Posted by Ed Garcia on September 19, 2003 at 11:16:04:
Matthew,
It?s interesting on how you?re trying to hedge real estate with off setting funds. In the industry we would call this a SINKING FUND. It?s also interesting about your theory although it?s currently being done all of the time with sinking funds, mutual funds and diversification of investing portfolios etc.
Terry Vaughan and Hugh Broma are working on an investor insurance program with just that thinking process in mind. I don?t use the word theory because the concepts are currently being used, but with different terms defining them.
But it looks like you?ve had some fun in being creative and brain storming to learn about investing. I sincerely wish that I had the education that you have received but unfortunately I didn?t and learned from the street. The street can be a good teacher and I must admit that even though trial an error can be expensive, you learn fast.
So thanks for sharing your theory with us and now let me address the other concerns of your post.
I think that I will be able to afford my first piece of equity property. My big question is how to get financing for homes with the greatest amount of leverage. How do I approach banks or finance companies to lend to me despite my limited experience? I have an excellent credit history despite it only being 2 years old with a FICO score of about 750. I have no personal debt and no school debt. Fortunately, I had a sponsor that paid for my tuition and housing, and avoiding me the pain of undertaking 170K in school loans. Also, what type of downpayment can I reasonably expect to dole out for my first property? Are there resources that I can use to attract equity investors?
You?re covering a lot of territory here Matt my boy, so let me break it down.
I think that I will be how to get financing for homes with the greatest amount of leverage able to afford my first piece of equity property. My big question is. How do I approach banks or finance companies to lend to me despite my limited experience?
Matt, I like the fact that you?re thinking big but, we have to crawl before we walk, and walk before we run. It?s great to plan and think ahead, but let concentrate and focus on your first deal. You have indicated that you have at least a 2 year credit history and a credit score of 750. If I were in you shoes, I would go for a 4plex for my first deal I would purchase it owner occupied and have off setting income from the other 3 units.
The deal being owner occupied, with your credit, you should be able to do 100% financing. Matt I would like to bring to your attention that we are talking about conventional, institutional financing. For that matter, you don?t have to have credit or conforming qualifications if you choose to do a Lease/Option, Seller Carry-back, Land Contracts etc. Many investors start out with no money, no income, and no credit, and these are the techniques that they use.
I?ve just looked at my clock and realize that I have to jump in the shower and get my day started, so I have to run. I hope I?ve given you some food for thought.
Ed Garcia