New Member Here - Southeast Missouri

[Mark P.]

I put this in another post, but thought I would recycle it to introduce myself, tell how I got started, and why I am here:

I started a year ago and just bought my second house. I was three years post a financially devastating divorce and realized I had to make a move to recover. I am an IT guy with a master's degree and a pretty good income, at least for this area. I also do consulting on the side. I worked with a guy that was liquidating all his properties and moving to Florida to retire. We talked one day and I asked him if he would help me out. Long story short, he gave me a 5 year note on a house that he already had rented. We did the math and worked it out so the cash flow would cover the 20% down after the 5 years. We had a lawyer do the paperwork and amortization table for about $700. He had nothing to lose. Five years free payments and if I default or can't get the loan after 5 years, he gets the house back. He knows I'll take care of it because I want to own it and I am motivated. With the cash flow from the house, and I had a good year with my consulting work I accumulated enough money in one year to buy another property. I could have just bought the first house, but he gave me a 2.75 interest rate and the bank is 5.75 for rentals, so I figured I would be stupid not to milk that for as long as I could. I still have four years to save the down payment when the note comes due and I am confident I will have that more than covered. I closed April 30th on my second house and rented it in one week. I am working now on trying to get a multiplex or a VRBO, but I am low on cash right now.

Here is a bit of knowledge I have learned for other newbies: A big bank wouldn't talk to me about my second property, but I had a friend that was a banker from a small town bank. I always stayed away from the small town bankers because I didn't want anyone to know my personal business, but I figured I do as well or better financially than most of the people in my town, so what the hell do I have to be ashamed of? I spoke with him and he had a LOT more flexibility on the loan for the second house I bought. Build a relationship with a small bank...that's my advice.