So what's holding you back?

[Frank Patalano]

When I help new investors with buying their first property I often want to know what is holding them back from pulling the trigger.

So I'll ask here. What is holding you back?

[Timothy Douglas]

Originally posted by @Frank Patalano:

Originally posted by @Timothy Douglas:

Originally posted by @Frank Patalano:

Originally posted by @Timothy Douglas:

I literally have no money and the only way to get money is to partner with somebody. However, being twenty years old, it is hard to partner with somebody because they think I don't know what I'm doing; they're correct for the most part. The last thing is that my time is stretched between Young Life and College and I'm not willing to sacrifice friendships or my degree to dive into Real Estate Full time. Long story short, I don't actually believe I can and it pisses me off...

 It's okay to be mad at yourself. It's okay that you want to enjoy life right now. Success involves sacrifice. You have to sacrifice something. It sounds like you are not even willing to sacrifice one day a month to attend a real estate meeting. If you are willing to do that then joining a local reia is a great first start.

I've actually obtained an LLC and was planning on starting a meetup in my area next semester because none of the current meetups fit with my weekly schedule. I'm totally okay with sacrificing a night, it's mainly that all my nights are full except Thursday, which is the plan now. The other thing that is stopping me is inaccurately assessing repair costs. I'm reading through the book and stuff but I am too scared to mess it up and cost an investor money.

 Nice. 

Making your own group is an awesome idea.

The next time that you look at a property, see if you can bring a friend that is super handy to help you improve on your  cost estimates.

 Great, WIll do!

[Kiera Underwood]

@Account Closed What market are you in? I'm just curious what price point you're targeting for #2! 

[Account Closed]

@Kiera Underwood, I am hoping that my equity line of credit gives me at least $25,000, which will be used for a downpayment on the next property. I plan to do a BRRRR with the money, so probably targeting something that requires no more than a $20,000 downpayment. So a purchase price of no more than $80,000-100,000 (20-25% down payment), and even at this price, I would want it to be a duplex (wishful thinking). It'll probably be a lot less than that. I also plan on doing hard money lending for my second deal as I will need money for rehab.

[Frank Patalano]

Originally posted by @Account Closed:

I think for me, the biggest problem has been finding capital for the next one.  I started renting out my first property (single family home) last December and currently make about $325/mo in cash flow.  However, it has been hard to extract the equity I have in my house to use on another property, I finally found a lender who will do an equity line of credit on an investment property and am currently going through that process.

 Nice. You could always partner to grow quicker.

[Kiera Underwood]

@Brian Alfaro understood. They are aggressive numbers but I wish you luck! What market are you aiming for? 

[Allison Meggison]

@Frank Patalano I think you are right. The first step is acknowledging it or establishing what it is that's holding you back but what if one is unable to figure out what is holding them back? I guess we would have to define "holding you back".

[Frank Patalano]

Originally posted by @Allison Meggison:

@Frank Patalano I think you are right. The first step is acknowledging it or establishing what it is that's holding you back but what if one is unable to figure out what is holding them back? I guess we would have to define "holding you back".

 I kind of left it open-ended on purpose.

here are some possibilities

What Fear is holding you back from success?

what one thing is holding you back from growth?

what excuse do you keep telling yourself?

I'm sure that there are more.

[Allison Meggison]

Lol touche'! I wish I knew the answers to those questions!

[Alex Bruski]

My biggest problem right now is figuring out where to buy my first property. Not only is there the rent and cash flow per month to consider but also how the area ranks, population / job growth, etc. all while on the west coast which isn't feasible for me to invest in state due to the cost nearby in LA. It feels hard to trust an area without actually being there on the ground for an extended period of time and obviously there is no way to explore every single small town I'm considering to this amount of detail.

[Frank Patalano]

Originally posted by @Alex Bruski:

My biggest problem right now is figuring out where to buy my first property. Not only is there the rent and cash flow per month to consider but also how the area ranks, population / job growth, etc. all while on the west coast which isn't feasible for me to invest in state due to the cost nearby in LA. It feels hard to trust an area without actually being there on the ground for an extended period of time and obviously there is no way to explore every single small town I'm considering to this amount of detail.

