Saturday, November 29, 2008

Starting Out

Our initial plan to get going on this was to make as much money as we could while still living in Pocatello and working at our jobs. To that end, we decided the best first step was to buy an apartment building, live in it on the cheap, and make money by renting the rest of the building as well as renting our house. I had just received a promotion at work, one that, while meaning more work and salaried paychecks, it also meant a bonus check every summer at the end of the fiscal year. Nothing substantial, but enough that combined with the income from the apts, we would be sitting in a comfortable position rather quickly. There were a good number of apartment buildings available in town at that point, some priced lower than the house, and we figured we could get into one of those rather easily. We have the good fortune to be friends with the owner of Gate City Real Estate, and spoke with him about our plans. He said it sounded like a pretty good plan, but warned us it might be more difficult than we'd thought due to the nature of lending on an investment property, rather than a primary residence, but that there were still a good number of places out there that we could get with 0% down.

Turns out, had we tried that 6 months earlier, that would have been true. Unfortunately, in order for us to get an apartment building when we started looking, the banks would require somewhere between 30-50% down, depending on our history and the building, and even then, we'd have to be able to cover the payments on our own without rental income. Needless to say, this was dispiriting. We had crunched numbers, and at this point hoped to jump right from the apartments into something closer to our eventual goal, bypassing a lot of time and steps along the way. Eliminating our chance for that left us a bit afloat. Luckily, we're pretty bull headed, and dove back in, talking to our mentor friend, who suggested possibly looking into Motels for sale. Being a running business, rather than an investment property, buying a motel outright would actually be easier to obtain funding, under certain circumstances. Quite frankly, we were a bit skeptical that we'd find a place, but decided to start looking...

No comments: