My situation, how would you proceed?

[Killbot]

Hi everyone, i'm new around here and would like some opinions from you folks.
i'll try and keep it short but heres my story and situation.
im 32 and my wife is 31, we bought our first house at 19 and 18, lived there for a few years then rented it out for a few years then sold it to build "the big house."
We lived in the big house for a few years until the market crashed. Ironically, as the economy was crashing both of our jobs cut hours right around the same time our ARM loan was adjusting UP (do they ever adjust down?)
Anyways, it was the perfect storm, bad economy, overpaid for home, ARM loan, less income, expensive wedding, car payments, etc. you know, the american dream! HAHA.
Long story short we lost the house to foreclosure and we totally re-evaluated how we do finances, moved into a one bedroom apartment and began paying off all remaining debt (the only thing we defaulted on was the house.) after all remaining debts and cars were paid off we moved in with relatives and saved for a house. We eventually paid cash for our house and are currently debt free except a credit card we had to use to replace our furnace right before winter. We also got sued for the deficiency on the foreclosure and had to pay for that as well.

So, now that we have finally cleaned up the mess we made we are ready to move forward.
We want to buy rental property but we are totally shut out of a mortgage for 5 more years because of the foreclosure. But we have a free and clear home worth about 150,000, paid off cars, and very little monthly expenses and around $4800 income monthly.
How should we proceed? Our thought was obtaining a HELOC on our house combined with some saved cash to purchase a rental property. Is this a good idea? We don't really want to wait 5 years but we also have great peace of mind sleeping in a house that cant be taken away (provided we pay property taxes) so we are kinda stuck.
What would you do?

 

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[jon.a]

Hi everyone, i'm new around here and would like some opinions from you folks.
i'll try and keep it short but heres my story and situation.
im 32 and my wife is 31, we bought our first house at 19 and 18, lived there for a few years then rented it out for a few years then sold it to build "the big house."
We lived in the big house for a few years until the market crashed. Ironically, as the economy was crashing both of our jobs cut hours right around the same time our ARM loan was adjusting UP (do they ever adjust down?)
Anyways, it was the perfect storm, bad economy, overpaid for home, ARM loan, less income, expensive wedding, car payments, etc. you know, the american dream! HAHA.
Long story short we lost the house to foreclosure and we totally re-evaluated how we do finances, moved into a one bedroom apartment and began paying off all remaining debt (the only thing we defaulted on was the house.) after all remaining debts and cars were paid off we moved in with relatives and saved for a house. We eventually paid cash for our house and are currently debt free except a credit card we had to use to replace our furnace right before winter. We also got sued for the deficiency on the foreclosure and had to pay for that as well.

So, now that we have finally cleaned up the mess we made we are ready to move forward.
We want to buy rental property but we are totally shut out of a mortgage for 5 more years because of the foreclosure. But we have a free and clear home worth about 150,000, paid off cars, and very little monthly expenses and around $4800 income monthly.
How should we proceed? Our thought was obtaining a HELOC on our house combined with some saved cash to purchase a rental property. Is this a good idea? We don't really want to wait 5 years but we also have great peace of mind sleeping in a house that cant be taken away (provided we pay property taxes) so we are kinda stuck.
What would you do?

Where?

 

[GuestUser113]

http://www.bankrate.com/financing/mortgages/fha-loans-after-foreclosure/

 

[randomnumber314]

What would you do?

No one can answer this really. You need to set a goal.

If you're going to get into real estate there are dozens of threads with awesome information. Only thing I can offer is learn to start using other people's money if your supply is so small.

 

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[CashFlowDepot]

You absolutely do not need to use bank financing to buy a house. There are so many other ways to buy houses or make money with real estate.

1. to build up your cash reserves you should do some wholesale flips.

2. Instead of buying rental properties, you can lease a house with the right to sublease it. You still get cash flow and are not responsible for repair costs which can be a big financial surprise just when you least expect it. It is a good way to get started. After you have paid the owner on time for a year you should ask them about selling you the house with seller financing or at least getting an option to buy it at a below market price.

3. You can buy with seller financing - you'd be surprised how many people will say YES if you just ask.

It is good that you are working towards creating cash flow so you have income even if the jobs go away.

Congratulations on cleaning up your financial mess! Good job.

 

[D11FYY]

You absolutely do not need to use bank financing to buy a house. There are so many other ways to buy houses or make money with real estate.

1. to build up your cash reserves you should do some wholesale flips.

2. Instead of buying rental properties, you can lease a house with the right to sublease it. You still get cash flow and are not responsible for repair costs which can be a big financial surprise just when you least expect it. It is a good way to get started. After you have paid the owner on time for a year you should ask them about selling you the house with seller financing or at least getting an option to buy it at a below market price.

3. You can buy with seller financing - you'd be surprised how many people will say YES if you just ask.

It is good that you are working towards creating cash flow so you have income even if the jobs go away.

Congratulations on cleaning up your financial mess! Good job.

Post is flawless.
I agree build up your cash reserves and play it safe until you grasp a knowledge of flipping properly. Once you do with trial and error you should be making a nice income in 10 years. Just be patient mate it will pay off soon enough.