 Today's technology gives you many options to study out of area markets. I've bought in 4 other states this year. LIVE video with an agent, etc.

I have a friend who lives in Brawley, CA. 

[Alex Bruski]

Originally posted by @Frank Patalano:

Today's technology gives you many options to study out of area markets. I've bought in 4 other states this year. LIVE video with an agent, etc.

I have a friend who lives in Brawley, CA. 

Do you have any suggestions on good sites that you have experience with? 

[Frank Patalano]

Originally posted by @Alex Bruski:

Originally posted by @Frank Patalano:

Today's technology gives you many options to study out of area markets. I've bought in 4 other states this year. LIVE video with an agent, etc.

I have a friend who lives in Brawley, CA. 

Do you have any suggestions on good sites that you have experience with? 

 Look up Neal Bawa.

Gives great info on choosing markets and gives website recommendations.

[Luke Saglimbeni]

Funds and trustworthy partners with $ to partner with.

[Frank Patalano]

Originally posted by @Luke Saglimbeni:

Funds and trustworthy partners with $ to partner with.

 I meet people through networking. That is where my partners come from.

[Morgan Madill]

@Frank Patalano

What’s keeping me from buying is paying off about $15,000 of student and car loans and then building up a savings of 25% and six months expenses on first cash flow by and hold property.

My biggest hurdle to overcome is the fact that I work a job that requires me to move every couple months regionally in the south east, currently working this job to learn construction and it allows me to also put away more into saving then most. It’s a catch 22 right now. I’d like to do buy-and-hold cash flow properties however that is going to be difficult starting off working on the road, because I’d like to self manage the property and be hands-on and put a lot of sweat equity into it.

[Frank Patalano]

Originally posted by @Morgan Madill:

@Frank Patalano

What’s keeping me from buying is paying off about $15,000 of student and car loans and then building up a savings of 25% and six months expenses on first cash flow by and hold property.

My biggest hurdle to overcome is the fact that I work a job that requires me to move every couple months regionally in the south east, currently working this job to learn construction and it allows me to also put away more into saving then most. It’s a catch 22 right now. I’d like to do buy-and-hold cash flow properties however that is going to be difficult starting off working on the road, because I’d like to self manage the property and be hands-on and put a lot of sweat equity into it.

If you really love the concept of real estate investing you would do anything to make it happen. Sounds like you aren't willing to compromise enough.

My partner Jimmy owed about $70K in student loans when he did his first house hack. This profit allowed him to pay off debts quicker.

I commend you wanting to have 6 months saved up. Since I don't know your finances I'm not sure if that is realistic or not.

Life's about choices. If you are so hands on my suggestion is to buy a live in flip. Buy as cheap as you can. Fix up as you live in an area. Then sell it when completed.

[Morgan Madill]

Originally posted by @Frank Patalano:

Originally posted by @Morgan Madill:

@Frank Patalano

What’s keeping me from buying is paying off about $15,000 of student and car loans and then building up a savings of 25% and six months expenses on first cash flow by and hold property.

My biggest hurdle to overcome is the fact that I work a job that requires me to move every couple months regionally in the south east, currently working this job to learn construction and it allows me to also put away more into saving then most. It’s a catch 22 right now. I’d like to do buy-and-hold cash flow properties however that is going to be difficult starting off working on the road, because I’d like to self manage the property and be hands-on and put a lot of sweat equity into it.

If you really love the concept of real estate investing you would do anything to make it happen. Sounds like you aren't willing to compromise enough.

My partner Jimmy owed about $70K in student loans when he did his first house hack. This profit allowed him to pay off debts quicker.

I commend you wanting to have 6 months saved up. Since I don't know your finances I'm not sure if that is realistic or not.

Life's about choices. If you are so hands on my suggestion is to buy a live in flip. Buy as cheap as you can. Fix up as you live in an area. Then sell it when completed.

-Thank you Frank you're absolutely right, currently I am headed towards being an investor. Taking daily steps to making it a reality! I feels like my debt it paying down slowly and savings is crawling but making great progress. Projecting to have over 20k ready to deploy at the end of 2020. Working on building out the business operations in the mean time.

