Posted by evelyn on January 30, 2001 at 13:25:10:
I think I e-mailed you already from another address but anyway…I think I will be heading to Sarasota and Venice soon.
thanks a bunch, patrick.
evelyn
One man’s (semi-newbie) situation - Posted by Steve (OH)
Posted by Steve (OH) on January 30, 2001 at 09:39:43:
Hello all!
I have posted here several times with questions, however, have not provided any input to other’s questions as I never felt I had the experience. Also, I have been hesitant in posting any type of “success story” for fear of “jinxing” it…because looking back, I do feel somewhat successful to this point (BUT I HAVE A LONG WAY TO GO THOUGH!). But alas, here goes:
I am only providing this feedback as inspiration to those who are waiting to jump into this business and are unsure if it is for them. This will give you one other person’s experience to ponder.
I bought my first investment property (which was also my first house…had rented to that point) approximately 1 1/2 yr ago. It was a duplex so I “owner-occupied” it while renting the other side out. It needed some work so I got that done and ran up my credit cards in the meantime. The house, at one point was a mess. I can remember, after tearing out this old drop ceiling, staring at this big pile of ceiling (asbestos??) and literally starting to cry. I was alone, with a hammer in one hand and a key to a duplex that was unliveable and had a $103,000 loan on it in the other hand. Oh yea, and credit card bills at/about anywhere from $10-20k in my pocket (I ran out of hands). I cried because I had no idea how it would turn out, I cried because standing there in a literally condemned s-hole was not how Russ Whitney’s book “Creating Wealth” described real estate investing (I had just finished it). I had about 4-5 weeks to get this place ready to move into before I had to be out of my apartment. Well, long story short, it got done; I moved in; I got a tenant in the other half; I had the house reappraised and put a 2nd on it to pay off my credit cards and I lived there a year before buying a SFH to live in while renting BOTH sides out on the duplex.
Last year I found a SFH for 38k in a neighborhood that was OK…I knew it would appraise higher. I bought it with my credit cards (which I would not recommend unless you are very cautious and disciplined/organized to pay it off). I put approximately $1500 into the house and it appraised for 70k. I took a loan of 80% of that; paid off my credit cards and put approximately 15k (tax free) in my pocket. There is a tenant in this place who pays my mortgage with a little (not a lot) cashflow.
Found another SFH across the street and a few months later did the same thing…made a little less (14k or so…again tax free). Tenant in and covering mortgage with a little cashflow.
In October of 2000, I found a 12 unit for a reasonable price and by now had a line of credit on my own home (which we bought and rehabbed). Used that for the downpayment (which was only approx. 6k because seller carried back 25%)…put some money in renovations of the 12 unit and have it 100% occupied with some monthly cashflow.
I am looking at other properties as we speak for more buy and hold/solid cashflow opportunities, but am going to start lease-optioning/subject to this year…maybe do a rehab and am also interested in buying into some type of business that generates “passive” income for the owner (anyone have any suggestions??) but that’s another story!
I now have no credit card debt, control almost $1 million in real estate, have formed an LLC (looking into corp.), a decent “net worth” (although as Robert Kiyosaki says: “net worth doesn’t mean squat! The only way to measure your assets is by answering the question: how long could you live if you lost your job tomorrow. In other words, buy assets that produce cashflow.”) and can buy properties (SFH up to 75k or so) with cash after being at this for ONE AND A HALF YEARS. I still work a FT job…it is not too bad and strengthens me as a borrower for now; plus there is just something about coming to a job when you have income being generated elsewhere…I have my wife on board (just got married in Sept 2000!) and we are in the process of creating a five year plan to lay out some goals, etc. for where we want to be/go.
Make no mistake, this is tough work, but man is it fun. I love working the numbers, I love reading books/posts, etc. and I love it when I enter the title company’s office and I know a deal is going to go through and the little board says “Welcome Steve.” I ain’t rich, I ain’t what I would consider to be a “success story” and as far as I’m concerned, my business is in the 1st trimester of pregnancy of a life span of 75 years compared to where it will be in 5 years. But I feel good about what I have done and I hope all the true newbies will explore their options regarding real estate. It is an amazing business and the knowledge that exists on this board doesn’t mean a hill of dung if you don’t put it to use. Everybody knows at least one person who is incredibly smart, but poor as dirt and unmotivated as all get out. You just have to have the intestinal fortitude to take the first leap…after that, it’s only a matter of developing relationships to find or fund deals and managing your existing properties.
