Lately I've been going to more real estate meet ups in my local area, and I'v notice a shift change in my presence. When I first started going before I did any deals, I was always the guy asking questions, trying to pick all the experience out people's brain as I could. Now lately when I have been attending I started to notice that I was telling my story to a lot of new guys who want to get started. Then I realized that there was value in my real estate experience, no matter how much or little I had. Which lead me to want to share on bigger pockets because I'm sure some one would be able to take something from my story.
I'll just jump right into the first deal. I've known since I was in college that real estate was the place I wanted to be. I was fascinated by the idea of owning a property and having some one pay you to live there and you make money at the end of every month for providing housing and keeping them happy. I've always wondered how does an inner city kid like myself with no money, or family or friends to get help from in this space get started. The first thing I did was turn to books, I began reading everything I could find on real estate to build a knowledge base of the field. Then I started speaking to people that seemed like they could guide me in the right direction. I ended up sitting down with a mortgage broker because I found out that having the money lined up or being able to buy was most important. During our conversation he told me about a program that would allow me to purchase a property with only 3.5% down. From there I had goal in mind and it was my focus for the next few month. I was able to land a job teaching right out of college and I went back home with mom. I paid my mother $300 a month and saved everything else that I could in order to get the down payment money I needed to buy my first house. I saved up $15,000 and bought my first 3 family home just a year after graduating collage.
Now I am in the game, I'm 24 years old, I own a home and I'm a landlord. The FHA loan is a great way for beginners to get started, the only problem is that this trick only works once. Even with the additional income from the house, it would still take me a substantial amount of time to save up 20%-30% down for another property. Back to the drawing board, I'm reading books and calling mortgage brokers all over the state to see what I can do to get around such a large down payment. I start to get the feeling that there is no hope as the months go by and my bank account is not growing fast enough, especially with all the un expected expenses for the house and evictions with tenants which I can cover at another time if anyone is interested. In my time of desperation, I hear something about an educational program (which I will not disclose right now) that help beginners grow their real estate business. I'll keep this part short, lets just say that program was very expensive and I didn't have the money to pay for it. But these guys are smart and they know that many people would come across this problem, so they actually have a department to help people increase their credit card limits to be able to afford it. In just a week I was able to increase my total credit limit on 2 cards from $5,000 to $35,000. Through speaking with the credit card company call receivers, I discover a way to get that credit transferred to my bank account interest free for and extended period of time. Now I'm left with an ultimatum, I either spend this money on an expensive educational course or use this money to go fund my next deal and get real time experience. Now I've already been looking for a deal even though I did not have the funds. This $35,000 on top of what I already had saved put me in perfect position to buy my next deal, all I had to do was let the money get seasoned for 3 months and it was game on. This deal also had plenty of unforeseen circumstances which also can be tabled for another discussion. To keep this story short, after being under contract for 10 months, I closed on my second 3 family house. Ill give you some brief numbers on this deal an how it worked out. Total income on the house was $3,000 a month and the expenses are around $1500. I was also able to pay the credit card payments from the cash-flow of the house. I would put $500 towards the cards and $1000 in the bank for emergencies every month. Now I am in the process of doing a cash out refinance to pay the cards off.
Obviously there are a lot more details that goes in to both stories but you get the picture. A lot of people told me I was crazy to do that because of how risky it is especially with the high credit card interest or paying PMI on and FHA loan. But these are some of the same people with the same dreams as me, yet I now own 6 units and they own none. If you are going to be cheap or scared to take a risk, then maybe real estate is not for you. With every win, there are going to be loses but most importantly, experience is being gained. I always tell people do whatever it is you have to do in order to get started. It may not be the way I did it or any body else, it may be more risky or safer; but get started, slow progress is better then no progress and some money is better then no money.
Dashon Jones
Multifamily Investor
NJ Realtor
