All Forum Posts by: Sean Ray

So the ending to this story was I posted about it on Facebook and got the person everyone recommended. They just finished way over budget and did a horrible job. Kinda scarred me a bit and I now know a lot of things to not do next time! 

Where do I find good contractors? Just go to Lowe's and Home Depot and ask them? Or go to job sites and ask the people working?

It is my first flip so I don't want to get screwed over.

The hard money lender for who?

I am looking to hit the ground running this year and want to focus on getting listings so  I can take the commission and invest in the Dallas real estate market. 

Which ones do you use or have you heard that are the best?

So I am at this cross roads. With such a big step of an investment, I could start on a path that can ultimately lead to a great future or just get a one and done and wish I would have done it differently from the beginning.
My passion for real estate has always been in long term investing. I don't jump out of the bed in the morning super jazzed to lease or sell someone something. I do this because I want to get the fuel to power my investing machine.

The Data:
2015 = $137k on my 1099
2016 = $100kish on my 1099

2015 = $76k after right offs
2016 = I have no idea how much to claim.

The Fuel:
Jan. 1st 2017 = $90k in savings

The End Goal:
$10k monthly in rental income for retirement

To Get There:
$1,200,000 in real estate investments that has a monthly 1% ROR (Preferably in the next 5 years. If 80% is held at the bank in debt that is okay)

Possible Paths to $1.2 million
1. Put 25% down on 5 $240k homes. (-$60k each down payment before closing costs and personal take home commission) Rent at or near 1% of purchase price. Focus on Duplexes

2. Use BRRR Strategy. Buy 6 $120k homes at 25% down (-$30k). Rehab them for less than $15k each. Rent them out. Refinance them for $200k each. Focus on Single Family Home fixer uppers.

3. House Hack. Live in a $300k duplex/house for two years at a time. Repeat this 4 times. 8 year path. Apply for a loan at 5% down (-$15,000). Rent out two of the rooms and live in the third one. Have my room mates pay down most of the costs of the house. Focus on Town homes or Duplexes.

4. Lease Option/Lease Purchase. Get 10 $120k homes to allow me to rent their house for them and with the option to buy the property at anytime. Put renter in there to cover cost and buy the property after 20% equity has built up in the property. Focus on Single family homes.

These are the options that I have found that make the most sense to me. Now here are the pit falls.

Hurdles:
- 1099 income is very difficult to get a loan. As of right now I have to claim all of my income to get approved for a $250k loan. If I don't go this route I can save $20k a year in taxes. That savings can go to paying for option #2.
- I make $30k+ a year in apartment locating referrals from living at apartments. If I move into a home in the house hacking strategy then I will lose my access to building my Dallas referral Network.
- Once a bank lends me my first loan it will be difficult as a 1099 to get a second loan. Possibly two years and will need to use creative financing/private lenders during that time and possibly after. This will be a higher interest rate that will cut into my profit.
- Finding a General Contractor to do the work that is reliable and will not over charge you is difficult.
- Market is peaking now vs buying in a low market. Rates are also going up.

I would love your feedback on which route you think is the best bet given the difficulty to get approved for lending and high costs of taxes to get approved for lending. What is the highest and best use of the $90k that can get me to the $10k a month end goal.

Help this kid become a man!

The ones you mentioned in Dallas county will get you the 1% rule but I would never want a family member living in those areas. 

Collin is great and if you can find the numbers that meet your goals but good luck with that. 

I have seen some 1% SFH in Plano, Carrollton, Rockwall, Farmers Branch and of course Arlington and Irving but they are not pretty and not in the best areas. Just depends on what you are comfortable investing in.

I look at deals everyday in Dallas and jump for joy if I find a 1% deal in a decent area. You can find them here but it is a matter of where you feel comfortable investing in.

Thanks @Andrew Herrig. I saw that about BA but I am nervous that the school district, jobs and future construction for that area is not looking too good. That area is being fueled by bars and restaurants alone and we all know that doesn't last long unless jobs help fuel it. 

White Rock, Lakewood area does have the growth of jobs and close location to major focuses other than just bars and eateries. That is why I have been looking in that area around Lockwood.

Thanks Andrew Herrig and Ryan H for replying. I agree with what you both said and that is why I am conflicted. Since I will be living there I want to live in an area that I actually want to live. Finding a place in dallas for under $200k is not going to happen, especially a Duplex. To stay in the areas I am looking to stay in then I am looking from $250k-$350k starting. At that rate the 1% rule is not even close. So I can't figure out what to do other than bite the bullet and live an hour away from the city in smallville bfe that has almost no appreciation or anything to do. I am def a city guy and this is where I have built my life at.