Best of luck to all the newbies - and thank you to all of the “experts” that spread their knowledge for free. I don’t imagine you will ever fully realize the impact you have had/will have on people’s lives.
Steve
Re: One man’s (semi-newbie) situation - Posted by Ray
Posted by Ray on January 30, 2001 at 20:50:56:
Steve,
Thanks for the inpsiration, I am doing my first rehab, and I know how you feel with a hammer in your hand and no end in sight. I am about 2 weeks away from finishing the job and taking a second for about $15,000 tax free. I should still be able rent with a little positive cash flow. So thanks for the help.
Ray
YAY STEVE! - Posted by Kate (VA)
Posted by Kate (VA) on January 30, 2001 at 11:49:44:
I think yours is most certainly a success story. Your story describes exactly the fear that has kept me ‘toe-dipping’ instead of jumping right on in the pool. Thanks for the encouragement. Will we be seeing you in Atlanta?
Kate
Re: One man’s (semi-newbie) situation - Posted by evelyn
Posted by evelyn on January 30, 2001 at 10:28:02:
Steve;
What a truly inspiring story! I have been proscratinating for almost 10 months. I went to the Legrand Seminar in Tampa in March 2000. Didn’t do very much, sent some letters to out of state owners, got not replys and gave up. However, I did discover this site, and it has gotten me motivated again ( or was it I need to get out of this rat race and stop being excited when I get an extra $50 on my paycheck?) This site has helped a bunch. I thought I had to KNOW EVERYTHING to get started. Now I know, that ain’t gonna happen, so I might as well get started doing something!
My mother is a realtor and refuses to believe creative real estate exists. Florida is a strange state. People with money move here all the time from up north and people are buying new homes cheaper than the ones already existing.
I know there are some deals out there for me, I jsut need to find them.
evelyn
Re: YAY STEVE! - Posted by Steve (OH)
Posted by Steve (OH) on January 30, 2001 at 13:14:36:
Not sure if I will be in Atlanta or not. I am going to Bronchick’s class in Colorado in Feb (I am in OH) so I kind of doubt I will go to Atlanta as well…
Thanks for the post!!
Steve
Re: One man’s (semi-newbie) situation - Posted by PatrickMD
Posted by PatrickMD on January 30, 2001 at 12:12:41:
Evelyn,
That was a really nice response to Steve’s story. Listen, my wife & I just visited Florida for the first time in September. There were two areas we were impressed with in terms of creative RE investment:
Sarasota & Venice. Sarasota is medium size while Venice is small.
We visited the Ringling Mansion Museum of Art near the main entrance of the airport. Make a right turn out of the airport gate. Go about 1 mile to a T intersection. The museum driveway is in front of you, right across the street from the last stoplight. (I doubt it’s for sale, but the rent, $9/day, has got to be one of the best bargains around! If you enjoy European painting and sculpture, this is THE BEST.) If you turn left down the intersecting highway (U.S. 41 south?), instead of going straight into the museum, there are nice 1930’s-1950’s “Florida tropical” style SFH neighborhoods on either side. A landmark is the Ringling Acadamy of the Arts on a left corner. As we were gassing up our rented Sebring convertible (another best buy - $35 a day at the airport!) across the street from the academy, we looked around at the neighborhood and said to each other, “HEY! There are some creative deals waiting to happen here!”
We went to Venice to attend a wedding. What a place! It’s one of only three cities built on the shore of the Gulf along the entire Florida Gulf Coast! The Intra Coastal Waterway also has an outlet to the gulf there, at Venice. A rail magnet built the original town as a resort and dictated the town covenents, which specify the town’s architecture style should all be Mediterranean. The planned result 100 years later is so cool! They must have a monster municipal Dept. of Public Works gardening budget. It looks like a Hollywood set! My RE agent cousin just retired there and told me the properties are a lot cheaper than you might think. (She said off season - I think that’s in summer - it’s a ghost town. Then, people literally give their places away.) We noticed if you stay away from the water’s edge and off the main blvds. - where there are certifiable millionaire mansions - there are neighborhoods of smaller SF and duplex homes from, say, the 1930’s - 1960’s. Some of the older ones have got to have some major equity. Even if you don’t invest in either of these places, we found they’re both a quieter side of Florida that are definately worth a visit.
I just hope you like gardens if you go there!