Question on the viability of a strategy I've been thinking about.

[Blake Williams]

Hello everyone!  For those who don't know I am a new investor working on acquiring my first property before the year is out.  I don't have much capital to work with, although I'm saving as much as I can while working full time.

Initially, my plan was to use an fha loan to buy my first rental property and owner occupy.  Unfortunately most of the houses I have seen in my price range so far while inexpensive, have enough issues to make them un-rentable.  This got me thinking however...

I'm curious, how viable of a strategy would it be to buy a house that needs work and fix it up with the fha 203k loan instead, then take out a heloc for the value you've built up by doing the necessary work on the property and potentially using the money from the heloc for a down payment for a second rental property?

[Josh Caldwell]

Let me give you a tip for finding a property to rent/live in without the bank.  You traget is burnt out landlords.   You can find them in a couple of ways.

  First, go down to your local magistrate and see if they will give you a list of the landlords filing for eviction.

Second, you can buy a list, from a list source, that will give you multi-unit property owners who bought their property over 17 years ago. These guys are at the end of their depreciation cycle.

Lastly buy a news paper, wait one month, and buy another. Any for rent ad that is in both papers, is a property that the landlord cant seem to rent. Call all of these, ask if they are SFR or not, if not, ask if he would be willing to sell.

It will take some effort but when you find a multi-unit with any of these techniques, then you have a potential seller who is ripe for a creative financing offer.

To your succss

Josh