Getting started can be the hardest thing to do...

I have always been interested in real estate.  When I was in college, I rented an apartment from one of my business teachers, and thought that owning real estate might be a good idea in the future.  After college the idea of property ownership wandered to the back of my mind. Instead I created a computer consulting business and spent six years watching that grow and then fail. 

With the failure of my own company I needed to do something to make sure my new family was taken care of, so I went to work for the largest computer company around and have been there now for over twelve years.  The early days were exciting and I climbed the corporate ladder quickly, but soon I felt stuck, my health suffered, and my marriage broke up. 

Four years ago, I found a book at the airport called Rich Dad / Poor Dad.  I didn't agree with everything in the book, but a lot of it rang true.  I was getting married again and my new wife also liked some of the ideas in the book, so we established goals to first become financially stable, then to be financial secure.  We made some good progress on the stable aspect.  In our first year together we were able to clear all the debts pending from my first marriage and even clear an IRS obligation from the failure of my business.  We paid down what the book called our "bad debt", which was mostly credit cards, a small car loan and a couple of student loans.  Neither of us had ever purchased any properties. We were long term renters. We purchased a home with an 80% first and a 20% second, which although the book consider a home a liability, we looked at it as providing us with stability for the children as we don't want to move again until they all finish high school around 2016.  In 2005 we refinanced the second mortgage to pull cash out and pay off the IRS obligation I mentioned earlier.

Although we look back and feel that we accomplished many of our goals, we did miss a lot of our them.  We had wanted to buy real estate by 2006 so we could start moving our income from coming from our jobs to being generated from investments.  We started doing some research, mostly reading real estate forums and doing searches on Realtor.com, we could not find any properties available which would provide a positive cash-flow without a substantial downpayment investment.  There seemed to be a lot of other investors who had read the same books and the value of the properties for sale were much more than the rents could cover.  It seemed like most three unit properties were going for 300K to 400K and only produced about $3,000 in gross rent.  So we drifted away from thinking about real estate on a day to day basis and instead focused on the kids and work. 

2007 was the year we finally got tired of battling our health issues as both of us were dealing with the health complications which come from being very heavy.  We spent most of 2007 and 2008 working with our local hospital and through lifestyle changes and surgery that issue is currently under control, but another 18 months have passed and still no investments in real estate.

Which brings us to today, August 2008, the real estate market has crashed and property values have dropped.  We haven't been personally impacted as much as some people because we have high enough earnings to cover both of our mortgages.  Mainly we have seen our equity vanish.  My guess is our home is worth about $450K today down from a high of 517K at one point.  We still owe $436K combined on the two mortgages so very little equity.  We have looked into consolidation of the two loans which might be possible with a 97% loan but with mortgage insurance added in cash-flow would decrease even more. 

Overall we feel that some of our stability has disappeared as my wife's company just laid off over 200 people and although she wasn't one of them who knows what the next wave will bring.  This has caused us to renew our interest in moving away from being dependent on our paychecks and trying to create income from other activities. To get started again I have re-read some of the books I have and I have made some posts on a few forums to try and find someone who has been successful at what we want to do and see if we can get some pointers on how to move forward.   It would be great to find someone who was in a situation like us and was able to get investment properties or at the least could tell us if it is even possible to find money to obtain them.

Our current situation is we still have two mortgages on our primary residence as I mentioned above.  Our credit card debt has grown again and is currently sitting at about 35K.  We continue to bring in about 12K net each month but our expenses have gone up so there is not a lot left over. We both still have excellent credit with my score over 720 and my wife's over 750.

Some people have said we are not in a great position to start investing that we should pay down our credit card debt and save, but I feel if we don't do it now we might never do it.

I hope to use this site and this blog to get advice and to post our progress.  Stay tuned, in my next post I will detail what I think my steps are going to be to get started.