Fix `er up, Sell `er up

[Seeo]

Hey,

I’ve recently looked into taking a course in real estate. I know it’s a massive market with virtually an endless amount of money to be made, so logically, I want to get into it.

Has anyone here done anything similar such as the classic: find the motivated seller, buy the home for low, tweak up the home and then sell the home for a value greater than (purchase + fixing)? I’d just like to hear anything a regular Joe has done to make really good money and eventually quit their full time job in order to pursue this type of business.

How would you rate your life before and after?

My problem is this… I don’t have the best credit, I’m 25 years old and I was an irresponsible 18 year old with a credit card at one time. This followed me to the age of 23 when I finally paid it off and cut the damn thing in half. My problem now is, even though it was a small credit card (1000$) my credit has sunk to being real bad, and without having credit since, it’s very hard to rebuild it. What is a good way to rebuild your credit as fast as you can, so that if I need a minor loan from the bank in order to purchase a property, I’ll have good chances of being approved?

I’m 26 now, and I have a wife and son and sister in law to pay for (That’s 4 people for 1 single paycheque, and my job as an administrative assistant is just getting us by, virtually paycheque to paycheque, and I’m so sick of it. I can’t even put into words my hatred for this endless work-grinding that reaps us little extra cash to save for a possible vacation. I know in a couple years my wife will go back to work, and that my sister-in-law will eventually get a job and help out with the bills, but I want more.

I’m the type of person that has always worked for my money, but now I want to reverse that order… I want my money to work for me. But the thing is, I have very little after everything is paid.

Not only that, but I want to be able to take a month off now and then and work on my book that I've been writing for the past 6 months, I just never have time to get to it, and my brain is exploding with ideas at all times...

Has anyone been in a similar situation? What did you do?

[Stigg]

First off....Take out 1 or 2 credit cards. Use them ONLY for purchasing gas for your car, and alternate them between months. It will build up your credit rather quickly (assuming you can pay them off). Another thing you can do is take out a loan with a low interest rate...If you can afford it, put all that money straight into a stock or two, and pay off the loan with money you already have. After you finally pay off the loan with your own money, pull the stock cash out and you should be back at the same starting point.

As far as real estate goes, I don't have the slightest idea. I had a friend who went into it straight out of high school. He is now a multi-millionaire at the age of 25. He got lucky in purchasing a warehouse 5 years ago that ended up being right next to a site that is now being used for Outlet malls.

The real estate market (as far as stocks go...) fell drastically about 3 months ago. it was Booming until they realized that they were "booming" for no reason. Prices had gone slightly up, but nothing new had come along.....so everything went crashing. Housing prices have gone way down.

Back to your "Make my money work for me" idea. I don't know anything about your financial status, but putting as much money as you can into stocks and bonds is ALWAYS a great idea.

I always found this kind of cool:

Let’s say you get a job and you can invest $4,000 a year. If you start at age 25 and put money in for only 10 years, stopping when you’re 35, at a 10 percent rate of return you’ll have $690,709 when you’re 60. Your out-of-pocket cost: $40,000.

But if you wait until you’re 35 to start putting away that $4,000 a year, you’ll have to keep adding $4,000 every year until you’re 60. Although you will have put in a total of $100,000 instead of $40,000, your account will be worth only $393,388.
I dont know the source for that....but credit where credit is due...


Another way to look at this is:
Let's say I have $5,000 invested in a 10% return right now. I can contribute $927 dollars every month.

Year Future Value (aka the top number)
Without Additional Contributions Future Value (aka the middle number)
With Additional Contributions (aka the bottom number)

1
$5,524
$17,269

2
$6,102
$30,823

3
$6,741
$45,795

4
$7,447
$62,336

5
$8,227
$80,609

10
$13,535
$205,009

15
$22,270
$409,685

20
$36,640
$746,441

30
$99,187
$2,212,122

40
$268,503
$6,179,779

50
$726,850
$16,920,391



Most companies now offer "matching up to X%" for their employees, so make sure you are investing ATLEAST that %, or else you are losing money right off the bat. And, your taxes exclude any money thrown into an investment option, so you will be losing less money "to the man" by investing more of your own. I currently invest 40% of my paychecks into my 401K, and I get by wonderfully (granted I am single, no kids, and rent....)

Take a look at www.msnbc.com and have a look at their Money section. www.troweprice.com is where I invest a majority of my money.

Although this seems rather cliche, but you may want to pick up any of David Bach's books. (for example: http://www.amazon.com/Automatic-Millionaire-Powerful-One-Step-Finish/dp/0767923820/ref=pd_bbs_1/103-4875397-3539047?ie=UTF8&s=books&qid=1173107947&sr=8-1 ) He is really great at explaining a lot of the financial "little things" you can do to make some decent cash. He even wrote a book for young couples, and seeing as how you are relatively young and are married, it may help you and your spouse quite a bit.

The stock market's overall return rate is about 8%. Your bank (assuming it is a low risk bank....liek most of the banks are.....is most likely between .5% and 1%. Although 7% difference doesn't really seem like a lot.....after a few years, that will REALLY add up.

Sorry for the long reply and not really addressing your "real estate" wishes, but there is a ton of easier ways to make good money....just read up on it!

