Moving Forward ADVICE needed - Posted by Gman (TX)

Posted by Gman (TX) on April 11, 2004 at 13:32:45:

Matt -

Thank you for the kind words and your considerate response. You really make some excellent points - I can see in some respects how I may have missed the forest for the trees here. Why alter course now if the path I have been on has provided very steady progress. I know part of this has to do with patience - I can see the light at the end of the tunnel and I am ready to achieve the financial goals I set for myself so long ago. That thing called life got in the way a bit, but oh how much I have learned from the experience! Thanks again for your feedback, and I hope you and your’s have a wonderful Easter as well.


Moving Forward ADVICE needed - Posted by Gman (TX)

Posted by Gman (TX) on April 11, 2004 at 11:57:30:

Greetings all:

I would like to solicit the advice of the many wonderful people that are part of this community. I am at a happy crossroads in my life, and would appreciate the insight of those who have found themselves faced with similar decisions.

To keep this short (kind of short!) - 4 years ago - I was divorced, BK, not a penny to my name, and close to 86K in debt with a 38K annual income that barely covered expenses.

Today - I have worked hard to clean up my financial mess - my only debt is 5K for a student loan used to finish my MBA, and 10K on my auto…no CC or other “liability” debt. I have 65K annual income, a mid FICO of 635, and 35K saved in a 401K. I have just finished with my self created debt payoff plan(don’t buy anything and put every spare penny to debt!) and will now have about $1500 month pure savings or investment cash after living expenses.

I have done all of this for two reasons…to never find myself in the mess I was before, and to position myself financially to where I beleive I needed to be in order to begin my investing career. I know you don’t have to have cash or credit to be successful in this biz, but it was important for my peace of mind given where I started from.

My question now - do I continue this conservative approach…build cash reserves and then use my first investment as my personal residence. Or do I jump right in and begin investing (would like to start with Lonnie deals where I can use small amounts of cash and not take on any more debt to generate some cash flow). I know it makes sense to buy my own home and get out of the rent trap, however I am concerned that it will slow down my ability to pursue other investments once I take on the burden of a mortgage and other household expenses.

A couple of other things to consider - my monthly living expenses currently are very low, and I do not have a family to move into a home - for the meantime, its just me.

Sorry for the long post…I appreciate any advice you might have in this situation. I have been mulling this over for a couple of months now, and I figured what better place to supplement my decision than with the fine folks at CRE.

Thanks in advance for your consideration.


Re: Moving Forward ADVICE needed - Posted by Bryan (NC)

Posted by Bryan (NC) on April 13, 2004 at 14:28:43:

Something I’ve been thinking about doing may be good move for you also. I also don’t have to worry about moving a family, and personally don’t have much preference to the look or prestige of where I live.

I think its good advice for new investors to NOT get involved with lease options or sub-to deals until they have the resources to carry the debt themselves. But I’ve been thinking that since I’m renting, if I could get a house sub-to, that wouldn’t cost me any more than I’m paying now. I actually prefere to have a roommate or two, so the orgiinal owner’s mortgage would be paid by them while I get a free (or really cheap) place to live and more equity accumulated for when I sell the place.

Re: Moving Forward ADVICE needed - Posted by Cynthia

Posted by Cynthia on April 11, 2004 at 17:45:08:

…good advice from Matt. I would like to add that you are already paying a mortgage it is just for someone else. Do not be afraid of a mortgage, it comes with pretty ribbons and nice surprises. Rent is rent is rent. Mortgage is home is tax benefits is sometimes cheaper than rent.
Congrats to you!!!

Re: Moving Forward ADVICE needed - Posted by Matt (MPD) IL

Posted by Matt (MPD) IL on April 11, 2004 at 12:45:04:

First let me say congratulations on your accomplishments so far. You have shown tremendous restraint and self-discipline and that in and of itself is certainly going to help you reach any goal beit investing or anything else in life… kudos to you.

As far as where you should go from here… it sounds to me like you’ve certainly got a handle on the conservative approach, why would you consider now going guns blazing into the unknown? Slow and steady may be a long-term plan and sound as if it’s a sure way toward working hard as opposed to hardly working, but you’ve already shown that you have what it takes to weather a pretty good sized storm doing it.

Everyone gets into investing for their own reasons and with their own talents and faults. You have already proven to yourself that you can do what it takes to financially keep yourself viable.

My guess is you already know how you want to proceed and are perhaps asking if it’s the right way to go. I’ll tell you this, if it’s the right way for you, it’s the right way to go. Someone else might not have the same goals and or discipline you do so their way might be right only for them.

Investing is a very personal natured thing. You can take bits and pieces of what worked for someone else and build your own working strategy around it using your own strengths. The most successful have done just that.

Either way, if you decide to proceed as you have done in the past conservatively and rationally or “jump right in” (which I’m not sure what that means) you’ll ultimately have to do so in a way that you’re comfortable.

I’d wish you luck but you sound to me like you’ve already made your own luck so instead I’ll just say again, congratulations… keep it up!

p.s. Happy Easter!


Re: Moving Forward ADVICE needed - Posted by Gman (TX)

Posted by Gman (TX) on April 13, 2004 at 22:16:50:

Bryan -

Thanks for the input. The sub-to idea for your own residence makes a lot of sense. In our case we are paying rent anyway - that monthly outgo might as well provide some benefit down the road.

Best Regards,

Re: Moving Forward ADVICE needed - Posted by Gman

Posted by Gman on April 12, 2004 at 20:09:20:

Thank you for your input Cynthia. I will be moving forward with confidence. There’s nothing wrong with my first investment being my home…and I will work to buy this home with the knowledge and sage advice offered on this board.

Thanks again,