Credit Score 400;s, no job, no home and no end in sight. How I am reversing it all

[Susan Authement]

This is very long. It goes over in detail what happened to me, what caused it. How i came to buy my first home and why desperation caused me to think out of the box for a solution to repair my life and the steps i did to date with results. My options for fixing this were extremely limited, almost non existant. Many people in my position become homeless and lose everything never able to recover. The horrific things that happened to me forced me think of alternate ways to get into a home. Once there a plan developed . It is not a pretty story. It is not a happy story although it does get much better. It is still ongoing as I write this. I asked a question on forum about LLC and some were saying it wasnt needed and didnt protect as much i would think. I felt i had to tell my story to explain why i want even poor examples of extra protection and why i over always go overboard on Insurance, way more coverage than needed and hardly ever used . (although i did have a house fire years ago, so never let coverage slip people, you never know when it could happen to you).

My story begins many years ago , I was a veteran by then, happily married to another soldier. I had a child, a wonderful daughter. It was a few years later when i found out that i had cancer.  I had got cancer. I fought it, survived then 2 yrs later found out i had it again in anther area. I beat it again and survived.

This is where things out of my control set me up for the disaster that was to come. The side effects from operations and radiation treatments left me unable to work. Social security told me I was short 90 days of work credits to draw my benefits and denied me. I went back 4 times and they said no No 4 times. They said to wear a diaper and get a job. For 27 yrs i was a stay at home Mom and house wife with no income for the next 23 yrs. 

Then when everything with my health was finally normal, my daughter graduated high school and went on to graduate college with top honors.  My spouse had survived back to back deployments post 911 and beyond. He finally retired and things were great. I thought they couldn't get much better.  

That was the moment my spouse of 30 yrs retired from the military and decided to divorce me with no warning. The year before informing me of this divorce he had begun to secretly take out several loans on our joint banking accounts and against 2 of the 3 paid off vehicles then didnt pay them. He declared bankruptcy for all our credit card accounts but  only for himself and specified i was not to be included in that process or notified. 

Then he never came home one day, called me the next day on phone from another state  to tell me he was divorcing me. He had drained our joint bank accounts, changed his pension deposits to a new bank account, abandoned me and adult daughter. He did not even say good by to child. Our farm animals were left with no food in the dead of winter. I could not afford a lawyer let alone a good one or pay for a bankruptcy.I had no food in the house. 

I was awarded half of his pension for life and the same dollar amount in alimony for a decade by the court. I started to feel like it might be ok.  He makes sure to pay each month but mails them late , spills something on envelope so its returned to him, once he just put my first name only with no address and the zip code. I always got the payment but often late. He refuses to do auto payment to me with digital banking.  I have never had the money to hire a attorny until hopefully this week. 

Until this month i have had hundreds dollars in late fees and over drafts each month. I cant take him to court because neither of us live where the divoce was occured anymore. Local courts here wont let me move my paperwork here and im too broke to travel anywhere. . I got evicted 5 times in first year. Those evictions are how i ended up in Arizona.  When i applied for my first apartment in 30 yrs i found out my credit score had plummeted from a nice score of 720 to the lower 400's even though i had never missed a payment on anything in my life. No one would rent to me. I was now sleeping in my vehicle in a place id never been . I was homeless.

My Plan : A home

 I had to come up with a plan to get into a home and get my life back .This was/is Phase 1 of my plan. 

I decided to place ads requesting to enter a rent to own agreement with someone willing to accept the down payment over the 4 yr lease in installments made with the monthly rent. I would then request rent be due at the end of month to prevent late fees and evictions.   I found a person who had all ready been transferred to a new location with his job and had been unable to sell their home. He was so desperate after paying a mortgage and expensive rents. He agreed to selll to me for 88K, rent to own for 4 yrs with 10% down paid in 200 dollar installments and owner financing. I had a house. I thought things were looking up . Its at this time my adult daughter passed away. For six months i barely functioned as a person. It so easily could have all slipped away with my dwindling interest in life around me.  After six months i pulled my self out of bed. I had not missed any payments or made late ones. I started by googling installing tile floors. I practiced on plywood. then did the spare bedroom. Then i painted the whole house and refinished the kitchen cupboards. I did many other projects and slowly came back to life. 

