Real estate investment without a paycheck

V

vic

Recycles dryer sheets
Joined
Oct 14, 2003
Messages
175
One of the things I am interested in after I quit my cubicle job is to buy and sell fixer uppers. We have excellent credit. However, I wonder whether it is possible to get financing if you don't have a 'real' job. I had no problem getting the HELOC (no poking into my work status) but when I was looking into an investment property, it seemed to be extremely important that I had a regular job in order to get financing. Does anybody have experience with this - is it possible to get regular financing and also at normal rates?

Vicky
 
You need regular INCOME, perhaps not so much a JOB. I havent had a job in a long time, but no problems getting credit. If your score is good and you can identify income flows from investments/property, (maybe I'm wrong but) I think thats better than a job. You can get fired from a job, its a little harder to fire you from your investments. Although I've probably deserved to get the axe a couple of times ;)

Have you done a remodel before...I dont mean spec'ed the colors but actually hired a dozen contractors, dealt with their bullshit, cost overuns, fantastic 'discoveries' every time you open up a wall to find the rot, mold or whatever?

Having just done one - and my brother in law was the primary contractor for 80% of it and took away most of the aggravation by being trustworthy - I wouldnt want to do one again.
 
th said:
You need regular INCOME, perhaps not so much a JOB.  I havent had a job in a long time, but no problems getting credit.  If your score is good and you can identify income flows from investments/property, (maybe I'm wrong but) I think thats better than a job.  You can get fired from a job, its a little harder to fire you from your investments.  Although I've probably deserved to get the axe a couple of times ;)

Have you done a remodel before...I dont mean spec'ed the colors but actually hired a dozen contractors, dealt with their bull****, cost overuns, fantastic 'discoveries' every time you open up a wall to find the rot, mold or whatever?

Having just done one - and my brother in law was the primary contractor for 80% of it and took away most of the aggravation by being trustworthy - I wouldnt want to do one again.
Click to expand...

Hello th. I submit that some people love this stuff. I think I would if I had the energy and the skills. Most remodeling I ever did
was (by necessity) 99% farmed out. Also, I never built a house from the
ground up. Some of you will recall I tried that for the first time a little
over a year ago (in Texas). Had to abort it. Way too much hassle.
Partly just age I know. Anyway,,the rot, mold, surprises, etc............
lots of folks would love the challenge. I used to own a hunting shack
and was trying to bring it back to life after years of neglect. I figured
it was so bad, even I couldn't make it any worse :) After working on it for a month or 2, I asked my son to take a look and give me some advice.
He studied the place for quite a while and then turned to me and said,
"I'd burn it!" That was my last major DIY job :)

JG
 
We are just starting with our new house (or basically really old house). Completely gutted + large add on needed. If I like it, I may consider it for doing in the future again for profit. Will probably not too do much of the labor ourselves. We'll see how this goes....
Vicky
 
vic said:
One of the things I am interested in after I quit my cubicle job is to buy and sell fixer uppers. We have excellent credit. However, I wonder whether it is possible to get financing if you don't have a 'real' job. I had no problem getting the HELOC (no poking into my work status) but when I was looking into an investment property, it seemed to be extremely important that I had a regular job in order to get financing.  Does anybody have experience with this - is it possible to get regular financing and also at normal rates?

Vicky
Click to expand...

Hello Vicky. I have not had a job since June 1998 and my credit is golden.
Since I retired it's been raining money. But, I have several
advantages. My net worth is higher than the average bear with no debt.
I have 40 years of history which is pretty spotless. And......I am
President of my own company, which (although positively lilliputian)
still impresses some people :)

JG
 
Oops! A correction. When I say that I have no debt, I am not including my -0- % CC borrowing. When that gets real high it does
effect your ability to get new credit. I don't think of it as "debt"
since 100% is comfortably tucked away in MM accounts or CDs,
so the effect on the balance sheet is zero.

JG
 
Vicky,

We are actually doing this right now. I work 20 hours a week, my husband has always freelanced, we have rental income and our credit score is about 780 but we did encounter problems with financing.

Last year we did a rehab that cost more than twice as much as we budgeted and took twice as long. We still made money because my husband did most of the work and we bought at a low price.

The way we financed the rehab was with a HELOC that we had taken the year before. This was the only thing we used it for and when we sold the house we paid it off.

