Tales of a Blacknight real estate investor: The Beginning.

At the time of this writing I'm 36 years old. I read Rich Dad Poor Dad over 10 years ago. Probably closer to 15 years ago when I was around 21 years old. It was a life changing moment for me. I come from a small town in southern Mississippi called Soso with a population of 379 as of the last census.  In small towns like that I never had a role model of a successful millionaire investor to look to. People there graduate high school (or not) and go work at one of the local factories for a few dollars above minimum wage and that's how they live out their lives. Small yearly pay raises, punching the clock day in an day out. It's viewed as an honorable living there. Mississippi has statistically been the poorest state in the nation every since I can remember, and it still is. I love my home state, but I always wanted more. I almost felt embarrassed about it though and felt like talking about wanted more would in a sense be dissing the people from there. I just never could settle and have a regular job and punch that clock, live check to check and be satisfied, but with that being the norm where I'm from, I felt like an outlier. I left that area when I was around 19 and ended up joining the USAF. This was the best thing that I could have done as it took me away from southern Mississippi and took me around the world, putting me in Japan for 4 years and then finally planting me in Las Vegas, NV. 

This was in 2005. I ending up buying a Carlton Sheets course (No Money Down something something lol) but didn't take any action as the real estate market here in Las Vegas was at the peak of it's hotness and if you didn't know, Las Vegas was one of the places that were hit the hardest during the 2008 downturn with more foreclosures that anywhere else in the country. Property prices where going up thousands, sometimes tens of thousands on a weekly basis. My then wife and I ended up purchasing what you call a cookie cutter house (3/2 around 2000 sq/ft) for 330K at the end of 2005. The mortgage payment was around 2200/mo. That was the entire paycheck for the month for one of us. So my check would wholly go to pay the mortgage and my wife's would pay utilities and food for the month. Well as you can guess that was unsustainable and by 2007 that home was in foreclosure and ending up selling as an REO for 133K. 

Valuable lesson 1: Never buy more house that you can comfortably afford.....check

I went on get my Real Estate license and sold real estate here in Las Vegas between 2006 and 2010. I ended up landing an REO  account from Litton Loan Servicing through an outsourcer called California REO and built up to selling 83 homes in my last year. I've done over 1000 BPOs (Broker Price Opinions) so I got very good at pulling comps and valuing a  property. I had a blog that I wrote back then on a popular real estate agent blogging site. One day I wrote a post about the problems with selling REO properties. Namely how the real estate agent has to front the money for the management of the properties while they have them listed for sale and how after submitting for reimbursement that the "bank" can take anywhere from 30 days to up to 6 months, in the worst cases, to reimburse them. I mentioned Litton Loan in the post. Someone at Litton must have read the post (I had no clue my little blog was on the radar of anyone there) and didn't take a likening to me "spilling the beans" I guess on how they did business because the next day when I logged into my email, it was filled with notices that every property that I had with Litton had been pulled and reassigned to another agent. PANIC......that was an understatement. I called my connect at CalREO and she told me that she doesn't know what was going on, but that they got word from Litton to pull all of my properties. Like that I was down to virtually having no business overnight. 

Valuable lesson 2: Never put all of your eggs in one basket.....check

Valuable lesson 3: Never let your family's income be dependent upon someone else signing your paycheck because one day they decide not to and you're screwed........check

Valuable lesson 4: If you're stupid enough to not follow lesson #2 then don't write a blog post about anything negative having to do with the basket that your eggs are in.....check (but you really should follow lesson #2 so that you don't have to worry what you blog about!)

Valuable lesson 5: Better manage money so that your debt load stays at a level that allows you to cover your debts even if the basket with all of your eggs in it goes away overnight. 

So I was at a turning point. Try to reacquire another big REO account? That's a tough order. In any major city, there'll be a handful of big players in the REO agent game. In Vegas at that time the major players each had hundreds of REO listings and grossed in the millions of dollars / year in commissions. They could afford to do things like rent yachts an through parties for asset managers, get bottles and tables at the clubs when REO execs were in town etc. Things that the little guys just couldn't afford to do. I decided to go back to school to use my GI bill money for something else that I was passionate about instead. 

