In the early years of my real estate investing career I was still stumbling around really trying to understand the investing game and trying to decide the best path to take.
One of my favorite early successes was the first property that I purchased at the young age of 21.
The reason that I feel compelled to tell this story is that I feel that it could be an inspiration to many others that have not bought their first one yet or to those of you struggling to pick up your next one.
Early In My Real Estate Investing Career
At this point in my real estate investing career I had about 2 years of investing knowledge under my belt. Not many successes but I had began to develop the creative mindset that real estate investors need to have. I was learning how to become a good problem solver.
At the age of twenty-one I had an entry-level construction job that paid very little.
I felt that this job would be a great way to learn the construction trade which in turn would help with my real estate investing in the future.
About 6 months down the road my friend and I decided we wanted to purchase our first property. This was in 2000 when the market was red-hot. I knew that we had to strike while the iron was hot.
My First Meeting With a Mortgage Broker
Our boss gave us a contact of his who was a mortgage broker and we set up an appointment to sit down with him. We were very excited about this appointment as it felt like the ball was rolling in the right direction to get us closer to our goal of buying our first property.
We sat down with the mortgage broker who proceeded to ask us questions about our financial situation. We let him know our monthly income, expenses, total debts, savings amount and our credit scores.
I will never forget what happened next. The mortgage broker started laughing. We were both shocked at his response but didn’t know exactly why. Then he proceeded to tell us that there is no chance in hell for us to obtain financing with our poor financial situation.
We left that appointment feeling angered at his reaction and very discouraged by the news. The least he could have done is give us some tips for improving the situation so we eventually meet the requirements. He chose to treat us like a complete waste of his time though.
Time To Get Creative
I learned that the biggest motivator in my life is proving the “Nay Sayers” wrong. There was no way I was going to let this stop me from obtaining financing. I had no idea how I was going to make it happen but I was determined.
Neither my friend nor myself wanted to turn to our parents for help. We wanted to make this happen on our own.
After brainstorming some more we figured that if we could just find someone’s credit to borrow, that also had a strong work history, we could get the financing we needed.
We knew of a friend who had an incredible credit score with no blemishes, as well as a very strong employment history. We came up with a plan to entice him to basically let us borrow his credit. We offered him $1,000 if he applied with us to buy the home. He was a little hesitant at first but he agreed to do it.
The Second Attempt
This time around we chose to find a different mortgage broker as we would never go back to the first guy if he was the last one left on Earth.
The qualification process was not easy to say the least. We actually needed a grant from the city for first time homebuyers so that we could actually have the down payment.
After a very long frustrating process we did qualify for financing and found a great property in a redevelopment area. The city was sinking all kinds of money in this area to revamp it, which we knew would just increase the value of our property.
We ended up renting out one room for $500 to really cut down our costs. Later we converted a portion of the detached 2-car garage into a room rental as well.
The market continued to skyrocket over the next 3 years and our property increased in value at an average of $30,000 a year. Late 2005 we saw the writing on the walls that there was a big storm ahead.
We really wanted to keep the home but we had an adjustable rate mortgage, our friend wanted off the loan, and we knew a crash was coming quickly.
We decided to sell the home and cash in on our first investment property. Looking back on our decision to sell in late 2005, it could be one of the best decisions we ever made.
Be the Better Person
I can’t tell you how many times I wanted to go back to the first mortgage broker just to spite him but I chose to be the better person. I am actually thankful for his unfavorable reaction because it was the fuel that I needed for my fire to take the action needed to acquire my first property.
For all of you out there looking to pick up your first property, don’t stop if you are told you can’t. Think outside the box. Get creative. If you have a strong enough will to make it happen you will find a way.
I hope that this post was of great value to you. If so, please share with others that may benefit as well.
Here’s to your success!
This scenario ended up working out for me but there was still a good amount of risk involved. If my friend was a less than honorable character he could have got greedy when we sold the home and demanded more than the $1,000 we gave him. With him being on title, legally he did own a portion of the home.
Keep this in mind if you end up doing something similar with a friend and even family member.
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