Hey, everyone. I guess "new" is subjective because I've been reading this site forever. But after meeting Joshua Dorkin last fall at a conference I finally got around to signing up. (Sorry it took so long!)
My real estate experience goes back to around 2005-2006 when we bought our first house. Yes, we bought at the absolute peak of the bubble and have been paying dearly for it ever since. To make a long story short, we bought our first house then and lived in it for about three years. It was more of a starter home and not one to grow a family in, but then suddenly we learned that we had a baby on the way. We made it work for a while, but knowing we were going to eventually have another we started looking for something bigger.
Unfortunately, given the fact that we bought at the peak, probably overpaid, purchased with very little down, and the state of the Michigan market, we couldn't sell. At least couldn't sell it for enough to even pay off the mortgage. So, we kept the house while going out and buying another one and planned to rent the first house out knowing that we'd still be losing money each month, but losing a few hundred would be better than losing $1200.
I knew being a landlord wasn't going to be fun, and I was right. It took a while to even find a tenant. And while the tenant seemed like a good fit, it didn't take long before the rent payments started coming in late and the excuses kept coming. After about 8 months I started the eviction process. Got her out peacefully, but the damage she left behind was not what I was expecting. Had to get new carpet and paint throughout, replace a door, gut a bathroom, etc.
Luckily, we got new tenants immediately, but it's both good and bad because it's family. Good because they aren't going to trash the place and always pay the rent, but bad because you don't want to do business with family.
That being said, the place is still losing money, which sucks. I tried to refinance the place last year, but nobody wants to touch it. Even with HARP, HARP 2.0, I'm coming up empty. The 7.5% we're paying on it now is ridiculous.
I recently sold a large chunk of my business and now I'm sitting on some cash and want to transition into real estate full time. So, going forward my real estate plan breaks down into three main goals.
First, I need to tackle our current rental property. The bleeding has to stop. I could pay it off if I really wanted to, but that would drain way too much of my working capital. With money as cheap as it is these days, I want to utilize leverage as much as possible there. I don't even know how much the house is really worth, but I'm guessing our LTV is around 125% today. Either way, I've got to find a creative way to get better loan terms so the property is at least breaking even. I don't care if it makes me money, but I'd like it to stop costing me money.
Second, I'm looking to turn the cash I have now into a small portfolio of rentals. The good thing about the Michigan market around me is that even though home values have fallen greatly in recent years, rents remain stable. So, there are a lot of inexpensive properties out there that can still command good rents.
Third, I'd like to try rehabbing a house or two. Nothing crazy, but there are a lot of homes around here that could use just a little TLC, and a lot of very motivated sellers, that there are some gems to be had. I'm not much of a DIY guy, but I have some existing connections that would help there.
Wow, that was long, sorry. But I guess that doesn't leave too many stones unturned. The main reason I finally got on here to post was I really need a kick in the pants. For two years now I've done nothing but waste countless hours researching local properties, going to see various properties, and wade through this huge stack of prospects only to never pull the trigger. I need to put on my big boy pants and make a deal already. So, I'm hoping by being more active here I'll get that virtual kick that I need to make something happen.