 

[CashFlowDepot]

Flipping houses wholesale style does not require you to buy the house or spend any money to fix it up. It is much safer! It is called Flip deals because you get on option contract then wholesale the house "as is" to someone who wants to rehab. The whole process usually takes a week or two - from contract to buy to the day you get paid.

What some call as "flipping houses" is actually rehabbing houses requires either getting a loan or borrowing from a hard money lender, (unless you can negotiate to buy with seller financing), then getting building permits, hiring contractors and overseeing the rehab. It usually takes several months, while you are continually coming up with more and more cash to pay for supplies/contractors, paying utility bills, getting the lawn mowed/landscaped, insurance costs, etc. After it is all fixed up, you hopefully get it sold quickly but usually have to wait another 30 days for your retail buyer to get financing... and you finally get paid. It is a slow way, and more risky way, to make money with real estate.

Unless you really know what you are doing, know how to evaluate the retail price after repairs, know how to estimate repair costs and remember to add in all the holding costs.... you should hold off on doing any rehabs. There is just too much potential for a miscalculation which could eat up all your profit or even put you in the negative.

Start with wholesale flips to learn to negotiate, learn to estimate repairs, and make substantial profits while you are learning

 

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[CashFlowDepot]

Keep this in mind as you explore the real estate investing opportunities.

The day you take on debt is the day you sell your life to someone else... the lender.
If you take on too much debt you will be spending all your waking hours working to pay back the debt.

The result is that you will not have any freedom to enjoy life.

Instead of debt you can

1. just get an option on a property then sell it for more than your option price

2. joint venture with someone who will put up the money, you find the deals and put up your time - then split profits.

As much as we think that everything will work out with real estate deals, sometimes it does not. If you have debt, you still owe the money. If you can't pay back the money, you will be foreclosed on and your credit rating will be damaged for many years. But even worse, your dreams of making money with real estate and obtaining financial freedom will be lost forever.

Learn to buy real estate with NO DEBT.

I've been doing it for 20 years so I know it can be done and done very successfully.

 

[PSDSH]

Last I heard, foreclosures only affected your ability to get a loan for two years...bankruptcy seven years. I'd check around for loans. How's your credit score?

 

[Nosferatu]

Keep this in mind as you explore the real estate investing opportunities.

The day you take on debt is the day you sell your life to someone else... the lender.
If you take on too much debt you will be spending all your waking hours working to pay back the debt.

The result is that you will not have any freedom to enjoy life.

Instead of debt you can

1. just get an option on a property then sell it for more than your option price

2. joint venture with someone who will put up the money, you find the deals and put up your time - then split profits.

As much as we think that everything will work out with real estate deals, sometimes it does not. If you have debt, you still owe the money. If you can't pay back the money, you will be foreclosed on and your credit rating will be damaged for many years. But even worse, your dreams of making money with real estate and obtaining financial freedom will be lost forever.

Learn to buy real estate with NO DEBT.

I've been doing it for 20 years so I know it can be done and done very successfully.

There are a lot of things im good at. Your particular field of knowledge isn't one of them. can you recommend me a course that i can learn to purchase real estate with no debt?

I followed your particular thread about your website, id like to learn more.

 

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[CashFlowDepot]

There are a lot of things im good at. Your particular field of knowledge isn't one of them. can you recommend me a course that i can learn to purchase real estate with no debt?

I followed your particular thread about your website, id like to learn more.

Send me a PM with your email. I will send you a book to help you get started.

 

[Killbot]

Thanks for the good info and responses everybody.

Last I heard, foreclosures only affected your ability to get a loan for two years...bankruptcy seven years. I'd check around for loans. How's your credit score?

from the multiple banks and lenders we have contacted they all say the opposite, bankruptcy is 2 years foreclosure is 7.
last time i looked my credit score was around 680, i'm sure its that low because we have been a "cash only" household for a few years now.

You absolutely do not need to use bank financing to buy a house. There are so many other ways to buy houses or make money with real estate.

1. to build up your cash reserves you should do some wholesale flips.

2. Instead of buying rental properties, you can lease a house with the right to sublease it. You still get cash flow and are not responsible for repair costs which can be a big financial surprise just when you least expect it. It is a good way to get started. After you have paid the owner on time for a year you should ask them about selling you the house with seller financing or at least getting an option to buy it at a below market price.

3. You can buy with seller financing - you'd be surprised how many people will say YES if you just ask.

It is good that you are working towards creating cash flow so you have income even if the jobs go away.

Congratulations on cleaning up your financial mess! Good job.

thank you for the multiple good posts of information i will look into these things.
Quick question, How often do landlords allow you to sublease a property to somebody else? I know if i owned a property for rent i wouldnt let someone come in and "middleman" my property.
Lastly, are there protections in place for me if i buy a property using seller financing to rent a property out if the owner doesnt pay his mortgage and the original lender forecloses on the property? Seems it could be a potential problem affecting my interest in the property, my reputation, and not to mention the tenant getting booted. Any info or links would be great.
Thank you again for the advice.

 

[ZCP]

Tax liens is another options. Could end up with a few properties.

Bird dogging is another option to learn / get in the game.

 

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[chrischapman]

If I were you I would start a fastlane business and become rich.

 

[chrischapman]

but, seriously, congratulations on cleaning up the financial mess.