Hmmmmm. What Should I Do Next?
Jeeeez. I thought I knew a lot about real estate investing until I found this website. Wow! Great information from a lot of very shrewd & smart people. My brain is on over load from the information alone.
What should I do next? I am a newbie looking to make a living in real estate investing.
I have available a HELOC for $228,000 at prime + 0. Excellent credit. A strong desire to succeed.
I see that there are many ways to "skin the cat" so to speak in the real estate speculating market.
What would an experienced investor think is the best route for me to take?
Thank you in advance.
Erik
That's a lot of money to throw around, use it as a safety net or as leverage, don't throw it at deals.
I see 2 types of investors:
The first type of investors try not to use their own money, and would take everything out with loans or from other investors (those who don't want to do the foot work). Once they have a deal they will try to get rid of it as quickly as possible in order to get their money out of it, this may require rehabs. There are lots of ways to go about this from what kind of property you are looking for (distressed, foreclosed, run-down, etc.),,, These types of investors are not interested in being landlords and are not looking for long term gains...
The other type of investor is looking at a buy and hold strat. They want to earn appreciation and grow the equity in their properties in order to have more with which to leverage. These investors are patient and will sometimes be landlords or will higher agencies to do that for them. It is harder to do this without having your own money invested into the property as other peoples money costs to use or to tie up for lengthy amounts of time. Plus, you need to offset mortgage payments with rents in order to generate a positive cash flow, and this will more than likely require a bigger down payment... Unless you good and can find ways to get higher rents out of a home with a lower value.
Decide what you want to be. Are you patient? Do you want the money NOW? Are you willing to do some due diligence? Do you mind being told "No" so much that the word "yes" scares you?
You have a lot of options with that type of money. If you do not want to move too fast I would use the money to buy rental units. If you want to move quicker than I would leave the money in your home and use it to leverage loans to buy and sell properties. It's really up to how much work you REALLY want to do.
Ericka, what I have done so far with my cash and credit lines is this:
Use the HELOC money to buy properties all cash at below market rates with a quick closing as added seller incentive. Refinance with local banker at 80% of appraisal at great rates. Mine has no seasoning requirements (not too common I hear).
A recent example: bought a HUD repo that was flipped to me by wholesaler at a double closing for 46K (paid with my HELOC) spent 6k more making it look brand new for a total of 52K. Borrowed 56K from bank based on their appraisal (the extra 4K minus closing costs of about $900 goes into my pocket). Already have many offers to L/O it right now and deciding if going to rent it out or what. Will bring $750 mth rent covering all my costs and then some.
We are not that far from each other. We should network.
[ Edited by Ricker on Date 02/09/2004 ]
Ricker,
hehe
I got your PM last week and I responded. Not sure if you got it.
Yea, we're close and I have you number I will give you a call and we can chat about deals.
Looks like you are doing just what I have in mind to do.
I must warn you though...it would be me learing from you
Erik
Hey, you never know. I am sure I can learn form you too. But yes,. the HELOC is the way to go. Also, when you get some equity in properties you get more possible LOC's if you need them. As far as networking goes, I think I might rent a big suite for entertaining during breaks at the Grosvneor in Orlando during the TCI conference this spring. That way, I can meet folks from all over the country and make future contacts. I have done that in my ins biz over the years and done well with it.
And, Oh yeah, I did get your PM and many others. Been busy sorry. [ Edited by Ricker on Date 02/09/2004 ]
I concur with Ricker on strategy. I am doing the same thing. I bought a preforeclosure and have recently bought an REO that needs rehab. I will be financing my cash out soon.