All Forum Posts by: Rigoberto Medina

  Update 12/13/2019, this is more to log my progress as well as for anybody who might want to follow along on this journey. All credit cards, save for 1 has now been paid off. This includes my Amex, Captial one, Paypal Mastercard, and my USAA credit card...yeah, I had a lot of cards. The only CC left to pay off is my Amazon CC, which should get paid off next paycheck. I have to admit, this has not been easy, especially with the holidays. Additionally, in one of the previous posts, someone gave me the sage advice that I have to get my wife on board with this shift in mindset and stewardship of money, as that is what it truly is, and let me tell you THEY WERE RIGHT. There has been more than 1 long discussion, especially when thanksgiving came around and Christmas being right around the corner, but we have come together at a compromise. In the past, we would just go nuts buying gifts for the kids and each other, racking up tons of debt on our CC (embarrassingly part of the reason I have so many CCs, especially that Amazon card, but there it is) and then worrying about paying it off when we could. The compromise is this. As our CCs have been paid off, I have been locking them up in our safety deposit box, out of sight out of mind and the added hassle of having to go and get them keeps us from spending indesciminantly. We have decided that this year, and years going forward, we are budgeting for the holidays, limiting the number of gifts that we get the kids and each other and those gifts will be paid out of our bank account and not on credit. This will hopefully keep us from going crazy and spending as we have in previous years and racking up debt.

  The rough stuff out of the way, there have been some very very positive changes that have occurred due to this journey.  As of today, my credit score has risen due to paying off all the debt I have paid off thus far. When I started this my credit scores were hovering around the mid 600s but have now risen to range from 689 to 710, I signed up for credit monitoring as part of all this. I am not sure why there is a range, Experian has me at 689 and Transunion has me at 710, but credit scores are going up which is going to make getting financing for an investment property easier. I have always had a good payment history but my debt to income ratio is what was killing me. In addition to that, I have now started asking myself, "is what I am spending this money on going to return money into my pocket somehow or not" and basing my decisions on the answer. This may seem like a silly thing but I am now actively looking for assets instead of just nice shiny things that might look nice for the time being, trust me I really wanted a new bullbar for my truck, but ultimately it would just have been money that would have been sent out to die and not made to work for me. 

  Compared to a lot of people that have paid off their debts before me I have bearly taken the first step or two and I have many more steps to take. What I have realized thus far is THIS IS NOT EASY. It takes determination, it takes spouses being onboard and a willingness to work with each other and compromise, and it definitely takes a change in the way you think. What has helped me, I think, is that I have not changed the fact that I pay myself first. No matter what, the first 20% of my paycheck goes straight to paying off debt. I have a loving and supportive wife who, while she does not fully understand my shift in mindset loves me enough to listen and work with me toward our final goals, the communication I think helped us out, there were several discussions, lol. 

  This is getting long so I will close by saying, I am still on my journey. I started with a total debt load of $38,150 and am now down to $29163.52. I have been able to pay off just shy of $9000 in debt since I started 4 months ago and will keep on going. I will post another update in a month or 2. I hope this helps someone, it has definitely helped me. 

You can use a website like rentometer.com but probably the best way is to look in craigslist, local papers, or ask property managers. Another thing you can do is drive the area that you are interested in and if you see a for rent sign, call the number and inquire as to the amount

Hello @Dustin M Prasuhn, as mentioned above, most traditional lenders will require a seasoning period, though you may want to speak with several banks in order to determine for sure. Please note that I said several banks, different banks may have different seasoning periods. While you are there, it will also be a good time to speak to them about requirements for the refinance part of the your BRRR.

In general, you will need all the documentation of personal financial standing that you would need for a loan. You will need to show income, either W2 or rental income (please note that most banks will not consider rental income as income until you have proved steady rental income for 1 to 2 years.), they will perform a credit check (the requirements in regards to fico 8 or 9 scores will vary by bank so you will want to ask this as well). They will want information on the property that you are trying to refinance including improvements, etc. (they will want to know that you added value to the property so that they are not lending out a large amount on a property worth very little). Get to know your local banks, and don't discount the smaller banks, oftentimes they may be more flexible than larger banks and you may even stumble on portfolio lenders that you can leverage for deals in the future. 

Good luck and I hope that helped.