[Melanie Hartmann]

I know when I got started, I didn't have the belief that I could do it. I felt I wouldn't be smart enough or good enough and that really got in the way. The only thing that helped was to keep pushing myself out of my comfort zone a little more each day. Networking and connecting to others experienced in the industry helped immensely as well!

[Frank Patalano]

Originally posted by @Melanie Hartmann:

I know when I got started, I didn't have the belief that I could do it. I felt I wouldn't be smart enough or good enough and that really got in the way. The only thing that helped was to keep pushing myself out of my comfort zone a little more each day. Networking and connecting to others experienced in the industry helped immensely as well!

I know a few investors in the Baltimore area. You have a lot of helpful investors down there.

What would you say is holding you back today?

[Shabreya Bangura]

@Frank Patalano fear and lack of support. At this point, I'm basically working my W2 for the insurance. If I do REI I want to go all in which would mean quitting my job. My family depends on my income (which makes it hard to take the plunge) and my husband doesn't think it's the "right time"

[Frank Patalano]

Originally posted by @Shabreya Bangura:

@Frank Patalano fear and lack of support. At this point, I'm basically working my W2 for the insurance. If I do REI I want to go all in which would mean quitting my job. My family depends on my income (which makes it hard to take the plunge) and my husband doesn't think it's the "right time"

#1 There is no right time or perfect time. There were so many opportunities at the bottom but 99% of the people passed on them.

#2 You don't need to go all in to get started. I worked for 10 years while growing a portfolio. I'll tell you one thing, with banks it's a heck of alot easier to have a w2 than to not have one.

Perhaps you should join a meet up with like minded people. That will start to build a support system for you.

[Shabreya Bangura]

@Frank Patalano

@Frank Patalano thanks for the advice and encouragement! I belong to one local meet up so far; I need to hone my networking skills. I’m naturally observant and closed off when I’m in new environments and it can come off kind of shy; but these are just excuses and the meetups will be perfect for honing those skills. 

Thanks again! 

[Melanie Hartmann]

Originally posted by @Frank Patalano:

Originally posted by @Melanie Hartmann:

I know when I got started, I didn't have the belief that I could do it. I felt I wouldn't be smart enough or good enough and that really got in the way. The only thing that helped was to keep pushing myself out of my comfort zone a little more each day. Networking and connecting to others experienced in the industry helped immensely as well!

I know a few investors in the Baltimore area. You have a lot of helpful investors down there.

What would you say is holding you back today?

There really are! I've been fortunate enough to meet a few them thus far. Occasionally, I still experience "impostor syndrome" and feel like I can't do what I'm doing even though there is plenty of evidence to the contrary. So these days, I acknowledge those feelings and then set them aside and keep it moving. I'm doing what I've dreamed of doing for years and it's completely surreal at times!

[Reed Vennel]

6 month later update.

I took the time to do this all right:
Got the debt paid off which fixed the credit up to 800 FICO.  That's allowed me to set up a HELOC for 60k to play with.

Negotiated a large raise at work through improving my value to the company and presenting a counter offer.  That fixed the debt to income ratio.

Found a partner to lend 200k at 8% interest with a minimum interest charge of $4,000.

Worked with the same realtor from my primary house to see a bunch of properties.  Three offers later, we're under contract to buy a 195k fixer upper with an ARV of 375k that needs roughly 60k in repairs and additions.  Settlement is Thursday then the fun begins!

Originally posted by @Frank Patalano:

Originally posted by @Reed Vennel:

Originally posted by @Frank Patalano:

Originally posted by @Reed Vennel:

Been working on trying to position myself well first. Bought my primary residence a year ago. (it's a partial house hack, I'm living in a 280k house for about 750 a month by renting a room out to a friend) My credit tanked over 100 points and I had used every last dime to avoid PMI and finance the renovation. My credit has just finally recovered to where it was pre-purchase. I paid off all but $2800 (which is at 0% APR) of my renovation costs while also getting two 5% raises, so I've brought my DTI from 30% down to 20% excluding the roommate rent.

I've been learning as much as I can and practicing analyzing properties.  I think I've come across several that were good deals, but financing is my current concern.  The current deal that has my eye is listed at 120k and needs 30k worth of work, but I've only got 11k in the bank, and 4k in stocks and bonds.  I do have 30k in my 401(k) and 80k equity on a 280k house but am worried trying to tap into those would undo all the credit repair work I've done over the past year.  

