Where should I start?

Question

Hello, everyone, my name is Pete Spiro. I am so sick of the daily grind, and I want out. I am thinking to try and get involved in real estate, but where to start? I have no experience, and no partners. I do have some capital, I own my own home, have good credit, and some money in the bank. I'm willing to work hard, to travel, to read, take courses, seminars...whatever it takes. But there's so much information out there it's a little overwhelming. Should I start with foreclosures? Short sales? Two-family houses? I would be grateful for any advice to help me get my feet off the ground here. Thanks.

-Pete

N/A N/A · Answer

These are all very good tips. I would add that you should also try to network with as many people as you can in the industry.

Michael Rossi · Answer

Pete,

If you are serious about getting out of the 9-5, then you need to come up with a plan that will get you from where you are now to where you want to be.  Writing a successful plan requires that you take a REALISTIC look at the numbers.  How much cash do you need each month to replace your 9-5?  Which real estate business can you start that will generate that amount of cash each month?  How much risk can you accept?

I was in a similar situation 4 years ago.  I wrote a short business plan designed to generate $10,000 per month in positive cash flow and $1,000,000 in equity (where I wanted to be).  Then, I worked backwards to determine what was required to meet that goal and how long it would take.  I decided that the best way for me to get both the net worth (equity) and the monthly cash flow was to start a rental property business.  Working the numbers backwards, I determined that I would need to buy 10 rentals per year for the next 5 years.  Bought properly with real world (not the silly infomercial guru nonsense) numbers, each rental would generate $200 per month WITH ME DOING ALL THE MANAGEMENT AND ALL THE MAINTENANCE ($100 cash flow + $100 for doing the work).

To make a long story short, I worked my butt off for about 2 1/2 years.  That meant working LONG days; six days a week; hardly a day off; no vacations, and a lot of sacrifice.  However, I exceeded my initial goal of 10 rentals per year and in less than 4 years, I was FREE.  I currently work 3-4 hours per day, 3-4 days each week and obviously set my own schedule.

The key is to learn the business and write (and follow) a realistic plan.

Good Luck,

Mike

Account Closed · Answer

Pete,

Where you start can vary a lot.

What books have you read? Use them to see what gets your interest. There are so many ways to start yet not all make sense for each person.

If you want to dump your job you need to focus on something that will produce an income. Hence you really need to narrow the scope to things that can replace your current income. Holding rentals rarely does that quickly though long term it can be a winner.

Flipping or other things that provide lumps of cash to live on may have to be the focus initially.

John Corey

Jon Holdman · Answer

Pete,

What Calixto is referring to is contracting a property at a low price and then selling it to an investor at a slightly higher, but still low price.  Wholesaleing.  You go out and find properties that you can acquire cheaply.  Write a purchase contract.  Then find an investor to buy the property, either by assigning your purchase contract or by doing a double closing.  Its unlikely you'll find these on the MLS.  You'll have to directly market to potential sellers (e.g., "we buy houses" signs and ads), search for prospects in the public records (out of town owners, houses acquired through estates) or otherwise find properties that can be acquired from a motivated seller.   You have to build up a buyers list, such as by advertising or going to your local REIA.  You find the deals and connect a seller with a buyer and pocket a few grand in the process.

But, let me back up.  You don't say if you've been studying this for a few years, or just started to think about it.  It sounds like you're more on the "just thinking about it" end.  Assuming that's true, start reading.  Reading here will give you some real world information.  But, its not always easy to understand if you're jumping in cold.  Go to a bookstore or library and start reading.  There are literally hundreds of books on various aspects of this business.  Start with some of the more general ones, such as the Wall Street Journal Real Estate Investing Guide (or some such.)  You'll start getting an idea of how it all works.  Then dig into whatever sounds more interesting.

Get out into the real world.  Find out if there are local REIA's and go to the meetings.  Go to open houses, look around and talk to the agents.  They're usually sitting around bored (well many times, anyway) and are glad to have someone to chat with.  Drive around in areas you think you might want to invest.  Call up some mortgage brokers and talk them to about getting investor loans.

At some point, you'll start figuring out what interests you and what doesn't.  And what makes sense for the time and money you have and what doesn't.

Jon

Anthony Sulecki · Answer

Hey.

There is a million ways to spin "investing". What do you want to do?

Peter Spiro · Answer

What does that mean, "picking up properties at wholesale price"?

Calixto Urdiales · Answer

Hello there pspiro-

Welcome to the club and I am glad everyday when I hear that there is someone out there that decides to get into the REI game! You might want to try picking up properties at wholesale price and turning them for a slight profit. Or if your into the long term thing I would day to pick up REO properties and then hold them to rent for positive cashflow. Either way you can browse through all of our forums and you will find what you need to know about renting and flipping houses. Thanks for your time and have a wonderful day!