All Forum Posts by: Raeshelle C.

Sometimes you have to walk before you can run. No offense but if you don't have enough for the down payment what makes you think you'll be in better shape when you own a rental and your tenants water heater leaks or boiler goes out? Worse yet when the tenant doesn't pay the rent and sues you for their problems. It's great having a goal but REI can turn into a nightmare if you don't go about it in the right way. If your going to buy and hold you need to think about more then just the acquisition and without reserves it can easily turn into a losing game. Maybe think about partnering with someone until you can go at it alone.

This may be blunt, and I do not have any intentions of offending anyone. With that being said, you've got to get your first property before you can expect anyone to get behind you with private money. There needs to be some sort of track record whether it be financially or in real estate that can build confidence. Even speaking as someone who lends, you would need to have some skin in the game, show knowledge in the field, and know a course of action once you have the money. There are a lot of people who say that they are real estate investors, but are they really if they don't have any money to invest? Not a popular answer, but build some funds, even if you need a part time job and need to streamline your spending for a while. Take advantage of an FHA loan, then reassess and build from there if you have the interest. This is not a business that comes without its growing pains, and instant gratification only comes after years of working in the trenches. Save the money. Have a plan in place. Execute. Don't waver.

Hi @Raeshelle C. :) I sincerely admire your efforts and I know it will definitely pay off if you put all your time, heart, and soul into it. Do me a favor, when you wake up every morning, read aloud from a piece of paper what your goal is and make sure you're working towards your goal every single day until you hit it. Also, you might want to read Brandon Turner's book on Rental Property Investing so you know exactly what you need to do to analyze a deal. You don't want to blow your hard earned money on a deal that would make you lose money. Buying a foreclosed property only to foreclose it yourself later because of unexpected expenses can be disheartening. By the way, real estate is a good way to financial freedom, but it is certainly not the only way. Start focusing on your talents and skills and who knows, you might be able to start a business or provide some type of specialty service that only you are good at. You can then sell the business off down the road and be sitting on a hill of cash. Being close-minded is what kills off wealth. Real estate is great, but it does present its risks too. Good luck!

@Raeshelle C. everyone here have really great advice. We just bought a 3 unit multi family property and we live in one of the units. The other units cover our mortgage 100%. We used FHA and put 3.5% down on a property that cost 170,000 including closing cost. We live in Providence Rhode island about 45 minutes from where you live. Are you willing to move? Try looking for homes in your surrounding area. Hope this helps.

Hi Raeshelle!

First, congratulations on wanting more, and more importantly, doing something about it. 

I'm all about a Ramen noodles budget and building an empire. 

The question isn't "can you do it", it's "how can you do it"?

I'm not big on sports, but I am fond of analogies.

You're trying to hit a double on your first at-bat.

So, let's go for a bunt first, then a single, then you'll be ready for the double and home runs.

Before anything else, join a local Real Estate Investing Association (REIA). Make it a priority to attend meetings whenever they have them.

Now, on to the meat n taters. You need to house hack, with a strategy:

Step 1: Find and buy a single family home. 2 bed 2 bath would be perfect. Consider it as a tiny duplex, but it will be much easier to find a SFH than any multi-family.

You want a discounted price in a neighborhood you can deal with, preferably one with the ability to have prices trend higher. (Pre-Foreclosure), REO, even just an ugly home that's been on the market too long. Anything you can do to get the price down.

Hire a really solid real estate agent. You want them to hold your hand and walk you through every piece of paperwork as many times as necessary to fully grasp it. You need to learn it anyway, right?

Step 2: Live there at least 2 years (I'm going somewhere with this!). You can have a roommate. That's why a 2/2 works best - it shares the load. Keep your furnishings to an absolute minimum. 

Paint, clean, put in nice floors, fix stuff, whatever. You want to force appreciation, even on a budget. It doesn't take much. An hour a weekend, and $20 can add up quickly. That's 104 hours of work, and $2080 budget spread out over 2 years. Find a style that suits the house, and go for it. 

In my area, coastal / Caribbean works very well. Shabby coastal is easy - find old furniture curbside, do a terrible job painting it white, put it up against a brightly colored wall with a black & white photo above it. Boom!  Magazine worthy!

At month 23, upgrade your landscaping for curb appeal. Pretty, colorful flowers. Then, call a Real Estate Agent (hopefully the same one) and prepare to list your home. Call in a stager if you'd like. And call a tax specialist (Tax Attorney, or CPA). 

Don't sell (close, specifically) until month 24 day 2 or beyond.

Then you should have a nice tidy profit. And because it was your primary residence for at least 2 years, the IRS (Section 121 specifically) doesn't want to hear about it - at all! 

That's right, it's tax-free! That's up to $250k for a single person, $500k married. That's why you need the tax person, to make sure you do it correctly.

So, let's say you can make a profit of $30,000. That's an extra $15k / year, tax free. And that's the first rung on the "Property Ladder". 

Now you can either do it again, bigger and badder, or you can take that money, plus your savings, and go for that duplex. I don't know your market or availability, but even a 4 plex is still considered residential. 

