Help!! My Wife Only Gave Me $10K

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Help!! My Wife Only Gave Me $10K

Jon Carter
Millbrook, AL · Member since 2015 · 20 posts · 12 votes

So here's my challenge.  I want to start investing in RE but my wife isn't so thrilled.  She says I can have $10K to start out with.  If I can make some money using that she says I can have more.  (Guess who pays the bills?)

So, I said to her, "How do you expect me to do anything with that?"

She says, "You're always on that Bigger Pockets website.  Why not ask them?"

So here I am.

What do you all think?  She says I have to do this alone.  No cheating with Clubs, partnering up, etc.

Would you go for a mobile home?  Vacant land?  Can you make any money with $10K?

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Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
11y

I think you're approaching this the wrong way.  Rather than have to "prove" to your wife something, maybe you should involve her more and talk with her and make it a project both of you can get into. Otherwise it seems like a "you versus her" thing.

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  • Jon Carter
    OP
    Millbrook, AL · Member since 2015 · 20 posts · 12 votes
    11y

    Thanks Christopher!

    I didn't mean to start anything.  I was just really trying to understand and learn.  I hope I'm not going to get people upset.

    0Reply
  • Richard Kramer
    Woodland Park, CO · Member since 2015 · 1 post · 1 vote
    11y

    I'd go with the mobile home idea. Surround yourself with an accountant, RE agent and banker who are all investors themselves. If you can do some or most of the repairs that come with a mobile home you'll definitely come out on top.

    1Reply
  • P. Martin
    Residential Real Estate Agent · San antonio, TX · Member since 2013 · 130 posts · 44 votes
    11y

    What is the roi on divorce?

    I'm kidding I'm kidding!

    3Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    11y

    You prevent a buyer from going around you in a wholesale deal by getting the property under contract.  If the seller has a contract with you, they can't see it to someone else.  That's not to say it's impossible for you to be cut out of the deal.  But the contracts protect you against that.

    I'm not upset.  And I don't mean to discourage you.  I do mean to inject a little realism into your calculations.   An investment that generates 50% returns is in the "too good to believe" category.  Lending hard money is the best I've found and that's doing good to earn 12% on average.  

    But if you're talking about $10K plus and significant amount of time and effort, that's not an impossible goal.   Difficult, yes.  Risky, too.  Given that cash and that goal I don't see a better alternative than giving wholesaling a shot.  The odds are, IMHO, well over 50% you'll run through the $10K and never do a deal though.

    0Reply
  • Jon Carter
    OP
    Millbrook, AL · Member since 2015 · 20 posts · 12 votes
    11y

    Ouch Jon.  Those are rough odds.  But I appreciate the honesty and advice.

    Richard, have you done mobile home rehabs.  How did they go?

    0Reply
  • Christopher Rodriguez
    New York, NY · Member since 2015 · 173 posts · 33 votes
    11y
    Originally posted by @P. Martin:

    What is the roi on divorce?

    I'm kidding I'm kidding!

     good one !

    i would guess 50% loss

    100 % losing your hair,stressed and.......

    the list goes on !

    0Reply
  • Kathy Utiss
    Specialist · O'Fallon, MO · Member since 2010 · 148 posts · 46 votes
    11y

    $10,000 isn't much..But you never know with RE. As that's why people are in RE. Returns can be exceptional. Mobile homes may not be bad as they are probably the least expensive to rehab/resell with a small profit. Maybe more profit by holding it as a long term rental. Sometimes people invest in 2nd mortgages prior to foreclosure sales to reap rewards on properties prior to sale on homes that are in good shape and should go for above and beyond any notes on the home. Sometimes people try to raise money thru reg d filings. Not sure how much that works but if it's true could be the best $6,000 spent to raise real money to do RE. Another avenue I've been learning about as well is CTL loans. Where you buy commercial properties based on the credit of the tenants in that commercial property. They claim only 2% down on such loans. If you ask me commercial RE is the place to make some real returns :) but is also the most expensive :) 

    0Reply
  • Christopher Rodriguez
    New York, NY · Member since 2015 · 173 posts · 33 votes
    11y
    Originally posted by @Jon Carter:

    Thanks Christopher!

    I didn't mean to start anything.  I was just really trying to understand and learn.  I hope I'm not going to get people upset.

     the only reason i said this is because everyone has their particular point of view/experience.

    will these point of view/experience be yours? i doubt that.... 

    because you ask questions,inquire and learn

    i just hope this does not scare you away from real estate as an investment avenue.....

    what i will say is park that money, tell your with the time limit and the ROI are off the table

    then go to REI Clubs in your neighborhood connect. ( do not buy into their services that they pitch their, come back on bigger pockets discuss the opportunity.

    when you get a chance check out www.bigger pockets.com/ubg 

    UBG stands for Ultimate beginners guide ( incredible stuff provided here that squashes all the hard selling these Gurus pitch to you)

    0Reply
  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    11y
    Originally posted by @Jon Holdman:
    Originally posted by @Jon Carter:

    OK  I have one question that I am kind of lost on.

    Isn't wholesaling a lot like being an agent/broker without the license?

    Its EXACTLY like being an agent without a license.  Wholesalers use techniques like assignments and double closings to avoid actually doing unlicensed brokering.  But the job is exactly the same as what agents and brokers do.

    I would not agree that it is "Exactly" like being an agent. First off, successful wholesalers are shopping for motivated home sellers with properties in less than perfect condition to wholesale to a rehab investor or they are shopping for homes that would meet cash flow standards of their "investor buyers" so most wholesale deals are completed by selling to an investor rather than a buyer who plans on occupying the property. The best way to wholesale is when your end buyer is all cash and that is typically going to be an investor rather than an owner occupant. That said, the mechanics are very similar between the two, just the strategies are a bit different. Agents market via the MLS while most wholesalers market for buyers in advance and then shop for properties meeting those criteria.

