Doing REI Fulltime - Posted by IB (NJ)

Real Estate Investing
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Posted by IB (NJ) on July 31, 2001 at 21:20:55:

Jay:

The hard money I’m using is coming at pretty good terms in my opinion: 16-18% int. only and 4 pts. With the exception of paying the lender’s attorney fee, there are no other fees. I’d rather use my own cash for flips (if I need it) and to ensure my living expenses are covered as I adjust to my new life as a full time RE Investor.

And as you know, using hard or any borrowed money increases your leverage in the deal because you’re putting up very little if any of your own money. My situation is different because right now, I’m buying, fixing, and selling. I want to establish the cash flow first before I start getting into rentals.

On the two props. you’re considering, I woudn’t use a credit line to purchase. From what I see in REI, the credit line is more suited for flips and rehabs that you’re going to sell. This is because you can access the credit line anytime you need to and have cash available almost instantly. Pretty powerful if you’re using the promise of a quick closing to bring down the price when negotiating with a seller. The lender I’m using is promising a $200k credit line once I’ve done a few deals with her (I’m on my first one). This will be a big asset in my efforts to build a wholesale flip business. Especially if I rely on distressed properties like preforeclosures.

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Doing REI Fulltime - Posted by IB (NJ)

Posted by IB (NJ) on July 30, 2001 at 18:05:25:

Hi folks. I started rehabbing last year around this time. We are on our 5th rehab with 1 sold, 1 refinanced and rented out ($250 pcf), and the other two under contract to be sold. It’s been a rough road. But fortunately, RE can be very forgiving as we’ve made our share of mistakes and still made a nice profit. Thank you all for the help you have given me over the months.

But I would like to ask those who are investing in RE full time for some pointers on making the transition from glorified employee to full time Real Estate Investor. I’ve secured the major aspects of the business needed to produce income. I have a couple of reliable REO sources (Realtors), a good mortgage contact (looking for more), and most importantly a reliable hard money lender with good terms (can you ask for anything more from a HML?).

Now I need a check list to make sure the timing of the jump is just right (or as right as it’s going to get). Beacause I was consulting, I didn’t have benefits at my job. So there’s no loss there. I’m single so I only have to worry about feeding myself. I have an ample amout of savings and my debt (outside of RE related debt) is pretty low. I need to check into business related insurance (liability, health, etc.) I’m setting up the home office (laptop, fax, high speed internet access, etc. - I could use some advice based on how you guys have your office setup) I’m working on self discipline by working my day according to my ‘to do’ list. Am I missing anything?

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Re: Doing REI Fulltime - Posted by JT - IN (St. Barth, FWI)

Posted by JT - IN (St. Barth, FWI) on July 31, 2001 at 15:46:27:

IB:

It seems that you have some experience from this past year, so I am sure that you are anticipating most of what is needed. The only thing that I recommend to anyone considering this question and step, (or leap), is to try to postpone losing your income from the other source, (consulting), for as long as possible. RE investing is fairly flexible, and will accomodate many schedules, such as a part-time consulting position. Whne the income generating position is COSTING you MONEY, in other words, you know for lead-pipe SURE, that you can replace the time spent in (consulting), with time spent in RE investing, and produce a larger return, then “Cut er loose”, as they say. The trick is, “to be objective and honest about this”. I have seen many who (on paper) can go out and do thus and such, but when it come down to it, once you leave your position, or JOB, then RE ivesting is your JOB. Don’t think for a minute, that it doesn’t have it’s days that you don’t want to go to the office or find something else to do. Now, with that said, i would trade it for the world, because I have no pressure on me to produce. I have made it, and don’t need to buy or sell another house, but without that situation, Re investing can take on the same characterisitcs that we are all trying to get away from.

So, all I am ssaying, is enjoy where you are, with the iother income, as long as you can stand it, and then, and only then, go head first, all out. Until then, you may just have more income, or as much, with less pressure.