You will have bought yourself time to learn, put yourself in the right learning environment (REIA), made some money, will have done your first deal, and you will probably have had the opportunity to learn and / or do a wholesale deal.

At that point, you'll be teaching someone else. :)

Don't close your mind to contrary ideas - - they may be useful at some point in time.

chapa.org/looking-housing identifies several classes

• https://www.chapa.org/looking-for-housing/homebuye...
• The homebuyer education schedule below contains pre-purchase and post-purchase workshops for first-time homebuyers offered by agencies with a Seal of Approval certification from the Massachusetts Homeownership Collaborative, a designation indicating they meet the Collaborative's standards for comprehensive homebuyer education.
• http://www.massaccesshousingregistry.org/ is about affordable housing.
• https://www.chapa.org/looking-housing/homebuyer-co... is counseling

 My experiences has been that FTB(first time buyer programs) are effective and useful to buy an SFR - - did this myself. Maybe someone on BP has an experience for a duplex or a 2-4plex they might share.

The comment "a certificate that acts as the down payment" is of great concern to me.

@Raeshelle Cooke HUH? "I took a home buyer 101 class that gave me a certificate that acts as the down payment for a house in Boston, but houses up there are too expensive. I wanted to take another class to get the certificate,..."

I assume you believe what you have written, but IMO, that's all dream land & smoke and mirrors.  No bank will take your certificate - - as anything of value, let alone as a substitute for a downpayment.

There is a document POF (proof of funds) and that says you actually have funds on deposit somewhere. The other document of interest is the Letter of PreApprovial, where the bank underwriting department states in writing, they will grant a loan, to you, for a mortgage no larger than xxx, using terms a,b and the property appraises for the FMV.

So, to help the BP community, what class did you take and what is the title on the certificate?

Hey, Rashelle.

I just wanted to tell you that you are not alone. The reality is for any type of investing, it will take some kind of money to make money. Even with the low money down strategies I'm considering, the reality is I'll still need some for closing costs and some type of reasonable down payment (not necessairily 10's of thousands of dollars, but enough to show good faith).

It's dawned on me that it's hard to make things click without that in place. While I could borrow (I doon't feel comfortable enough to do that yet) I've decided to apply the brakes a bit and gather some capital so I can come out guns ablazin' in due time.

I say be patient and trust yourself to do the right thing. If you feel better borrowing and getting started, I say do it. If you feel better slowing down a tad and saving some capital, I say do it.

We'll get there in due time.

Your rate of savings have to match your area of investment. Yes, I've listened to these podcasts where you can use a credit card to buy out a mortgage/piece of property for 800 dollars; I can pretty much assure you that these are about as viable and frequent as sighting the dodo bird in the NYC market. 

The traditional route is 20% down 80% finance, , gives you about 500k purchasing power with 100k down.

Foreclosed homes generally require a cash payment; if you don't know any special lending partners who can bridge loan you that amount, your going to have to find some way to come up with the whole amount. 

The chances of finding a foreclosed multi for 150k in the boston area.... see dodo bird reference. 

If saving up 20-30k would take years, you have to start with some less likely choices in the investment world- 1. Work smarter (i.e. get a higher paying job to make more money) 2. work harder (work more hours/work more jobs) . Getting a RE license and selling homes is a great way to make some extra money (commission) while getting to see properties and neighborhoods. 

Cut expenses. Eat healthy, but don't eat out. There's a formula I use for whether to buy, make, or do myself; If I can make more money doing something else, then I buy. If I can make more money by fixing it or doing it myself, then I do it. You have 24 hours in a day. Assume you sleep 8, 2 for hygiene and bodily actions, a regular 8 hour job, leaves you with a total of 6 hours of "free" time; which then you must subtract every other part of your day; commuting, grocery shopping, laundry, etc.

Now if you can use those 6 hours to make money that you would otherwise save, it make sense.

Here is some good info from somewhere else (in 2013):

"It's Literally Not Worth His Time to Pick Up a Dropped $100 Bill From the Ground. With a worth of $72 billion, a 6% rate of return would earn Gates roughly $114.16 per second he is alive, making it a poor investment for Bill Gates to bother picking up a $100 bill if he dropped it"

People who live in NYC (manhattan) pay huge rents/taxes etc; but their savings of 2 hours a day commuting is 2 hours more of making money; whether it be more relaxed, or more profitable. They dry clean their shirts and send out their laundry. Its cheaper than doing it themselves.They have a doorman receive it for them and put it in their apartment; it would cost them more money to pick it up themselves. They don't do their own oil changes. They don't even clean their own homes. They don't decide whats for dinner, or even cook dinner, unless its fun for them, because they hire a personal chef to take care of it. The nanny takes care of the kids. They take charter flights, because showing up 3 hours early for a flight is just a waste of time and money. They take a car service or have a personal driver because finding parking and focusing their brain on driving takes away from their profitability.

While that is a bit extreme, time management, and the ability to decide where money should be spent, and where time is BETTER spent is one of those "7" habits of successful people.