Posted by Claudia on April 30, 2006 at 08:01:53:
John,
No worries. 
We might do that. We’re in Redmond, WA and the REIA chapter here has their next meeting on May 16th. If they don’t pan out, the Seattle chapter looks to be quite active.
Thanks again for your help!
Claudia
What’s the Best Approach? - Posted by Claudia
Posted by Claudia on April 29, 2006 at 11:32:33:
My husband and I own a townhome (our primary residence) in a very desireable Seattle neighborhood (appreciation rate of 17.5% on avg./yr.). We are in the process of refinancing so as to get a better loan structure and to pay off our credit cards. This will not quite max out our equity.
We have strongly considered real estate investing for some time now, but never thought we had the wherewithall to do so. This latest refinance, however, has us questioning whether or not this is true.
Although we have a relatively high debt-to-income ratio, we have good credit scores (both above 700). We see real estate as being a great avenue for improving our net worth.
My questions are: is it realistic for someone in our situation to get started in real estate investing and, if so, what would be the best approach?
Thanks!
Local REIA - Posted by Martin Greenberg
Posted by Martin Greenberg on May 01, 2006 at 07:55:12:
Dear Claudia:
I belong to the local real estate investment club, REAPS. It meets the 4th Thursday of the month on the main campus of the University of Washington. In addition, there are subgroups that meet in the North, South, and East sides of the county. This past week we had the lovely Vena Jones-Cox who spoke about how to find motivated sellers and wholesaling. Check out the website @ reapsweb.com or go to the club list on this site. There are a lot of newbies at the club right now.
Marty
Re: What’s the Best Approach? - Posted by John Corey
Posted by John Corey on April 29, 2006 at 17:52:41:
Claudia,
I am south of you in the Portland metro area.
I need to burst your bubble a bit before encouraging you to invest.
The problem you are having is you spend more than you make. Simple way to improve the situation is to spend less. You got lucky in that Seattle has risen for a period so you can suck money out of the property to pay for the lifestyle you already paid for on a credit card.
Understand very clearly that 17% is considered extremely high appreciation. It does not happen every year. If you looked up the Seattle statistics you would see that 17% is clearly the exception.
Flash back - there was a billboard asking the last person to leave Seattle to turn off the lights on the way out. Houses were being given away and they were not appreciating. It was a while ago. There is no specific reason why it could not happen again.
If you have no credit, no cash, no equity but are willing to work you can still find deals or make money investing in RE. It just is a whole lot easier to do so with good credit, cash to work the deals and a monthly outgo that is easy to cover with one salary or less.
As to best approaches. There is no one answer.
Look at your present situation. With good credit but no really cash to work with you can focus in areas where credit matters more than cash.
Look at your present skills or other details related to your lives. Maybe you are a license contractor. Or someone you know has a lot of money but no time to look for deals. Or your husband is a lawyer and deals with probates.
May times people will be told to focus on flipping and other ways to get in and get out quickly with little to no money invested. It is not easy and in some ways it is just another job. What it can do is produce lumps of cash that you can then use as working capital on later deals. Dutch will tell you to check out Bronchick’s book on flipping (Bronchick is a moderator on the legal forum and has published a number of things).
A realistic way to start is to decide today to spend less and pay cash for things until you have the budget under control. Do that while learning about RE. There is more than one RE investor group in the Seattle area. Go to some meetings. Get the Bronchick book and start dialing for dollars. Or get the recent book by Conti that talks about how to start (100 calls a week). I also like the Weekend Millionaire book as that has an 8 week plan in the back and assumes the investor has a full time job.
The hardest thing will be changing you present lifestyle so you have the time, dedication and cash flow to invest. If you do you will look back and kick yourself for not starting earlier. In the early days it will not feel so easy.
John Corey
PS. Well done on the credit score. The easiest way to keep it high is to not apply for loans. As you likely will be doing so expect the score to bounce around. Try to minimize the number of times you apply and the number of loans you hold in your personal name if you want to keep the score up.
Re: Local REIA - Posted by Claudia
Posted by Claudia on May 01, 2006 at 18:44:18:
Martin,
Thanks! I see that the Eastside chapter has a meeting 1 week from today. There’s also the NW Real Investors Assoc. that meets the 3rd Thursday of each month. How long have you belonged to REAPS?
Claudia
Re: What’s the Best Approach? - Posted by Claudia
Posted by Claudia on April 29, 2006 at 20:43:43:
John,
Wow! Thanks for all of the data. I probably should have clarified a few things for you so as to save you some time. We actually don’t have a spend-more-than-you-make mentality (which I know is the first thing one might think of when you say “credit card debt”). The use of the cards was simply to invest in further training for our careers that has paid off 3 fold. That was done before the spike in equity and the recent restructure was to get out from under the yoke of interest that was non tax-deductible while we paid it off. We never use credit to purchase consumer goods. If we don’t have the cash for it, we don’t get it. Sorry for not clarifying that.
That said, it looks like you recommend, at least initially, focusing on either freeing up some working capital and/or perhaps hooking up with someone who has the working capital, initially, in order to do a few deals while furthering our knowledge of the real estate investing field. I’ve located an RE investor group here and am planning to go to the meeting coming up next month. I’ll hit the bookstore for the books you mention this week.
Thanks also for the tip on how to maintain our credit score.
Claudia
Re: What’s the Best Approach? - Posted by John Corey
Posted by John Corey on April 30, 2006 at 01:04:29:
Claudia,
I could have asked before posting. The mistake(?) was shared.
If you can consider a trip down to Portland. The REIA is very active (www.nwreii.org). John Merchant also knows of a group in the Tacoma WA area.
John Corey