I'm a little confused when you said your credit Tanked. Is there a specific reason for this? Maybe I missed it. Besides that where are you finding this deal? If it's on MLS perhaps you can work with a partner and split it. If it is off Market perhaps you can put it under contract to purchase and wholesale it.

I had relatively thin credit (I was 24 years and one week old at the time of closing), so adding a 200k loan increased my debt profile substatially.  I had recently bought and refinanced a car when the brakes went out on my college ride, rate shopped on the house over a long escrow period so they didn't get viewed as rate shopping, and I financed the renovations through 0% credit cards, so in total had 8 inquiries and multiple new accounts in the last two years.  The credit cards showed a high utilization rate even though it was free debt that I had invested elsewhere.  

I didn't have late payments or bankruptcy or anything like that, but the rapid change of living on 12k a year as a college student to being an engineer looks like instability as far as credit goes.  Wells Fargo, Discover, AmEx, Nerdwallet, BoA all have free credit monitoring services, and all of them showed a 100-140 point drop from the month before I bought the house to the month after.  

I've been looking MLS, auction, foreclosure.

 So I wouldn't borrow all of your equity. Like I said I would find a partner.

[Frank Patalano]

Originally posted by @Reed Vennel:

6 month later update.

I took the time to do this all right:
Got the debt paid off which fixed the credit up to 800 FICO.  That's allowed me to set up a HELOC for 60k to play with.

Negotiated a large raise at work through improving my value to the company and presenting a counter offer.  That fixed the debt to income ratio.

Found a partner to lend 200k at 8% interest with a minimum interest charge of $4,000.

Worked with the same realtor from my primary house to see a bunch of properties.  Three offers later, we're under contract to buy a 195k fixer upper with an ARV of 375k that needs roughly 60k in repairs and additions.  Settlement is Thursday then the fun begins!

Originally posted by @Frank Patalano:

Originally posted by @Reed Vennel:

Originally posted by @Frank Patalano:

Originally posted by @Reed Vennel:

Been working on trying to position myself well first. Bought my primary residence a year ago. (it's a partial house hack, I'm living in a 280k house for about 750 a month by renting a room out to a friend) My credit tanked over 100 points and I had used every last dime to avoid PMI and finance the renovation. My credit has just finally recovered to where it was pre-purchase. I paid off all but $2800 (which is at 0% APR) of my renovation costs while also getting two 5% raises, so I've brought my DTI from 30% down to 20% excluding the roommate rent.

I've been learning as much as I can and practicing analyzing properties.  I think I've come across several that were good deals, but financing is my current concern.  The current deal that has my eye is listed at 120k and needs 30k worth of work, but I've only got 11k in the bank, and 4k in stocks and bonds.  I do have 30k in my 401(k) and 80k equity on a 280k house but am worried trying to tap into those would undo all the credit repair work I've done over the past year.  

I'm a little confused when you said your credit Tanked. Is there a specific reason for this? Maybe I missed it. Besides that where are you finding this deal? If it's on MLS perhaps you can work with a partner and split it. If it is off Market perhaps you can put it under contract to purchase and wholesale it.

I had relatively thin credit (I was 24 years and one week old at the time of closing), so adding a 200k loan increased my debt profile substatially.  I had recently bought and refinanced a car when the brakes went out on my college ride, rate shopped on the house over a long escrow period so they didn't get viewed as rate shopping, and I financed the renovations through 0% credit cards, so in total had 8 inquiries and multiple new accounts in the last two years.  The credit cards showed a high utilization rate even though it was free debt that I had invested elsewhere.  

I didn't have late payments or bankruptcy or anything like that, but the rapid change of living on 12k a year as a college student to being an engineer looks like instability as far as credit goes.  Wells Fargo, Discover, AmEx, Nerdwallet, BoA all have free credit monitoring services, and all of them showed a 100-140 point drop from the month before I bought the house to the month after.  

I've been looking MLS, auction, foreclosure.

 So I wouldn't borrow all of your equity. Like I said I would find a partner.

Nice Job Michael. Keep in touch. I'm proud of ya.