All Forum Posts by: Eli Covarrubia

Hey Eli,

I applaud you in your willingness to start building your future. I too am JUST starting off in real estate investing. So, in regards to tips in real estate I cannot help much as I have just as much to learn as you do. However, I can give you some tips on building credit. As someone had already mentioned, I would start with a secured credit card. You can start one up with a local credit union or the bank that you currently use to hold your money. I would recommend a credit union because in the future you might need them for an auto loan, mortgage or maybe even a personal loan so it is always good to have a good proffesional relationship with one. If you don’t already know what a secured credit card is - it is a credit card you open using your own money as collateral (i.e: If you put 500$ into it, this would be your max limit). I would use it for simple stuff. Gas, food, etc. A good rule of thumb is to keep it between a 5-10% untilization. So if the limit is 500$, always keep the balance around 25-50$. This, in turn, will show that you can hold a credit card responsibly. I would not worry too much about the rates, as credit card rates are typically higher. Also, if you pay the card off before the statement closes each month, or pay it down to the 25-50$ balance, the interest charge will be next to nothing. Remember, the goal here is to build credit, and it does come at a cost.

Also, depending on how your financial situation is and how soon you want to purchase your first home, I would recommend a SMALL auto loan, as these are one of the easiest to get with limited credit and a decent rate. The mortgage company is going to take this loan into consideration with your credit card company as debt to income so make sure it is a small payment. This is one of the easiest ways to get a loan and build credit. If you have a co-signer with great credit then you can a very good auto loan rate.

I must admit though, I am, by no means, a financial advisor. But I do work in a finance department in the auto industry and far to many times I see young adults your age come into my office with below average credit due to bad financial decisions.

Live within your means and start ASAP. The sooner the better.

Sorry if the reply was a bit long. But I hope it helps.

Good luck!

Eli,

Multifamily properties are a great choice for cash flow if you can find one and make the numbers work. The beauty is allowing one or two tenants pay your bills while you work a job to fund the next one. 

However, if you're able to live with your parents while building an amazing foundation for your future. March on buddy. Just remember to keep your wonderful family happy. That's a huge gift brother, so don't take it for granted.

So about your credit score or lack of. I'm not a financial planner or adviser but if I had to do it again. I would find a secured credit card with the lowest interest rate as possible. You'll have to essentially give them a couple hundred dollars as "collateral" and you're set. Look for the lowest fee as possible or one with no fee at all. 

The goal here is to show you're responsible with your finances. Don't max it out and then pay it off. Carry a small balance and pay the minimum bill plus a little extra each month. Yes this will cause you to spend a little money on interest but the goal is to make you look like a money managing superhero. Don't close credit accounts unless you absolutely have to and remember the earlier mention of debt to income. The basic idea is to show a responsible history. Not a huge balance run up and pay down. Keep that up and you'll look amazing in no time. 

Do yourself a favor and put the subject of building the perfect credit score for buying real estate on your research and reading list. 

And you specifically asked Joe Hines this one but my current area is three parallel streets in a close by town and each road is about 1/4 mile long. So literally 112 houses to look at. 

You have to know your area. First off you should ask yourself why would someone want to live in this specific city or town then why on this street, then why on this end of the street and then why in this house.

There has to be a draw to the area you buy a rental in. Usually people don't simply say I'll live here because it's pretty. They choose the area because of good schools, because the home is close to the Walmart, mall, hospital... something like that.

What Jeff and Rudy have posted is excellent advice.  To round it out with a few specifics:

I'm a big believer in researching an area, knowing the market (income, rents, appreciation, industry, etc) and building a team.  Electricians, plumbers, real estate agents, property managers and even people at the county tax offices can be very helpful to you. 

I've also found it valuable to subscribe to various forums.  Over time, you'll be able to answer questions and you'll learn a lot from looking at answers from others.  

@Eli Covarrubia

And just adding to what Jeff eloquently wrote. Since, you mentioned you just got a job. 

If, you are working for a company that either has 401(k) and or 403(b), basically retirement plans. 

If, they match any contributions towards your retirement, please match it at the very least. 

By the way, I purchased my first house at 26. I challenge you to beat me :)

-Rudy Vazquez

Since no details were given to income or current situation. I'll start off with a few general bullets.

#1 Save your money for a down payment on a property which will allow you to live in as well as bring in some additional cash for your real estate journey. Duplex or bigger if you can. 

#2 Do not buy a nice... anything. Stay away from cars, trucks, boats... You will have plenty of time for all that later.

#3 Read everything here at BP and read Robert Kiyosaki's book "Rich Dad Poor Dad" this week.

#4 Your credit matters when you start dealing with lenders so be smart about building a good score while keeping your debt to income as low as you can.

#5 Even if you don't agree with everything Dave Ramsey has to say about finances. He does have a wonderful slogan to live by. "If you live like no one else, later you can live like no one else". This basically means be smart, think about your goals for the future, stay out of stupid debt, reference Robert Kiyosaki's book above.

#6 Surround yourself with people doing what you want to be doing. Go stuff envelopes for an active investor, realtor or Broker. 

#7 Research your areas real estate groups. They're meet ups in towns and you'll get to talk about real estate and real estate related topics in person with people doing it. Talk to an agent, they may be able to point you to one.

#8 There's an enormous amount of information out there but remember this key piece of advice. You can move mountains with other peoples money if you know what you're doing BUT CASH WILL ALWAYS BE KING!!!