and didn't have a buffer if things didn't go well or the property was vacant. My number one goal when doing my first deal was to make sure I put myself in a position to do my second. As your portfolio grows you can afford to take a little more risk because the income from the other properties can prop up a short term underperforming property or unexpected repair. I get nervous about hard money lending or taking on additional debt especially in the beginning because if things don't go well you not only have those costs you have interest on top of it. Having said that I understand you need to get capital from somewhere to get started.
One option that has worked really good for my wife and I is borrowing from our 401K's. Not sure if this is an option for you but most 401K's let you borrow against your balance up to $50K or half the balance, which ever number is smaller. You lose out on that money growing while you have it borrowed but if your taking it out to achieve financial freedom and shifting that money from one investment to another I don't see an issue. The other great part is the interest on the loan gets paid back to your account. When we did this on my wife's 401K the only fee to do this was a $75 origination fee. The rest of the money we retained. For us our 401K's have been a way for us to become our own bank. Between the two of us we can borrow $100K. I wouldn't recommend this for everyone but it's an option.
Another tool you could use is a HELOC on your primary residence. We also have one of these in place as an emergency fund. I prefer to borrow from myself and pay myself back the interest but if something bad happened we always have our HELOC to fall back on.
As for hard money lending I don't have a lot of experience. I have done hard money loans as the lender but only for small amounts, $20K and under, never as the borrower. My cousin works for a hard money lending company that specializes in helping people in your situation. Short term loans for real estate flips. She speaks highly of them but I have never worked with them directly myself. They are based out of Milwaukee and they are called the Hard Money Co. Maybe they could be an option for you if you go this route. If nothing else at least it's a lead.
I wish you the best of luck getting started! If you ever have questions on the long term rental side of getting started once you have your property feel free to reach out. I have a ton of work instructions and processes my wife and I have established to manage our business that I would be happy to share once you get to that point.
Thank you for the input! Thats what I came here for, so I'm glad that I'm in the right place. There is so much "hype" out there on social media and the web in general that it's hard to know who to trust and who to genuinely learn from. I do like the idea of playing things as safe as you can like you've explained. We currently have a HELOC out on our own home that we used to build onto the existing cabin. It is now worth a lot more, also being that it is water front property, and how the market has shot up I am wondering if I could get that loan number bumped up. I am planning on paying it down quickly regardless so that i can use it for investment properties (unexpected costs, downpayments, etc). I do like borrowing against the 401. I will definitely keep that in mind for the future. I do think a hard money loan or finding a private investor may be my "in" on the first property. Although I do understand the fear factor with taking on one of these loans, I think I just need to jump in and take the risk. Most people don't DO that first deal. I need to make this first one happen and build from there.
I will definitely keep your contact info! Thank you, I will reach out when I get to that point!
I will have to look into all of those options and see what fits. Any suggestions on where to get started looking into hard money loans? Pro's/Cons for someone just getting started? But yes It would be great to meet some locals who have either been in my feet and if I were to run into a private lender or two willing to work with us that would be great. I'll plan on getting to one of their next meetings.
Right now we're not looking to move from where we're at. I'm a fisherman and we're right on the water, so it makes that decision tough haha. I think our goal is to turn this into a rental down the road but we will be staying for a couple years at least and would like to get our portfolio going with other flips/rentals at this time. I haven't looked to see if I qualify for pre-approval. We did take out a home equity on this current home to build onto it so that has been pretty much used up. But im sure we could go back to a bank now that it's finished and has added value for additional equity? I will be sure to check out UW credit union. Are hard money loans something worth looking into, or is a bank a better option to start? I did look into the meetings a few weeks back but wasn't sure it was worth making the trip. Thanks for the advice. I'll check into it again.
Thanks for the reply! I'm actually just 45 minutes north of Madison. Columbia County area so I'll be looking in smaller surrounding towns to start. Baraboo, Portage, WI Dells area. Although Madison would be great to get into. That's solid advice and I like the ideas. I'm sure I won't have issues finding the help. My main concerns are securing funding, finding and properly assessing a deal in this market right now.
Hey everyone!
My name is Nick and I've been extremely excited and motivated about getting into the real estate market. I'm looking for any advice to put me in the right direction for the first flip (or couple). I work in HVAC construction for a living and before that I ran a small gourmet mushroom farm. Had to take on the full time job to help swing the bills. I've realized what I truly want in life and that is financial freedom, neither of these are going to get me there. After seeing on the job ,many investors building new duplex's, flipping old homes, or turning something into a rental in the area I became very motivated to pursue that for myself. We recently contracted out our own home for a pretty major addition/renovation on waterfront property. This is our personal home but knowing the increase in value we were able to accomplish was another motivator for me. I know we can make this dream of being a real estate investor happen, I just need to get into that first deal. I was hoping someone here, possibly even a local, could help with getting me there. I think the biggest thing for us is securing the financing. I've heard hard money loans are a good place to start, or to look into local credit unions and use any equity in the purchase property to do the renovations. I do not have a ton of personal cash to get started. I know there are formulas for how much you can buy a home for and thats some more studying up on I will have to do. Where should i start to prepare myself for a success in this game? Is now an okay time to get into things with the markets the way they are? Hoping to get into our first property by the end of this year, any advice would be appreciated! Thanks in advance!