Overwhelmed

[Account Closed]

I am single and work a full-time job in the school system and have accepted the fact I'll never have the financial security I want if I continue to do what I'm doing...I'll be working till the day I die:( So I did some research and after lots of reading I feel like real estate investing is something I can do for myself to create a financial safety net. The problem is I'm totally overwhelmed! I know I want to buy and hold to create a cash flow I just don't know what my first step should be. I plan on speaking to my contact at my local bank branch to get info on financing options available to me. I'm nervous to reach out to local real estate professionals because I'm not even sure what questions to be asking. I've already read the Ultimate Beginner's Guide but I still feel unsure. Can someone please help me calm my nerves so I can take my first step?

[Account Closed]

Originally posted by @Account Closed:

I am single and work a full-time job in the school system and have accepted the fact I'll never have the financial security I want if I continue to do what I'm doing...I'll be working till the day I die:( So I did some research and after lots of reading I feel like real estate investing is something I can do for myself to create a financial safety net. The problem is I'm totally overwhelmed! I know I want to buy and hold to create a cash flow I just don't know what my first step should be. I plan on speaking to my contact at my local bank branch to get info on financing options available to me. I'm nervous to reach out to local real estate professionals because I'm not even sure what questions to be asking. I've already read the Ultimate Beginner's Guide but I still feel unsure. Can someone please help me calm my nerves so I can take my first step?

Ashleigh, I suggest you look into a duplex you can live in and rent one side. See if you can get an FHA loan to do so with just 3.5% down.

Then, if you don't have a downpayment, try this.  My daughter desperately wanted to buy when the market crashed here in CA, but couldn't figure out how to save enough for a downpayment.  She's in payroll.  We were talking and she said if she didn't have to pay taxes, it would be easy, Ha ha!  

Anyway, we talked about it and came up with the idea of changing her W2 deductions to 8.  She said if she changed them to 9 dependents, the IRS would get flagged.  So, she changed hers to 8, if I remember correctly.  This meant she had about 20% more take-home pay, and she saved it.  When it was time to do her taxes the next year, she made a payment arrangement with the IRS.  The IRS was easy to deal with.  They made payment arrangements she could handle.  She figured it came out to a "loan" at about 4% interest.

Now, the great thing about this "loan" is that it does not show up as a debt on your credit report.  And what the bank will see is steady savings on your part.

We told friends of mine who were in the same boat the following year, and they are two professionals and they did the same thing.

The IRS will tell your employer you can't change your deductions again until the debt is paid.  But, it's not illegal and if you pay them back as agreed, this debt and payment plan will not show up on your credit report.

Anyway, this is how my daughter bought her first home.  For her second home, she used her 401K money.

And just to let you know, it's not impossible to live on just your Social Security money.  I do.  There are subsidized senior apartments all over the place, and they're really nice - at least the two I've lived in so far in CA.  We don't throw our poor old people in the nearest river in America.  There is great subsidized housing and tons of programs.  You won't have to work until you die, unless you want to, or can't downsize your lifestyle.

An example: I live in a very tiny studio apt, but it's very well-managed.  I can walk to the ocean.  I can drive to the redwood forest in 12 minutes.  This is my bliss, and it's free.  I have an old beater Toyota that starts up every time.  I have a great dog who goes walking with me.  I have Amazon Prime and am currently addicted to Vikings LOL.  Life ain't bad for me, and I live on $900/month - and my medical care is free (Medi-Cal).

I'm just saying, worst case scenario - you'll be just fine if you "only" live on your teacher's pension and social security.

But, I think your plan will be fun.  I think you should start out with a duplex that you live in.  Go slow but sure and protect your assets.  No get-rich-quick schemes!  That's an almost guaranteed-to-lose-your money risk you can't afford.

Best of luck to you!