All Forum Posts by: Paul Farley

@Paul Farley You are posting on a public forum. Put 20-25% down and buy conventional. Otherwise you are asking how you can commit mortgage fraud. If convicted you could get accommodation in the nearest fed pen for up to 30 years and $1,000,000 fine. The other option is to move into the property.

Hi Paul, 

First off, if you haven't already, I'd join your local REIA - we have a monthly main meeting and regular focus groups throughout each week, of which are free to attend. Check out our website - InvestInStark . com This is the best way to get to know local investors, contractors, vendors, etc... There's a Saturday breakfast coming up this week you might want to check out.

Second, it all depends!  It depends upon your background, your interest, your available time, your knowledge, are you a DIYer, are you a hands off guy, etc... Only you can answer these kinds of questions to help you narrow down the best path for you.  Many educational references listed in prior posts are great recommendations - now just add some local activity to start networking.  

Welcome to the club - Stark County is a great area to invest!   

I would open up a whole Life insurance policy- (Only work with people that understand real estate and over funding the account- and no I don't sell it) then use that money you put in there to get financed for investment properties and only put down 20% SF, or 25% small MF. Then I would diversify between SF and small MF-- housing is NOT a luxury, its a necessity and a housing shortage is here and people need safe housing. 

Be careful. When you ask people to help you spend money, a lot of people are happy to help you spend your moeny.

If you are eligible for a house hack, I would start with that. If your life situation doesn't enable you to purchase a live-in rental, then I would consider a single-family up to a fourplex with a conventional loan. Your market should be affordable for something.

It sounds like you're in the early stages, so let me give you some basic advice to start educating yourself. If you've already done this, then ignore me.

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the BiggerPockets podcasts. This will clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. BiggerPockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.

5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.

6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.

Paul, 

Always great to see someone local on the forums. I'm located in Jackson township as well. Happy to connect.

@Paul Farley

"-how often do you have to pay federal income tax and how does this work? For a business like mine which will be paying out almost all monies to the owner is the income tax based on the amount received in sales or net income/loss?"

Assuming a sole proprietorship / disregarded entity, you'll file Schedule C with your 1040 and pay income tax and SE tax on your net taxable income from the activity.  "Paying yourself" as a sole proprietor doesn't reduce net taxable income, it's just a distribution -- kind of like moving money from one pocket to another