What would you do??

[WannaBe]

I have always been intrigued by the idea of real estate and its possibilities. I am still in my research stage and have yet to own one piece of property including my own home. As a very generic outline my goal is to purchase a home, hang out for 2-3 years build equity, borrow money and purchase an investment property (residential). Here is where I need the PROS (any advice for that matter). Through a series of late night infomercials ….I know…..I begin to see if it is truly a possibility to purchase a home(s) as they mention. What %, if any, did you put down for your home? Now fast-forward…..you now have the capital for your investment home, do you FLIP or RENT....other possibilities??? Thanks in advance!

[Jennifer Allan]

Your plan is good! In fact, it's exactly how I built my empire in the mid-to-late 1990's. Well, not exactly, I don't know anything about the zero-downpayment programs except what I've heard, which is mostly negative.

What you can do to acquire real estate over time is to buy homes as primary residences, thus being able to take advantage of the best loans (minimum down, low interest rates). In order to avoid loan fraud, you must actually live in the properties for at least 12 months (usually), which is what I did. Between the years of 1994 and 2000 I purchased 5 properties, all as primary residences and yes, I moved a lot! But my goal was to acquire real estate, and since I was a real estate agent, I was always finding good deals and was willing to put up with the inconvenience of moving.

As I moved in and out of properties, I refinanced as needed, taking the equity from one and using it to either renovate or purchase other places. I rented out all the homes until late 1999 when I sold out and found myself with a net gain of over $400,000 (I was lucky enough to have bought just prior to a boom, so property values went up substantially).

Of course, I had taxable gains to deal with and some people would caution against my strategy for that reason. However, it worked for me and was a lot of fun.

Being a landlord is pretty easy - much less hassle than most people think. There are lots of secrets to getting and keeping good tenants, and ensuring that they respect you and your property. I'm working on a book right now addressing these issues, but would be happy to answer any specific questions you have about it!

Jennifer