$60k In Cash And 3 Houses; What Would You Do?
I'm 25 w/ $60k saved up. I two rentals w/ mortgages and the 3rd house is paid for w/ a renter. My credit score is roughly 740. No current bills other than mortgages that the renters pay. What angle of investing would you take?
I started out in a similar position. My advise would be to educate yourself in different investment strategies. Some of the boot camps can be fun too. You're in a good position and probably won't need much, if any of your own funds going forward.
I did a couple of things that I wish I had done differently simply because I didn't know a better way.
I don't know your situation but you may want to look into things like assett protection and incorporating up front if it makes sense and you want this to be your full time career.
Man, I know 60k ain't that much in your market. But, if I had 60K here and three rental houses...I'd be set and on my way to SUPERSTARDOM.
Quote:
On 2004-12-16 15:44, monopoly wrote:
I'm 25 w/ $60k saved up. I two rentals w/ mortgages and the 3rd house is paid for w/ a renter. My credit score is roughly 740. No current bills other than mortgages that the renters pay. What angle of investing would you take?
where's your market? I'm glad you bought that up. My market is in an afforadable Indiana.
Quote:
On 2004-12-16 16:13, EnormousCitrus wrote:
Man, I know 60k ain't that much in your market. But, if I had 60K here and three rental houses...I'd be set and on my way to SUPERSTARDOM.
Quote:
On 2004-12-16 15:44, monopoly wrote:
I'm 25 w/ $60k saved up. I two rentals w/ mortgages and the 3rd house is paid for w/ a renter. My credit score is roughly 740. No current bills other than mortgages that the renters pay. What angle of investing would you take?
I am also in California and invest in Indiana. Mine are in Indianapolis. My biggest concern is that the rental market seems very soft. If you can solve the rental problem you might look at REOs. The foreclosure rate is very high in Indiana. You might find a rehab REO that you can buy and fix it up. You can refi your cash back out and still have a positive cash flow. Then repeat...
The market can be soft at times there, one of my rentals was vacant for 6 months. That cost me $2500. I moving from Cali to Indy so I can put my foot on the biz. I'm bringing my broom with me!
Why do you assume that he will not need to use any of his own funds in order to buy more? How would he secure 100% financing and still have a positive cash flow? Really need to know so I can keep moving forward....please help me... I'm 'stuck in Md/Va/De'
ceinvests,
This is close to what I did a year ago. Bought REO that needed rehab for $30K . After $25K rehab property is worth $100K. It rents for $1350/mo. I can get an 80% loan at say 6%. Payments if loan is 30 year amortization of $479.64/month. I have close to $875/ mo. to cover other expenses. Plus, I put $80K in my pocket after investing $55K.
Ok, by refi at 80% of new FMV you get 80K.
You invested 30K+25K, so you profit 25K
Your interest only pymnt 6% of 80K = 500. -
You get really high rent on 100K house, so you have a 850. mo positive (simple math)
So, how will you buy your next property w/zero out of pocket. And how did you qualify for your 80% refi? Do you have high ficos? A high paying job? Little debt?
I am asking for reality, not the book stories I've read. Somewhere my rubber keeps missing the road. LoL
Why don't you just keep doing REO rehabs? Seems like it's been working, try upgrading to larger houses or better area.
To ceinvests...
He was asking what "other" types of investments can he do. Everyone seems to assume he wants to keep doing the some thing over and over. There is more than one way to skin a cat. For instance, he could do some wholesaling for extra cash income with no money out of pocket. That is what I was refering to. It always good to diversify a little and not get stuck in a niche'.
Yep, I think I took this off in another direction.
I got sidetracked by the "NO out of pocket" -
Sounds like wholesale is a good thing to get familiar with for all. I'm gonna post my problem in the mortgage or landlord section, hope you reply! Thanks!
ceinvests,
In the transaction I described for you I started with $50K cash. If I did not have it, I could have borrowed it or taken on a partner, etc. The point is that after the refi I have a property with $20K equity with positive cash flow and $80K of cash for the next opportunity instead of only $50K. I have never had difficulty getting loans for my properties.
Here is a possible way of working with a partner. I could offer to pay a partner a $10K profit within a year for an investment of $55K. Do the same transaction, keep the positive cash flow property, give the partner $65K and pocket $10K. After this, don't you think he may be willing to do it again?
Yes, Ed, I see what you mean.
This goes to show how the different markets can affect thinking. I am having the worst time finding a lender to consider doing anything w/my equity positions;feeling like I'm going to have to sell. I don't know if it is because my ficos have inched down from 720 to 680 due to inquiries and balance % OR if it is that I am now 'Self Employed' , but I am feeling stuck.
Did you have a partner or did you find one? I guess by now he has the cash, did he initially?
Also, with the refi ... are you going No Doc,Stated, or Full Doc to get a NOO 80% interest only?
Is that rent a L/O or is that the market there? That is fantastic on a 100K home; in my market a rent like that is a 220-260K TH or a 260-300K SFH!
ceinvests,
As you can see from my earlier post, the loan I was considering was fully amortized over 30 years, not interest only. The property is a duplex in Indiana, not California. No, I did not use a partner. I was trying to illustrate to you what you could do if you have no money. I used my own cash on this one. My FICOs are reasonable, but not outstanding--not very different from your recent FICOs. Yes, I have a good, well-paying job that I enjoy very much. Undoubtedly, my earned income helps greatly with my ability to get loans which is one reason I keep my job. My loan to value ratios are also favorable. They got that way from investing where there has been good appreciation for the last few years. My loans have been full doc loans and my primary loan broker is in Colorado.
Regards,
Ed[ Edited by edmeyer on Date 12/18/2004 ]
>Thank You for helping me "get it"! Back to work for me.
I understand how a rehab duplex could money flow so positively. Nice job.
**Nice tip for the young investor who posted this**