This year we are in the middle of a new construction, a modular that already been onsite about 3 weeks. The financing problems had to do with the bank demanding additional documents as the process went along that hadn't been required early on. Then telling us to sign a paper that we promised to live in the house and sell our current one otherwise we would need different financing at a higher rate, etc.

Our solution was to get together with friends of ours and have them finance the construction. We paid for the lot and specced out all the costs, time frame, etc. We filled out the legal paperwork with them as the mortgagor and worked out a disbursement and interest payment schedule. We pay them 10% interest only on the loan monthly and when the property is sold they will receive the full loan amount plus 3 points.

This is a win-win situation. We don't have any hassles with a bank and they have their money making money (their investment is also a HELOC). Because we value our friendship we discussed everything upfront and obviously they know we are trustworthy but we are dealing with this in a professional matter with all appropriate legal paperwork. This is business.
 
Every remodel job I've ever undertaken, no matter how large or small, turned out to cost twice as much, take twice as long, and if the job was large enough, twice as many contractors after you get tired of the first ones infantile efforts to screw you.

My dad considerably remodelled just about every home he ever lived in, and his take is that the above statement has always been true.
 
Whoops wait...another brain synapse may be about to fire and leave me with a further opinion...

Nope...just too much sugar in my coffee.... ;)
 
Only 4200 and I catch up with JG!  If I stay up all night....

Nahhhhh! :LOL:

Judy
Couldn't resist, JG.
 
You guys are pretty funny :D

Regulars here are aware of my temptation to buy more real estate, in spite
of (in my more lucid moments) knowing it would mess up my carefully crafted
ER life. Yesterday I am sitting in the Jeep while DW buys groceries. I am
browsing one of those free real estate mags you can pick up at most any
grocery/convenience store. Anyway, there is an 11,000 SF building
located in a nearby community for sale. The photo looks great and it
comes with one (1) existing tenant and two (2) 800 SF
apartments. Here is the good part. The price is $55,000 with owner
financing. Where was this stuff when I was seriously looking?
I called. There was a contract in place already and it looked like it would close.
Dodged another bullet :)

JG
 
It's interesting to note how various contributors vision their ER lifestyle. Some guard it tenaciously and refuse even to spend a few hours a week managing a moderately complicated portfolio. Others are actually anxious to go into real estate including managing rentals and extensive rehab work which may involve endless hassels and hours of work that would have been considered slavery in earlier times.

If leaving my 50 hours per week cube-dweller job (which I hope to do in less than a year) meant taking on 24 x 7 responsibility for a flock of tenants, dealing with shifty contractors and spending zillions of hours learning and applying the building trades, I guess I'd just continue with the weekly 50 hours in my cube. At least most of my weekends are my own.

It reminds me of a college chum who ER'd to open his own business. Now he works twice the hours, has twice the stress and his life savings and home are on the line since he "bet the farm" on the business. I have no problem with entrepreneurship, but calling it "ER?" Not in my view.

We each walk our own walk.

youbet
 
youbet said:
It's interesting to note how various contributors vision their ER lifestyle.  Some guard it tenaciously and refuse even to spend a few hours a week managing a moderately complicated portfolio.  Others are actually anxious to go into real estate including managing rentals and extensive rehab work which may involve endless hassels and hours of work that would have been considered slavery in earlier times.
Click to expand...
Some people fish, some people surf, others invest in real estate. It's a hobby.

I'm looking for the ER wanting to do yard work for those who wish they didn't have to...
 
Nords said:
Some people fish, some people surf, others invest in real estate.  It's a hobby.

I'm looking for the ER wanting to do yard work for those who wish they didn't have to...
Click to expand...

Nords, It's your lucky day!

MRGALT2U said:
This is interesting.   I love to cut grass.  Could do it all day.  Very enjoyable passtime for me.

JG
Click to expand...
 
I'd buy JG a plane ticket to Sacramento and pick him up myself if I can watch him cut my lawn while I'm sitting in a chair drinking a beer.

Really.
 
youbet said:
  I have no problem with entrepreneurship, but calling it "ER?" Not in my view.

We each walk our own walk. ialics mine

youbet   
Click to expand...

Maybe it depends on what you're retiring from.

Judy
 
Did you mean artifical or artifactal?

And no, you cant play. Apparently theres a database limitation of one person who can reply to their own posts 4-5 times in series. Maybe Jim can do something about that ;)
 
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