Just the way that I view things…

JT - IN (from St. Barth, FWI)

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Re: Doing REI Fulltime - Posted by mark - seattle

Posted by mark - seattle on July 31, 2001 at 02:50:39:

You might also consider widening your scope of business. Rehabbing is great and there is a need for it. But you might also consider flipping or lease options to generate more cashflow with less work. As a friend said 'the pen is mightier(or more profitable)than the hammer. Food for thought…

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Re: Doing REI Fulltime - Posted by Clare Z

Posted by Clare Z on July 31, 2001 at 24:17:36:

From what I have read, the main thing is to be “independently ok” . In other words, the money you are making makes up for what you are leaving. If you think you can pull it off, just do it. With the extra time you can learn more and do more deals.

An emergency rule of thimb is that 3 months of living expenses is the minimum to have in saving or liquid. Six months is better. Depends on your family situation and risk /stress tolerance.

Good luck,

CCZ

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Re: Doing REI Fulltime - Posted by jaim

Posted by jaim on July 30, 2001 at 20:49:42:

i am interested in rehabs.Which are the best places to learn how to do it (any book)?I know that the experience is 90%,but what is the best way to start ?
Is better to buy houses from hud? or other auctions or from people?Thanks

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Re: Doing REI Fulltime - Posted by IB (NJ)

Posted by IB (NJ) on July 31, 2001 at 16:06:45:

Thanks JT for your comments.

Right now, my job IS costing me money. It’s not just a matter of me not wanting to be here (because of course I don’t). But I come into the job and practically spend all morning on the phone and sending/receiving faxes trying to get deals closed. I’m starting to take days off just so I can catch up to my RE Investing. Additionally, my market is pretty hot. And we have some pretty good contacts that are making up a nice number of profitable deals. But in order for us to meet the demand and grow this baby, I need to quit my job and take some of the load off of my other two partners. Believe me, the last thing I want to do is leave my job prematurely. But when I realized that this job is actually slowing me up, I knew something had to give.

I finally secured a reliable and fair hard money lender for our deals. So now I can free my money up and start using OPM. I’m just waiting for a deal I have under contract to close. We should be getting a closing date any day now (If the BS loan rep gets his act together). This is the last deal that we had to do with investing our own cash. Once we actually close and I have a check in hand, we get our money out and I can submit my letter of resignation.

Again JT. Thanks for the words of wisdom.

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Re: Doing REI Fulltime - Posted by syguy

Posted by syguy on April 15, 2002 at 01:39:35:

Obviously a new interest in REI, but could someone enlighten me on flipping? Thanks in advavce. syguy

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Re: Doing REI Fulltime - Posted by IB (NJ)

Posted by IB (NJ) on July 31, 2001 at 12:56:54:

Thanks Mark. Actually on my to do list once I leave the job, are plans to build a wholesale flip business where all I have to do is make phone calls. But right now, rehabs is a god steady way to earn the income that will allow me to leave the job. And once I leave and work this thing full time, the ideas and vision I have for my business will start to materialize before my very eyes :slight_smile:

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Re: Doing REI Fulltime - Posted by IB (NJ)

Posted by IB (NJ) on July 30, 2001 at 22:12:17:

Kevin Meyer’s book “Buy It, Fix It Sell It: Profit!” was the best book for me. Start here on this board and try to meet as many helpful RE Investors in your market as you can. They can give you alot of info (although they may be stingy on contacts).

I buy strictly REO’s. I’ve never bought a HUD property but I know some on here have.

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Re: Doing REI Fulltime - Posted by Jay_TN

Posted by Jay_TN on July 31, 2001 at 18:16:34:

IB, what are your reasons for using hard money, instead of your own money? I mean, are you just going to stick you own cash in a savings account. I am in the same boat. I am doing REI full-time, but am 2 years out of college. I am currently buying, rehabbing, and holding for rentals. However, I want to buy and flip rehabbed properties to fill in the slow months and also bring cash to buy new rentals.

Right now, I’m considering two new properties, but am trying to decide whether to get mortgages, use a Line of Credit, or get a cash out refi on an existing house.

Email me offline if you’d like.

Take care,
jay

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Re: Doing REI Fulltime - Posted by syguy

Posted by syguy on April 15, 2002 at 01:45:50:

Could you explain REO^s. Thank you,syguy