I've started this post a thousand times, and have never finished. It's a question we get asked literally ALL THE TIME. I just never know where to start, or end..or how much information is too much. Or if it's even information to anyone.
The Truth is, I can't tell YOU how to save money to buy a house. Everyone has different situations, and are dealing with different things and issues. I can only share with you guys OUR story,and how things worked out for us.
I guess I'll just start at the beginning.
We were teen parents. When you are 16, and living with your parents, you sort of start to think you won't be able to ever achieve certain things. Home ownership is one of them. We literally scraped change together at times to buy diapers for our son. It was hard, I was scared, and there were certain thoughts that just never crossed my mind. Like owning our own home.
Cut to Nick being 19. He's working a ridiculous amount of hours for a company owned by a really close family friend. One day, in casual conversation, he mentions to me he wants to start renting houses.
Was my Response. I mean, we could hardly keep food on the table at the time. I was struggling through classes at Community College, He was making decent money at his job, and I was waiting tables. Still very young, and having a whole lot to learn about love and life in general..
That year, we received $8,000 back in taxes.
We live close to Baltimore City, where they are basically giving houses away. That year, at 17 and 19 years old, we bought our first rental property. It required lots of work.. like, a lot. Nick would work 10 hours a day at his job and then work on the flip house until 2am, often times falling asleep there just to wake up and go to his day job.
Cut to a year later, Nick had quit his old job and had started his own contracting business. We were tired of renting it out and wanted to sell. We made $10,000 profit on our first flip. Continuing with the trend of buying and flipping, we were able to buy and sell six more houses.
Each time moving to better areas and buying higher quality houses.
6 years later we bought a 6 unit apartment building that needed lots of work, after renting for a year, we bought and sold that house for a $50,000 profit.
Do you know what we did with that $50,000? We bought our first house, at 23 and 25 we owned a house, IN COLD HARD CASH. NO MORTGAGES.
Over the next year, we would work and continue to rent out our only other rental property. Eventually taking a deal with a hard money lender to buy our most recent flip house.
All while still living with my mom for a small amount of rent and working on our current house when we were able.
Over the next year we would put about $80,000 in the house. When we bought our current house we live in, it needed SO much work. We pretty much couldn't live in it while doing the renovations, We continued to live with my Mom for another year, while working on our fixer upper and getting things live-able. Mostly just working on the evenings and weekends, since Nick was still running his business and, we still had a few rental properties to take care of.
Cut to now, 11 years later. We are completely debt free. We own both of our new vehicles in cash, and have no mortgage on our house. We just bought our first flip house, not located in the city or urban area and are looking to make a $80,000-$120,000 profit.
Some things to note about our story:
My Mom helped us a lot, like, a whole lot. We lived with her rent free for 6 years which enabled us to bank money to continue buying and flipping rental properties.
Do you have a family member you could live with or stay with for a small amount of rent? I know it's a long shot, but this can really help you get a jump start on saving for a house.
Nick is good at everything and over the last few years has truly learned every single trade, which means, WE do all the labor and work on our flips. We don't sub it out which in turn gives us the highest profits.
Is your significant other, or are you, a handyman or a jack of all trades? You will have to learn how to do the basics in order to really benefit from flipping houses and maximizing profits.
We have dealt with a hard money lender on numerous occasions. This is a lot different from a bank loan (which we were never able to get ironically.) but it worked well for us in the end. You will have to have something of value to put up in order to get a hard money loan, and the interest rates are very high.
Nick and I have been dealing with the same realtor for the past 8 years, when we told him we were in the market for a house for ourselves, he found this major fixer upper that nobody wanted to touch. Here's the thing we've learned as investors these past few years, The foreclosure lists you see? No matter how "exclusive" aren't really accurate. The really GOOD deals go to investors and realtors that have relationships with their clients. This means, the really great deals on houses are typically gone by the time the lists make it to the general public.
My advice? Find a good realtor and build a relationship.
Now, do you see why it's so hard to give specific advice? Everyone is going through different situations, and dealing with different things. We were teen parents, but thankfully had my Mom helping guide us along the way. We are also really lucky, because Nick is a jack of all trades so to speak. If he doesn't know how to do something, he won't stop until he learns. Also, when buying and flipping houses, you have to understand how minimal the space is sometimes for profit, especially when you have to start sub-contracting things out that you don't know how to do. For instance, HVAC in most houses costs $15,000 ALONE. Nick and I are able to literally cut all of those costs in half because we do the work ourselves, this maximizes our profits.
Moral of the story? Nothing is out of your reach, ever. I hate when I hear people say, "but I can't because of this.." Just STOP. Because if you want something bad enough, YOU CAN GET IT. We have obviously had a lot of help along the way, but the only reason we're anywhere is because of the hard work and dedication to making our dreams a reality!
So there you have it guys, that's all I have for ya. I hope it's even the slightest bit insightful, if it does nothing more then help you understand why we're so grateful for everything.
Feel free to leave a comment if you have a question or comment and I'll try my best to respond and answer!