Here's my REI strategy...please let me know your thoughts

[Nicole Pettis]

Hello!

After talking to many and researching much, I feel I have decided on the strategy that I want to move forward with. However I am unsure on a few things, so please let me know your thoughts or how you would proceed.

1.) First things first, find a foreclosure that we can fix up and live in(we currently rent)

2.) After that house is finished find another foreclosure/distressed property to buy & flip

3.) My goal is to buy & flip 4 homes in a year (I know that may seem low, but both my husband & I work full time) So I don't want to take on too much.

4.) Then eventually purchase some buy & holds to rent & continue to flip

This is where it gets sticky. My sister who works for a bank & my brother who is a mortgage broker have both suggested I use the HELOC from our new house to purchase the next. However, I don't feel comfortable doing that, because if something happens with the secondary investment property, I don't want it to take our home with it as well.

I would rather just get a new loan for second property and go that route.

Suggestions? Thoughts?

Thank you!

Nicole P

[Ned Carey]

Originally posted by Nicole Pettis:

1.) First things first, find a foreclosure that we can fix up and live in(we currently rent)

Buying a home to live in is a great investment but avoid the pitfall of buying the largest you can afford. You are probably better off buying the cheapest you can tolerate and saving the difference.

No that is not a low number. Newbies who have a goal to do 10+ deals in a year are often setting themselves up for failure. A banker friend once said it scared him when newbies came in and said we plan to do 12 deals this year. Get the first deal done and then move on from that.

If you are not 100% sure that the deal you are doing will be successful you shouldn't do it at all. I am not saying you should take out a HELOC, that is a personal decision. However if i is becuase you are afraid of losing your house it could be a gap in your real estate knowledge that generates that fear.

Keep in mind that is substantially harder than getting a HELOC.

You've got a good plan, Get educated and move forward a step at a time and adjust as you go. Good luck - Ned