Monday, March 14, 2005
Another Prospect
I found another prospect from the daily listings I get from my agent. The list price is $75k, and I can probably go as high as $65k. In my previous blog entry, I stated I couldn't get another property the conventional way unless it was for $50k or less. I figured for this property, I could borrow $15k against my 401k and foot the remaining $50k in a conventional loan. That should please my loan officer. Of course I'll probably bid smaller ($60k) first to test the waters, but I'm thinking a price closer to $75k will probably get the house. If it requires more than $65k, I'll have to back out, since a $65k purchase would probably only net me $10k in the end (which is the lowest net gain I'm willing to take). I haven't seen the inside (or even the outside) yet, so I'm guesstimating repairs at $3k for now.
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2 comments:
I just recently stumbled onto your blog here and think it's great. By coincidence I am also in the tech field, live in the same area (PF) and have similar REI goals. I'm probably a couple months behind you - still learning, no offers placed yet.
Is it the flipping approach that is keeping you from being able to finance another property? That is, would an institutional lender be more likely to give you another loan if you had cash flow on the first property to service the debt?
I don't know the answer yet, but this was one of the assumptions I made and why I chose to go the rental property route initially.
Hang in there and keep up the good work!
Martin - Glad to meet you. I know of several investors in my farm area, and I look at them more as colleagues rather than competition. One thing I've learned over my brief history in this venture is that there are more properties out there to be gotten than one thinks. When (not if, but when) you get to the point of making offers, you will find this out. The vast majority of your offers will be shot down, but you'll see the availability of properties to be enormous. Also, you will find properties that you just don't want for whatever reason (i.e., not your type, too many on your plate already), and can pass them on to other investors with or without a fee. This is the main reason to look at other investors in your are as friends instead of foes.
I would imagine as I get more cash reserves (and/or properties), lenders will be more open to lend me more money, but this is just a guess. I have personal debt that also plays a role in getting more loans. However, these are with conventional lenders. HML/PML's usually couldn't care one what your financial situation is like (for the most part). They only want to see that the property has potential to make money.
Best of luck!
Danny - Thanks for the kind words! EVERY investor out there has had to start at ground zero. If you read my blog, you'll see the barriers I've encountered along my way (wife, friends, time, money, and so on). You must make it a point every second of every day to look past the barriers and keep you end goals in sight. Don't take a vacation from your venture, or you'll find yourself 10 years from now wondering what happened to the dreams you had.
Thanks again!
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