What would you do to continue REI in this situation?

Question

Hello BP Community,I would like to get advice or any recommendations on my current situation. I know there are many here with more wisdom and life experience and want to get someone else’s perspective. I introduced myself two years ago, but here it goes again.Background:My name is Christian Benitez. I am 24 years old and will finally be graduating with a double major in Finance and Entrepreneurship in May 2019. Being the oldest and first person in my family to attend college, I wanted to set an example for my younger siblings and make my parents proud by completing something they didn’t have the chance to do when they were younger. I knew since I was 18 that I wanted to be my own boss. From 18 to now I have had two small businesses and MANY part-time jobs. I don’t have the businesses anymore. I dreaded going to my last few W2 jobs, but I needed money for school/expenses. Within the last 2-3 years, real estate investing has sparked a big interest in me and I know this is one of the main routes I want to pursue to make a living. In 2016, I was able to acquire a property using the Subject-to method with the help of a friend. My family (parents/siblings) and I are currently using it as a primary residence and slowly fixing it up. I still owe 150k on the mortgage. The house sits on a corner lot in a dead-end street in South Minneapolis one block away from Richfield. This past summer a property, two houses down sold for 265k. It has 3 beds, 1 bath and 1,394 sqft, with unfinished basement. My house has 4 beds, 2 baths, and 1,080 sqft, with extra kitchen and living room in the finished basement.Question / need advice:My main goal with REI is to buy and hold using the BRRRR strategy. Buying a house using private/hard money seems doable, same with rehabbing and renting. The part I think I will get stuck at is refinancing. I have seen many stories on here of people using the BRRRR strategy with no job. How are they able to refinance without having prior experience and no stable work history? I am having a difficult time deciding on what I should do from this point. Do I sell the house (family will move back to an apartment) and use the money from that to buy cheaper properties outside the twin cities? Or stay at current house, get a job in finance and continue REI once I get a stable job? If I get a job, I will need to wait two years and who knows If I will qualify with the income I will be making. Any recommendations on what I should do or what would you do if you were in my situation?Any advice is greatly appreciated!Thanks

Bryan O. · Answer

@Christian Benitez it wounds like the basement is finished with kitchen... is there a walk out to it? You could turn that into a long or short term rental to add to your income, which will help you build cash and prove income to make you more stable for lending. Also, you can look at commercial financing rather than standard financing for mortgages. They have far more flexibility in lending and the property itself is the first criteria. After that, they look at your credentials, but relationship is more important here than paperwork. You may be able to offset your lack of paper credibility with additional rental income and personality.

Christian Benitez · Answer

@Tim Swierczek Thanks for the advice. I would love to meet up for coffee. I will message you within the next few days to set something up.@Bryan O. There is no walk out, but once they go upstairs, the exit door is right in front. I didn't think about short term rentals, so this could be another possibility. Appreciate the advice.@DJ S. Thanks a lot for the advice. You gave me really good ideas I will for sure put into action.@Thomas S. I haven't considered using the BRRRR strategy with a multi unit. I will definitely look into this more. Thanks for the advice.@Mary Mitchell You are right, the mortgage could be called at anytime and that makes me a little uneasy. Commercial financing is something I haven't considered before, but will look into it more. Thanks for your advice.@John Woodrich Thanks for your input. Have already started the job hunt!@Armin Nazarinia A few days ago I heard about being able to use to education as experience as well. This is something I will be looking into for sure. You gave me some great ideas. Thanks for your advice.

Armin Nazarinia · Answer

@Christian Benitez- I agree with everyone here. Get a job in Finance, if I remember right since you have a degree in Finance, if you get a job in it, you may not need 2 years experience because your College counts as experience if you get a job in the field you graduate in. This means honestly if you have a down payment or sell that current home, you could buy another home right away with all of the other parts aligned. Get something cash flowing. House hack if possible and while working the finance job build this up and any other business you want up. I know the W2 job sounds tough but knowing you have an end goal helps keep you focused and moving forward. Best of luck.

John Woodrich · Answer

Get a job in finance to improve your ability to get financed. Then work to grow your portfolio.

Mary M. · Answer

I agree get a job in finance. Do the work thing for a couple years. It is good experience. However, i would sell this house - why? Mostly because the mortgage could be called at anytime (if i understand how subject to works) you can use the built up equity to buy a 5 plex which you can get commercial financing for which does not need you to have income - it qualifies based on the income of the property. This way you will have control of your asset and not have a possibility hanging over your head. Your family can move into one of the units once one becomes available - or if they prefer an apartment Good luck! You have your entire future ahead of you - set a strong foundation and you will be successful!

Thomas S. · Answer

Start your business career. It will be a major plus as a investor long term to have a solid high paying job.Save every extra penny going forward and after you pay off all student debt start planning to invest. Sell the house when it is done and move forward with a BRRR initially in a multi unit. With a good paying job you should be able to qualify for financing fairly easily. Use your job environment to net work with other investors.

DJ S. · Answer

Hello @Christian Benitez, I lived in MN and invest there. I agree with @Bryan O. if you can convert the basement to a rental with separate entrance. That will help offset the mortgage. I will keep the current house since its a family in there. Renting is no longer an option for me with a family. Landlords are in control and anything can change anytime. You want control.Even if there is ~50K in equity, you are subject2 so not sure you can refi since loan is still in another person's name. Keep building the equity by renting out the basement (if possible).Then I would get the Finance degree job. You must have liked finance to major in it .. I hope :-).thats 40-50hrs per week. You have another 20hrs minimum as a single guy. You can Drive 4 Dollar , do other marketing while employed... that will give you time to ramp up into real estate investing knowledge...as well as W2 for bank financing if needed. RE is a slow process (faster if we get 2008 again). You want another job to keep you busy till you are savvy enough to go FT into investing. Your siblings can help drive for dollar etc if you are hoping to inspire them...and can convince them. :-). It could be a family business with everyone helping...thats a lot of extra hrs available to use...if your family is close like that.

Tim Swierczek · Answer

@Christian Benitez The stories about people re-financing but no job or 99.5% bullshit. You can use private money you can get partners but somebody has to have an income. Real estate is a get rich slow process get the job get on your feet and keep building your portfolio. Let’s meet up for coffee.