Leaving real estate resulted in my income dropping from a gross of 240K down to around 30K in the next year. This ended up leaving me unable to pay my debts and eventually declaring BK in 2013.

Long story short, I went to school for Audio Production to become an audio engineer. I've always loved music and would have loved to record music for a living. But life happened and I had a couple kids during that time. This shot a hole in my plans to move out to LA and bum it until I got a break recording. So I turned to another of my passions, computers. I ended up teaching myself to code and started a career as a full time software developer, tripling my income in a year. 

That leads me to today. I've got great career that I love doing. It pays me in the six figures. And I'm ready to start investing in real estate. This is the first time in a very long time that there's more money at the end of the month than month at the end of the money and I'm going to put that money to work. 

I'm challenged in that I have a high income, but my credit is still shot from those years of low income and defaulted debts. I've been working with a law firm to fix my credit and my scores have risen from the high 400s (BK is heck of a thing) to 609 TransUnion, 621 Equifax, and 623 Experian Score 8 which are still low but on the way up. I've become a bit of a credit connoisseur. Did you know that you a variety of credit scores with every bureau? Your Score 8 is the general one that you see for all three bureaus when you pull your credit yourself. But there are different scores that are commonly used by mortgage lenders. Namely you Score 5 for Equifax (currently at 618), Score 4 for TransUnion (currently at 667) and Score 2 for Experian (currently at 539.....I don't know why this one is so far off from the others). There's also different scores used for auto lenders, and different ones for credit card issuers. A good resource for checking all of your scores for every bureau is www.myfico.com . I pay for the service and get access to every credit score that I have and get daily alerts whenever anything changes. The law firm has been getting negative things removed and I'm sure by this time next year that my scores will be up in the 700+ range, but I'm too impatient to sit it out for a whole year just to qualify for mortgage loans at a good rate, so I'm going to target lower priced homes that I can get into for cash and rehab and rent out for good cashflow.

Back where I'm from you can find homes for 50K all day long. If you're cool with a rehab project then that price can drop down to around 30K and if you aren't afraid of the "Hood" then you pick up properties sub 10K that need rehab. These are great opportunities for buy and hold and I'm going to acquire at least 5 properties there in the next 12 months. I've got 5K in the bank. Another 10K or so on credit cards (I know, I know, I know that's bad juju, but it's there if I absolutely need it). I'm adding 1500 to 2K per month to my savings. My sister is my boots on the ground person back home. She's awesome and very business minded. She does all the research gathering on properties and she's one of those people that knows EVERYBODY lol. I mentioned how I didn't get a return email form the local credit union down there and she says "Oh you know your cousin Kenya works there in the loan department. You should just talk to her!" Or when I tell her that I have to call into the assessors office to get tax info manually because they don't have an online system there, she says "Oh, Ms. Rogers daughter Jasmine works up there, just let me know what you need and I can get it for you." Then my brother-in-law is a handy-man. Really he's an unlicensed GC. He can do it all, he just isn't licensed. So with that team, it get's me started investing there. 

I've found that it credit score matters more than income. You can make a million dollars but if you've got a low credit score a traditional lender still won't loan to you. I even applied for crowdfunding private money and got denied by two and the one that did approve reduced the 35K that I was asking for down to 12K at 30% interest! I'd be crazy to even think about taking that. This is why using the credit cards would be a much better option in the case that I needed that amount of  money instead of going to somewhere like that. 

I just got home today from doing a 11 hour drive from Denver back home to Vegas. I listened to about 10 episodes of the BiggerPockets podcast and man there was some valuable stuff that came out of that. One about a guy that wholesales land caught my attention, simply because it was something that he got into with only 3K in the bank. This is going to be my backup plan if I can't get enough financing for BRRR deals. He was spending a couple hundred per month in marketing and said that you can get lower cost deals for only a couple of grand. That's something that I can do all on my own without needing financing from anyone else. The time for sitting on the sidelines is over. I'm in the game now.