Is This The Best Way???
I am new and am wanting to know if this is a good idea to start with. I am 30 years old, I have decent credit (FICO around 700), my income is about $40k, and I am nearly debt free (just a little more on student loans), and I have never purchased a home before. Would it be a good idea for me to buy my first home from a motivated seller at a discount, fix it up a little while I live in it, and the resell it after about a year for a profit or is there a better, faster way to generate some money to do bigger and better RE things? I have talked with a man in my area who will be leaving his full time job as of July 10 (today) to do RE full time. He's been a part time investor for about 3 years until now. I know that he does mostly wholesaling, and some lease options and makes around $20k per month. I have talked with him a couple of times and enough to know that he's not willing to teach me anything. I am being realistic. I don't expect to get the kind of results he's getting because I'm not sure if his case is the "extreme" of what most full time investors make. I'd be happy with $10k a month in 5 years. I'm looking at real estate investing to fund my retirement.
I'm new at this too, but without capital it's going to be difficult to secure a loan. Also, your loan amount is only going to be commiserate with your income. I purchased my first piece of property when I was twenty four and have been leasing it out for the last few years. If you fix up the home and lease it out make sure you secure at least 125% of the mortgage payment so it will not count against you when you apply for a loan on your next home. Sounds like in your case the best situation is to buy your first home and fix it up enough to lease it so you can obtain another property. Be careful not to purchase a property that needs too much work if you don't have the capital for repairs.
Good Luck,
Delias
Amy,
I won't offer advice for your best strategy as it is outside my normal scope of work, but do note that if you purchase a home and then resell it you will automatically save money if you live in it for 2 years vs. only one year. If you live in a residence for 2 out of the last 5 years you will pay no long term capital gains taxes on the property. So if you do buy something and cas stay there 2 years you will get to keep the profits instead of giving uncle sam his cut.
delias,
i am new to re as well. Could you explain the thing about 125% morgage in further detail?
Quote:
On 2004-07-10 04:24, jonathanb wrote:
delias,
i am new to re as well. Could you explain the thing about 125% morgage in further detail?
What he/she is saying is "make sure the rent that you collect is 125% of the mortgage payment." Example: mortage payment is $1000.00..make sure you rent the place for at least $1250.00. If not, then you may not qualify for another loan if you decide to use "conventional financing" for your real estate investments. [ Edited by amyindallas on Date 07/10/2004 ]
yes, that's right. I stumbled into "renting" on accident. Purchased my first home and it was so far out of Atlanta the commute was awful. I gave up after a couple of months and moved back into town! When I went to purchase another home in the Atlanta area I learned a lot from my lender about things I should be doing on my first property such as the 125% rule. Good Luck : )