Questions, Myths, Misconceptions and Fears About Investing in Real Estate

by Brad
(Burlington)

I was talking to my landlord about real estate when he mentioned he was a member of your “Rock Star” group and owned another house and another condo on the way (being built). I was shocked!

Here he is at 30 years old and owns 2 properties and a 3rd on the way. I thought in my head, I need to do this! Well anyways, I immediately went online to do further research and spent all night reading the articles, getting tips, advise, etc... I could NOT stop reading. You guys seem knowledgeable with a true desire and passion to help people succeed at real estate investing!

I want to get into investing in real estate. I’m not even bothered by the fact that I will make mistakes. I am sure I will, as long as I learn something from each mistake. My current job isn’t too bad and I make enough monthly income to support myself. I earn over (gross) $50,000 /yr.

Here is my fear. I still have some current outstanding debt that I haven’t cleaned up, that went into collections over a year ago. I defaulted on my car payments because I was living a lifestyle that I could not afford and learned a valuable lesson as a result. I owe probably close to $5,000 but I’m not sure what the exact number is. There is also an outstanding debt of approx $290 that went into collections for a Internet Service Provider (ISP).

I was in over $10,000 debt over a year ago and managed to get all of credit cards / line of credit completely paid off. Now I am interested in saving up for a down payment on investment opportunities and outstanding the car debt lingers over my head. I keep thinking investing is not possible right now, I should not even try.

I am also currently going through a common-law separation in which we have a 7 month old child together. I can expect to pay at east $460 /m for child support after the agreement has been signed. I am motivated by the separation to do well for myself, move on and save for my child’s education when he gets older.

What options are available to me right now? What should I be focusing on? Saving? Should I attempt to pay off the outstanding debt before venturing into real estate investing? Can I repay my old debt while still continuing to invest? Should I do nothing about my outstanding debt and ignore it? How important is my credit rating when real estate investing?

How do I fix my credit score? Will lenders look at me negatively when applying for a mortgage? What interest rates should I expect? Is it a good idea to fix my credit then apply for a mortgage or apply with bad credit at a higher interest rate? Do I have a chance at real estate investing given my current situation and what steps should I take to correct them? How much should I save for a down payment?. I know there are programs out there that offer 5% down, is that realistic and where do you find them?

I really want to get into real estate investing and need to knock down some of the personal barriers, misconceptions, myths and fears I have about getting started. Who should I consult about my given situation to put a smart/specific action plan together that will enable me to reach my long term financial goals?

Regards,
Brad