So I got a call from Quicken Loans the other day. They wanted to process the application anyway since the October 15th deadline to file my taxes was fast approaching. So he asked me all the usual questions about my income and my properties. He got to the point where he asked whether Property 2 is my primary residence, like if that’s where I live. I was put on the spot and I didn’t know what to do. I just… I knew that many of the advantages of FHA loans are based on being an owner occupant, so I froze. He asked me again and… and I told the truth.
I told him that I don’t live in Property 2, and I could hear that oh-so-familiar pause. He said that I don’t qualify for the special FHA benefits, which means I’d have to do a conventional refinance. That means having to go through the same credit checks and income verifications like every other bum, and the LTV goes down to 70% from 75% for investment properties. That would mean that Property 2 would have to appraise for $115,000 (previously $95,000) in order to get the $25,000 I wanted. I don’t even know if the fucking place is worth $95,000, and I’d probably have to do repairs to the exterior for it to have a chance. Going through all that bullshit is… it’s just not worth it. I could have lied, but then I’d have to tell the tenants of Property 2 to say I live there, and then they’d have something they could use against me and I just… I just don’t wanna go through that incredible hassle. So I probably won't be doing the refinance this year. And, just when I thought the misery was over, Sam sent me a picture that made it worse…
Sam came to my bank job to cash a check for $200,000, but didn’t tell me how he got it. I saw that picture and I just shook my head. I mean, look at that shit. $200,000. Just $20,000 of that would have set me up to start trading and then retire. Remember that “secret competition” I was having with him to see who would retire first? Yeah well, I think that picture shows that I lost. I mean, he won a competition that he didn’t even know he was in. I’m the guy still doing security while he has the clothing store, his properties, and $200,000 that he got from godknowswhere to invest in whatever he wants. Right now he’s on vacation in Texas taking pictures and having a great time. And me? I killed a big basement critter the other night and then swept his slimy body up into a trash can. I’m at the shipping depot in my crappy security guard uniform. Tell me, who’s got it better?
Here come the reality punches, and I think they're gonna hurt. I’m gonna mention how everyone seems to make more money than me. I’m gonna write that I can barely watch TV shows or movies without becoming obsessed with the fact that everyone on the screen is making more money than me, even the names in the credit roll. I feel like such an idiot. I mean, I never would have thought that the guy with over 15 foreclosures and horrible credit would retire faster than the guy with great credit and no foreclosures. And all because I followed the rules. That motherfucker would have found a way to make the appraisal people believe that he lived in Property 2 and would have gotten the refinance. Sam always finds a way around the rules, and that’s why he’s retired. And me? I'm quickly becoming one of those losers who talk about success but never achieves it. I mean, look at my current plan. Make money in stocks to invest into real estate. Does that sound right? Any true real estate investor with 8 years of experience should be able to make money in the FIELD of real estate without using outside sources of income. Oooh, that one hurt the most! I don’t feel like writing anymore so I should just hurry up and arrive at a solution.
In the short-term, I shouldn’t be concerned. I don’t really need $25,000 to get started with trading. $15,000 at 4-to-1 will put my trading power to $60,000 instead of $100,000. And it would mean that I could only do three day-trades a week. The profits won’t be as robust but, if my patterns are as good as I think they are, I’ll still make money. I should be able to save $15,000 by late-February/early March which isn’t too far away. And, when I do make my trades, it’ll be with my money and no extra loan to pay back. I’ll still be able to retire by the end of 2017. That's the short-term.
I told him that I don’t live in Property 2, and I could hear that oh-so-familiar pause. He said that I don’t qualify for the special FHA benefits, which means I’d have to do a conventional refinance. That means having to go through the same credit checks and income verifications like every other bum, and the LTV goes down to 70% from 75% for investment properties. That would mean that Property 2 would have to appraise for $115,000 (previously $95,000) in order to get the $25,000 I wanted. I don’t even know if the fucking place is worth $95,000, and I’d probably have to do repairs to the exterior for it to have a chance. Going through all that bullshit is… it’s just not worth it. I could have lied, but then I’d have to tell the tenants of Property 2 to say I live there, and then they’d have something they could use against me and I just… I just don’t wanna go through that incredible hassle. So I probably won't be doing the refinance this year. And, just when I thought the misery was over, Sam sent me a picture that made it worse…
Sam came to my bank job to cash a check for $200,000, but didn’t tell me how he got it. I saw that picture and I just shook my head. I mean, look at that shit. $200,000. Just $20,000 of that would have set me up to start trading and then retire. Remember that “secret competition” I was having with him to see who would retire first? Yeah well, I think that picture shows that I lost. I mean, he won a competition that he didn’t even know he was in. I’m the guy still doing security while he has the clothing store, his properties, and $200,000 that he got from godknowswhere to invest in whatever he wants. Right now he’s on vacation in Texas taking pictures and having a great time. And me? I killed a big basement critter the other night and then swept his slimy body up into a trash can. I’m at the shipping depot in my crappy security guard uniform. Tell me, who’s got it better?
Here come the reality punches, and I think they're gonna hurt. I’m gonna mention how everyone seems to make more money than me. I’m gonna write that I can barely watch TV shows or movies without becoming obsessed with the fact that everyone on the screen is making more money than me, even the names in the credit roll. I feel like such an idiot. I mean, I never would have thought that the guy with over 15 foreclosures and horrible credit would retire faster than the guy with great credit and no foreclosures. And all because I followed the rules. That motherfucker would have found a way to make the appraisal people believe that he lived in Property 2 and would have gotten the refinance. Sam always finds a way around the rules, and that’s why he’s retired. And me? I'm quickly becoming one of those losers who talk about success but never achieves it. I mean, look at my current plan. Make money in stocks to invest into real estate. Does that sound right? Any true real estate investor with 8 years of experience should be able to make money in the FIELD of real estate without using outside sources of income. Oooh, that one hurt the most! I don’t feel like writing anymore so I should just hurry up and arrive at a solution.
In the short-term, I shouldn’t be concerned. I don’t really need $25,000 to get started with trading. $15,000 at 4-to-1 will put my trading power to $60,000 instead of $100,000. And it would mean that I could only do three day-trades a week. The profits won’t be as robust but, if my patterns are as good as I think they are, I’ll still make money. I should be able to save $15,000 by late-February/early March which isn’t too far away. And, when I do make my trades, it’ll be with my money and no extra loan to pay back. I’ll still be able to retire by the end of 2017. That's the short-term.
In the long-term, however, it's time to open my eyea and realize that I'm not as good as I should be at this point in the real estate game. I have to find a way to educate myself in real estate investing and figure out what I'm doing wrong. Sam has already proved that being the guy who follows all the rules isn't enough, so I have to learn the tricks of real estate investment. I know the rules, but knowing the tricks is how Sam was able to beat me to paycheck retirement. And as I figure this out, I have to watch as seemingly everyone is getting loans and refinances approved. I have to watch while everyone else seems to be moving forward. I really don't want to lose at this game, so I had better find a way to learn as soon as possible.
P.S.: It would seem that the answer is to ask Sam how he did it, but I'll explain in another post why that's impossible.
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