BiggerPockets

I was just curious, if the experienced investors here had to start all over again, right now, and were able to know everything they've learned along the way, how would you go about beginning?

I did have to start all over. It's a great experience!

Here's what you do:
1. Dematerialize your life. Lose your "love" for all the "things" you think make you happy. Once you stop spending money on stupid crap like that, you can start mastering money.

2. Try living someplace "uncool"...but cheap. I moved from hip, urban Chicago to living near the Amish. My house costs less than my Chicago property taxes used to cost and I suddenly realized I didn't necessarily need to go out and pay $20 for parking, $75 for dinner, $25 cover charge and have 3 martinis at $18 each to enjoy myself on a Saturday evening. I can still do that if I want and the irony is while it's a longer distance in driving, I can still get into Chicago faster from Indiana than I could from the "suburban" west side of Chicago. But now I have more options with what I want to do with my free time and since I'm not paying a king's ransom to have a house, I have more money for fun stuff. Besides, the Amish make better food than anything I've had at Morton's, Capital Grille, McCormick and Schmick's or even my beloved Cheesecake Factory.

3. You're small again which isn't bad. It means your lean, mean, mobile and can get maximum ROI by finding small niches that the big guys are just too big or busy to exploit. You're not taking care of a portfolio, so spend the time finding the maximum ROI in a market that you can. I know I talk about the 2% rule (rent must be 2% of the purchase price) as a standard and it is a good standard - but I don't follow it. That's because when I got small, I found niches where I can get 10-14%. The 2% rule is a good rule to follow, but I prefer the 14% rule.

4. Go with your gut. It's like the song says, "When you ain't got nuthin' you got nuthin' to lose." Now's a perfect time to try that mountainside ski resort daycare you always had a nagging feeling would be a cash cow but you just couldn't afford to risk "all you had" on. You don't have anything to risk now. Don't rely on education because education is based on "what worked before". If we relied on education, there'd never be any innovation. Trust your instincts. There's something you know that you can't prove in any educational material but you just have a gut instinct is out there. Get it. It really is out there. Case in point - show me one real estate book that has the 14% rule. I can't show you any bit of educational material that has the 14% rule. All I have is a house that does it (well, a couple anyway).

5. Trust yourself. Chances are you lost something because of something you did or failed to do. Own that mistake and realize it was just a mistake and move on. I lost a house to foreclosure. Big deal. I have several now. I'm not blaming a bank or a mortgage broker because I couldn't keep up with the payments. If I had been smarter in a decision 6 years earlier, I would not have been in the position I was. The thing is I know what I'm good at now and I'm confident in my abilities at it. That's all I need. I don't need to be good at rearranging the past.

If I could do it all over again, I would walk down any street in Los Angeles, buy each and every home on the street, as well as each home of each neighboring street, buy them all with liar loans, sit on them for six months and then sell each one for $150k more than waht I paid for them.
Legal Ponzi RE scheme worked nicely in 2004-2005!

This is a question everyone should ask themselves at least yearly. I know as long as I have the information in my knowledge repository I am good to go. That is why I keep adding to it and enhancing it all the time.

I keep mine on-line and share it with friends and family but a simple binder works too.

Probably find an easier way to make a buck...lol. No one anticipates how much work this business really is. It's rewarding, sure. I've started car shopping for a purchase I'll be making at the end of this month and was looking at a couple mercedes I could buy cash (knowing me, I'll probably buy another pickup though). Make no mistake though - you earn every dollar.

Tim,

When you say the 14% rule,,,can you be more specific?? Numbers please? Like are we talking 500 a month on say a 25K house?? That would be a GROSS 14%. Or are we talking 14% AFTER expenses like PITI and vacancy and repairs set aside??( ALL the normal stuff)

Working on one of those large red hotels as we speak.

Tim, get the truck. :) If you get a M-B you know it will have to be a garage queen. I am not sure about you, but I would personally hate to have people *think* I am a high roller. I like to keep a low profile.

My wife has an Escalade... I can guarantee I will never (okay never say never) drive it to a work related activity. Again just my view point.

>But I love my hip rented apartment close to downtown Portland. I can give up the Cheesecake Factory in a second, but not so quick to give up all the small shops, restaurants, and bars in my neighborhood. I'd have a hard time cutting that out of my life, and if REI can't provide that for me, I'd understand.<

Save your money my man! Sounds like you are leading a consumers life not an investors life. Check out Dave Ramseys book on personal finance. Then check back with us.

I am not saying have no luxuries, but coffee and food out all the time eats LOTS of money.

I'd strive to have more direction and a tighter scope. That comes from not having a concise goal. Our first property was a great investment. Bought it two years before the peak, then sold it during the peak. We used those profits to buy a couple properties in the "hood", but paid peak prices. They're doing well, but not stellar.

Thanks to the uncertain economic times in MI, I've been very cautious about what I buy. Because of that, I've been using my abilities as a Realtor more and more to help other buyers and sellers. And, I'm working toward getting my broker's license. My theory is that one day all these newbie investors are either going to go broke, or need decent property management. In my area, all the PMs are lack luster to say the least. But, if I were to come across a stellar deal, I'd strike! I guess I'm more of an opportunist than anything else.

Can you see my lack of direction? :lol: