Re: Beginner+ $30,000 line. Where to start? - Posted by arlan
Posted by arlan on April 28, 2010 at 09:58:55:
Find a cheap house. I mean cheap. Lets say 15,000-20,000. Use the balance to fix up, modestly cheap. Then rent it. Now you are an investor. Then go to a local bank or S & L and get an equity loan on this free and clear rental property. You could probably get 80% of the BPO or drive by value of $30,000. Take that $24,000 and find 2 really cheap foreclosures. They are available. Use what ever cash you can scrape together, Zero interest credit cards, etc. to fix them up a little to rent. Then get equity loans on the 2 new deals, Lets say you get $18,000 each. Buy 2 more houses. Now you have 5 rentals. Monthly net cash flow of $1,000.00. Then take the portfolio to a different bank because the first will not give more than 6 equity loans, and get a $150,000 line of credit. After paying off the equity loans of $60,000, buy 5 more cheap houses. Now you have 10 rentals. Before you know it you will own 34 rentals, 3 comercial buildings, a vacation double wide in New Mexico(also rented out on a short term basis to pay for, owe the bank lots of money that my tennants are paying for.
I also do a couple of flips per year, and build 1 spec new construction at a time. About 2 per year.
Cheap houses make money. Especially stinky houses that no one wants.
That is my story.
PS - My first rent house was purchased in the fall of 2003. I have been full time in this business since August 2005.