All Forum Posts by: Greg Scott

Lifestyles Unlimited has an office in your back yard.  You are lucky.  I fly to Texas 4x per year to attend their events.

@Katie Miller

You are going to have a major sample bias on this survey.  How do you reach new customers by asking your English speaking customers if they want this in Spanish?

No se puede!

@Matt Ott makes a good point.   I just assumed that you would want to pay down your student loan debt.  Most people have a hard time with the idea of carrying debt, particularly student loan debt, and given you are new to investing, you might not yet have the confidence you can achieve double digit returns.  So, it is true that if I were in your shoes, I would put as much cash towards investing as possible.  That student loan debt is relatively cheap.

The answer to your question is simpler than you might think.  

Your student loan debt at 4.5% is your key hurdle.   If you can find a house hack that makes you more than 4.5%, then that is your best strategy.   Realistically, in Tennessee you should be able to find properties with double digit returns.   As long as you don't stretch yourself to thin fiscally, the house hack is almost certainly the better financial decision.

@Kevin Scott

Coincidental last name, but I do not believe we are related.

I've been with the same company for 22 years and am now quite disappointed that for 18 years I diligently maxed out my 401(k).   Now that I know how to make money in real estate, I often don't contribute, or when I do, I do the minimum to get matching funds.  I do everything I can to get money out of it now, including getting hardship withdrawals (which I don't really need, but are totally legal) against my kids tuition bills.

If I had not so diligently funded my retirement account, I would already be retired!

@Tom R.

Yes, but there may be other reasons for renting vs buying.

I have one property in a B+ neighborhood, a great location.   My property manager put it up for rent and he said he was flooded with applications.   He said he was shocked because he had to turn down an MD with an 800 credit score because he got another application from a consultant with a 7-figure income who wanted to pay 3 years rent all at once!  That person could have paid cash for the house without blinking an eye.    

So, you never know.

Tim:

I suspect that Wells Fargo's actions were not altruistic.    Banks sometimes donate houses that are in really poor shape because it is the way to get rid of them at the lowest cost to the bank.

You should be VERY cautious.  Here are things I would check.

 - Is the neighborhood in a war zone or in a remote location?  It may not be worth the trouble to rehab it.

 - Get an inspection.  The thing may be ready to fall apart.   Some houses should be torn down rather than rehabbed.

 - Close with full title work.   You don't want to get the deed and then find you owe $25K in back taxes.

Thomas:

Congratulations on your first deal!  You are already way ahead of most people because you took action.

Be forewarned, you will experience some bumps in the road and feel sick to your stomach at times.  Keep pushing through and you'll be fine.  Real estate is a pretty forgiving business.   Just don't stop moving.

Some reactions to your post:

 - Given the low price he is asking, the other investor may be able to land a 760 credit score.  Obviously  he has a different model.   Over time you can figure out what works best for you and your personality.

 - I don't normally provide a fridge for my SFRs but had a couple where I inherited one.  If you can avoid buying a fridge.  They always seem to result in service calls.

- Tenants definitely pay for trash. Unless it is a requirement in your community I'm not sure why you would keep it in your name. My SFR tenants take care of all utilities.

Rachel:

I have 9 rent properties in DFW.  The sweet spot in that market are homes in the $100 to $200K range.   Properties below that amount can be in difficult neighborhoods with security concerns.  Houses above that range just don't cash flow well.   Why?  You can't rent a $400K house for 2x a $200K house.   You are better off owning two $200K rentals.

Here is my recommendation.

 - Sell the house and pocket the $215K

 - Set aside $70K for your next property

 - Pay off most or all of your student loan

 - That leaves you with about $45K for investing.   This is plenty to get started

 - With the first $500, join Lifestyles Unlimited.  They are a real estate education and mentoring group with thousands of members and they have a large office right in your back yard.   Las Colinas.   My wife and I have already flown into DFW 3 times this year to attend events at their office  They are that good.

 - After you learn the ropes, go out and buy 2 SF rent properties to generate $1000/mo cash flow and use that to start saving for property #3.

You will be amazed at how fast your wealth and passive income will grow.

Janathan:

There are lots of loan products out there, so expect that somebody probably offers that sort of feature.  However, I suspect it would not be a good debt product.  By definition, it is not going to be a conforming Freddie / Fannie loan so you would be coming from a private lender.  That means you would be paying higher interest on the debt.  If you haven't used your 10 loans up, it is probably better to use that and set aside money for a rainy day.

Instead of seeking debt solutions, you should be seeking deal solutions.  If you find properties at a good enough price that they cash flow well, you don't need exotic financing to solve your problem.

Good luck.