For four years i had quietly fixed up the home and did improvements . I made my rent and down payment installment on time every month for 4 yrs. When it came time to to buy and close on the home the management company had compiled 4 yrs of payment history that was reported to credit bureaus and had all ready reported the prepaid 10k down to the seller too. My credit score had raised from mid to lower 400's to 650 and i got the loan i needed from a real bank and mortgage company at 4% instead of from the seller.

I now owned my home first home all by myself at 56 yrs old. 

Phase 2.: build equity. Remove it. Buy 2nd house with cash. Pay for both with one renter.  

My work in the home over those 4 yrs as the renter had raised the value of the home in addition to the 4 yrs of appreciation the house had naturally. I bought a home for 88K that at closing had risen in value to 130K. 2 yrs later the AVM had it at 170K.  The first 6 months it rose to value above 160K and kept rising. I lived in the home for the 12 months required when its your primary residence. I continued to do projects each month during this time. Trying to raise the equity in my home.   I waited a few months more then last month I applied for a Heloc expecting to get 20 to 30K and have to jump through hoops.  I found out the home appraised for 220K and the big 3 Credit score groups had my credit at 730, 732 and 743 . I recieved a 71K Heloc this week.  I all ready have a approved renter waiting to move in with a 3 yr lease and a 2nd person who keeps calling to see if the "other guy" changed their mind.  The property is managed by a professional office and the rent is ach payments direct The rent amount im getting is 3 times what i pay for the mortgage. 

Phase 3 !! I reached a major milestone this past week. I have started the 3rd phase. With the HELOC i am purchasing a home in MIchigan and doing it all over again.But the process will be very differnt this time. I will be living in a home with no payment due. someone else is paying for this home and the original house every time they pay rent. I will have so few bills it wont matter if a check is late. As long as it arrives it wont affect me. I have no car payments, i will have no mortgage payment when the renter moves in and i have not ate in a sit down restaraunt for 7 yrs, saving money where i can. Its finally paying off. It felt so bad while doing but was worth it. This home i m buying in michigan , it will be the 2nd home in my "Portfolio" of owning and maintaining 5 rental properties.

I will be changing  primary to this house I buy in MI.  I am paying both the 1st mortgage and Heloc payments using the rent money, then i am using my own money i recieve add 3 full loan/mortgage payments that go directly to principal and interest on the Heloc freeing up a huge chunk of it back up to buy house number 3. I move into house 3 after the 12 months. Now i send all funds to heloc to pay it off . Then i live in the home that has the lowest rent coming in .  I continue to pay large amounts to principal from my person funds each month and also all the rental units .. according to my calulator i used this will pay off the first mortgage very quickly, twice as fast as the Heloc because the interest rate is very low.   This will pay it all back in 5-8 yrs if i understand how the early payoff works. still years but not decades. If it is under the 5 yr mark i can always withdraw heloc again to get more rentals but i dont plan on it. 

That begins the final stage.  I plan to continue to use the original home here in Az as needed. I could sell it or keep renting it. I like the idea of to live off and maintain the rentals for as long as i enjoy it. I can sell them off anytime i wish. Just don't renew the lease, sell it when i dont enjoy what im doing anymore.. 

So that was my whole plan.feel free to comment on it. Please keep in mind i know most ppl use the Heloc as a down payment then get a mortgage. I am very house insecure after what happened to me. I love the idea of each property i buy being paid in full the moment im handed keys. Debt hanging over me makes me have to take xanax or drink tooty fruity drinks all day. Hard to be working hard doing that. So what do you think after reading that mini novel ? should i put them in a LLC while im doing this? If i do i believe MI and Az are almost the same fees and costs to start. Should i put them all in one or keep the AZ home in Az LLC and the Mi ones in a MI LLC ?

I hope someone else can find inspiration by my story or if you are in similar situation maybe you can take part of what i did and run with it like a pair of scissors in your hand cutting through the mess thats blocking you.