For anybody that might be following this post here is my latest update. The last paycheck I was able to get a little bit more over time so I had a little bit more money to pay off some debt. I was able to pay off my Amex card. I am paying off some of my smaller debts first, that one was only 1000 but I am now free and clear of that one as well as my Conns account. I get paid tomorrow and will have enough funds because of the overtime I got, to be able to almost completely pay off my 3000 capital one credit card. That will be the last of the small debts.....then come some of the bigger loans. I have only been on this debt payoff treck for a short period of time but I have already learned some valuable lessons. 1. I have created an account to hold my money until I have amassed enough to pay off the debt in full or pretty near it. This allows for 2 things, number 1 and most important, it keeps it out of my main account so I cannot see it and am not tempted to spend the money. 2. and this is kinda cool too, it is a Tmobile account, not sure if I can say the name here or not, I am not endorsing them or anything just saying where the account is. Why does this matter, well because while my money is parked in that account it is earning 4% interest on up to 3K.  I know that is nothing but it means a lot to me as I have made a decision based on return on investment instead of my old way of thinking. I just wanted to share. I will update again periodically to let anyone following know how I am doing with this debt payoff. Once that is done my credit should be in line and I will be positioned for investing. 

Great job! That is very inspiring to those of us who are just starting out. Keep up the great work and thank you very much for sharing. 

@Jerry Padilla is absolutely right. In addition, credit worthiness is huge. Depending on what lender you go to, you will need to have at least a 640 FICO to even get looked at and above 740 to get the best rates. You will want to talk to a lender 1st and get pre-qualified so that the refinancing does not bite you in the backside. Additionally, have multiple exit strategies. If lending dries up for whatever reason, how are you going to get out of the deal before it eats your lunch?

@Clara Brashear, there is a wonderful book on this topic in the BP store that goes into great detail but a short synopsis as follows: 1st and foremost it is a long term investment strategy, you are marrying the high points of buy and hold as well as flipping and what I mean by this is explained by the steps of the BRRR.

Step 1: Buy, you will be buying a home that needs rehab. Why are you doing this? because you can get them at lower than retail value, you can then add value to the home by way of the rehab (in this sense, it is very similar to the flipping strategy)

Step 2: You execute the rehab. This step is similar to the rehab step in the flipping model but there are some definite differences. For example, since you are planning on renting this out, the degree of rehab will likely be a little different. Material choices may be a little different, etc. What I mean by this is that you will have a property that you will keep for a long period of time, you will want to choose materials that will be as tenant proof as possible. 

Step 3: You refinance the property. This is where the strategy diverges from the flip model. You will want to refinance the property, this is because you usually aquire the property, to begin with using hard money or private lenders, which will normally have a much higher interest rate than traditional lenders. Additionally, when you refinance, you have a chance of getting most of the money you initially invested or all of it back. This last facet is what is so great because it allows you to scale this strategy. That finally leads you to the final step

Step 4: You repeat. After you get your initial investment back or at least a good portion of it, you find another property and do it all over again.

Disclaimer: there is soooo much more to it than what I listed above, that is only a very high-level overview. You will need to become familiar with finding the deals, financing the deals, rehabbing (this is huge, this can turn a good deal into a money pit if you dont know how to do it right), property management, and on and on and on. The forums are a great place to learn this, the search function that @Jim Goebel mentioned is a great place to start. Read, read, and read some more. There are so many great books out there that can educate you on what you will need to know. This business is a people business, develop relationships with people that are doing what you want to do and doing it successfully (I can't stress that last point enough. There are people that are "investors" but never have had a single property and will tell you all the reasons why it won't work......while never having really done it themselves.) Don't just limit yourself to investors, develop relationships with bankers, hard money lenders, contractors, etc. I have learned so much just from speaking with a couple of bankers that I took out for dinner. Go to local REI meetings but most of all, TAKE ACTION. It can seem like a lot but no matter your journey, its one step at a time. Best of luck to you.

@Steve Vaughan, thank you very much. That is so great that you were able to pay off that amount using this method, that helps confirm that I am on the right track. @Theresa Harris, thank you very much for the kind words. I love the support and accountability that the forums are allowing me. I think they are a super powerful tool.

@Brant Richardson, thank you very much for the advice. Once I fully trust myself, that may be a great strategy. I have a lifetime of bad habits that I am trying to break and I have been doing very good so far but I have not fully convinced myself yet. I have lots of people start lifting with me and hang for a short amount of time only to go right back to holding down a couch not too far down the road. Once I feel inside that I can fully trust myself with a large revolving credit account, I am going to do that and short circuit the compound interest that is working against me, coupled with paying everything off fast.

Another paycheck, another update. $1491 paid toward consumer debt. Conns account completely paid off, sizable dent put into my capital one credit card debt. Next paycheck I will continue paying off my capital one card and hacking away at this debt. Interestingly as soon as I started doing this we had 2 of our vehicle break down, luckily my wife's van was covered by warranty but still had to pay almost 600 for non-warranty repairs and my work vehicle broke down. Youtube and some sweat and tons of swearing later, I was able to save almost $1000 on the repair by doing it myself and stay on my path. $35,497 left to go. Seems like a big task but 1 debt has already bitten the dust and I saved a good amount on interest, feels very good.