[Elly]

I'll echo the advice Stigg gave for getting a couple of credit cards. The longer you have a credit card for the better standing you have with loans companies.

When I got my first mortgage at 21 and I was very pleased with myself when I proudly told the broker I had no credit cards (thought that made me responsible) and he told me it actually made things harder for him to get me a deal. If you have a card and you've not defaulted you're going some way to proving you're a good risk. Without a card I was an unknown entity. You can remedy your earlier transgression by starting a new CC history now.

I've done a few places up to sell now and it's always been financially successful. I'm just finishing off the garden of my current place ready to put on the market and I complete on a new place on Thursday but I'll live in that one a few years because I plan on putting a pool in the garden and a entertainment room on the entire top floor (mini cinema, pool table, poker table) so I want to enjoy that myself before selling on.

The current place I'm in is a 4 bed victorian house with all original features intact. I made a large family room (kitchen with lounge/dinner at the other end) and put a brand new kitchen in with underfloor heating. Opened up the back wall to the garden with some double doors into a conservatory with underfloor heating and french doors out into the garden. Redid the garden (just finishing that off). Sanded and stained some downstairs floors and recarpeted a three of the bedrooms. I had the agent round the other day who was 'ooing' and 'ahhing' all the way round the place so I must have done something right. We should be able to put it on the market for more than I expected and it'll shift quickly according to him. Hope so as I'm going to juggling two mortgages come Friday:undecided:

All the things I did in the house are things I've read or seen others do very successfully. This in the UK though and perhaps kitchens come family rooms aren't the thing in the US. I don't think conservatories are much called for in the US either. I'm in Scotland and it's not so warm here and conservatories are a way to feel as if you're outside but you're all toasty inside so a big plus for buyers. Sanded/stained floorboards with large good quality wool rugs always seem to go down well, they give a feeling of opulence, more so than wall to wall carpet. Doesn't matter that you'll be taking the rug with you to your next project:)

I'm not sure if property developing in the true full-time job sense is going to give you an easier life. If you want a quick turnaround you'll be working some very long days so you're wife will need to be onboard - if not literally then in the wings with encouragement for the days you uncover that lovely damp rot, or wood worm infestations and you start to wonder wth you've done :smiley:

[mesonm]

I’m 25 years old and I was an irresponsible 18 year old with a credit card at one time. This followed me to the age of 23 when I finally paid it off and cut the damn thing in half. My problem now is, even though it was a small credit card (1000$) my credit has sunk to being real bad, and without having credit since, it’s very hard to rebuild it. What is a good way to rebuild your credit as fast as you can, so that if I need a minor loan from the bank in order to purchase a property, I’ll have good chances of being approved?

I’m 26 now,
Has anyone been in a similar situation? What did you do?



First, Happy birthday! (you turned one year older while writing the post...)

Second, get ANY credit...a prepaid credit card works just fine...pay EVERYTHING on time...

[Atoz]

I am thinking of a number between 450 and 800, know what it is?? yes your credit score..

mine is at 661, anyone else dare to post their credit score?

[kodeeak]

730 ish.. myfico is a lifesaver..

I became a licensed real estate agent in my home state and surrounding states for the sole purpose of buying distressed homes and rehab'ing them for future sales. I affiliated with a Prudential office locally (need a broker to ratify contracts) and eventually became a silent partner in the operations after one of the owners passed away. I still have a full time job in another industry..

If you want to buy and sell homes purely for investment purposes, getting your license makes sense, since you'll be paying a good bit in commissions as a seller. The cost incurred for training (in my state at least, which is very stringent) more than makes up for itself in the first transaction you do.

My first home I purchased was an abandoned home in Baltimore City which I paid $130k for. After a very difficult time finding contractors and companies to do rehab work who would come on a consistent basis, I sank about $95k into it to completely rehab the house and sold it for $375k. Being able to represent myself in the deal saved me about 3% of the selling price, so roughly $11k.

That profit was an exception to the rule, I haven't come across a deal like that since that first experience. Just so happened I purchased the home right as that area was undergoing revitalization, dumb luck. It took me over a year to complete this project, all the while I had 2 mortgages, 2 sets of property tax, and had to deal with homeless people making shelter in the house, a rat infestation, and a flood. My point being, while the profit was wonderful, it was one of the most stressful years of my life, hands down and we were spending $$ out the wazoo to fix this place up. At times we had $20-30k sitting on our credit cards just to cover contractor bills until the bank would send us the next phase of our loan.

In the real estate market, it takes money to make money.. you have to be able to handle a lot of risk and mitigate it very well when you can. I know it sounds gloom, but I've seen too many people go bankrupt from being in this business with dreams of grandeur.

One option if the risk seems to too high for you is to become a part time agent. Working in the idustry is not hard, one can do it part time easily and the work is menial at best... most of it consists of not violating state laws and practicing ethics. Standard commissions on boths sides of the fence (buyers agent/seller's agent) is 3% of the sales price and your company will take a 30% cut of that for letting you work for them :laughing: if you're a people person, have reliable transporation, are diligent in helping people find that perfect home, you can easily supplement your income by $20-40k in slow markets doing this part time.. more in fast paced markets. I'd be happy to chat with you if you want more info.