    I also agree with the sentiment that a 50% return in 6 months is a steep goal when starting out, however, certainly obtainable IF you choose a strategy that is highly active. Passive investment strategies will not ever deliver such returns without massive amounts of risk as Jon eluded to. So again, go with his advice, pick a strategy that fits your liking, abilities, and desires, and then learn all you can about that strategy and the market you intend to invest. Then and ONLY then do you start investing. learn first, invest second.

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    1Reply
  • Christopher Rodriguez
    New York, NY · Member since 2015 · 173 posts · 33 votes
    11y

    correction with the word THERE when i wrote THEIR ( do not buy into their services that they pitch there, come back on bigger pockets discuss the opportunity.)

    0Reply
  • Jon Carter
    OP
    Millbrook, AL · Member since 2015 · 20 posts · 12 votes
    11y

    Hi Kathy

    Thanks

    I think I'm going to have to Google a lot of what you suggested since I'm not familiar with the terms.

    But, like I said.  I have the time and will make the effort.

    0Reply
  • Christopher Rodriguez
    New York, NY · Member since 2015 · 173 posts · 33 votes
    11y

    i am extremely grateful Josh Dorkin for creating this site 

    and check out brandon turner's podcast 

    disclaimer i get nothing out of mentioning the two above

    0Reply
  • Jon Carter
    OP
    Millbrook, AL · Member since 2015 · 20 posts · 12 votes
    11y

    Hey Will!

    So a wholeseller looks for the buyer first and then the seller that has a property that meets what the buyer is looking for?

    0Reply
  • Jon Carter
    OP
    Millbrook, AL · Member since 2015 · 20 posts · 12 votes
    11y

    How much of a finder's fee does the wholeseller make?

    0Reply
  • Mike Roy
    Rental Property Investor · Bath, ME · Member since 2014 · 220 posts · 288 votes
    11y
    Jon - I'd do my homework before spending a dime. $10k isn't a lot to get started in real estate, but it's still a lot of money. No offense, but you are asking some pretty basic questions that Google could quickly answer. Some of the more successful investors here studied for years before deploying real dollars. If you're looking to prove something to your wife, the first thing you should prove is that you know what you're doing. There are a lot of angles to get into real estate with varying degrees of risk. Many of them are nothing more than jobs too, so you really want to think about your motivations, goals and exit strategies before spending that $10k. Good luck!
    2Reply
  • Joe Cummings
    Philly Burbs, PA · Member since 2015 · 338 posts · 133 votes
    11y

    To make that 25% on a 10k investment, you better have some skills and be willing to get your hands dirty.

    0Reply
  • Kyle Penland
    Investor · Dyersburg, TN · Member since 2015 · 320 posts · 100 votes
    11y
    I could buy a property cash for that and generate 450.00 a month.
    2Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    11y

    @Jon Carter

     You still haven't answered the questions I posted. If you would, you might get more ideas than wholesaling. Unfortunately, without real information on your market, nobody can give you specific information. Every market is different and with $10,000 and houses are selling for $20-50,000 in your market that's one thing. If you have $10,000 and you're in a market where houses are in the hundreds of thousands that's a totally different thing. Details matter.

    2Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    11y

    Jon Carter please make sure to validate anything you have read on this site for yourself.

    Another poster mentioned this:

    "Where you buy commercial properties based on the credit of the tenants in that commercial property. They claim only 2% down on such loans. If you ask me commercial RE is the place to make some real returns :) but is also the most expensive :)"

    Whoever has told this person you can buy use a CTL loan for 2% down is false. I do commercial real estate everyday. Just due diligence alone is tens of thousands of dollars and then you have title, attorneys fees, lenders fees, and on and on.

    There are some situations where you can buy a pharmacy for 5% down that has no annual increases in the primary term of the lease when you hit a certain DSCR on a BBB- plus credit tenant but you still have to qualify as a borrower and those properties are one in a thousand.

    Let's play out theoretically that you could buy a property with 2% down. That is a 500k commercial property. It would have full unlimited recourse as a local bank loan. A credit tenant rents at a per sq ft lease rate that generally sells in the millions in sales price. You couldn't even buy if that was all true because of no reserves and no extra money for due diligence and closing costs.

    I just can't stand all the bad information floating around out there.

    When I was talking about business loans I was meaning this.

    As an example take a Jersey Mike's subs. It does 50,000 a year profit. The owner wants to retire and sell. In the marketplace sellers try to get a 3 times profit multiple or 150,000. Buyers try to purchase with a 2 multiple or 100,000.

    SBA loans are tough to do so sellers offer some owner financing. Buyers goes in and puts 50,000 down. Owner finances 50,000 business note at 7% interest with a 25 year amortization with a loan due in 5 years. After 2 years in the seller just wants their money and they are willing to sell the note at a discount to do it.

    40k is left owed and after some negotiating the seller will sell the note for 15k today. You buy for 15k on a note valued at 40k left.

    I am not getting technical on the numbers and this is a very loose example but just to see how it works.

    I do not like residential notes because of all the government regulations to HELP people that were enacted. Too much red tape for me to deal with. When buying business notes you have to know how to analyze businesses and the borrower to calculate risk of default percentages.

    Any venture out there you have to really understand the minute details of what you are doing or you can get burned easily.

    I get asked all the time on commercial investing what is a good amount to start and when I say a minimum of 500k to 1 million to start in liquid funds they are shocked. They are thinking doing something with 100k on their own. Unless it's a hole in the wall in a rural town mom and pop type thing then it Is not happening.

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    2Reply
  • Christopher Rodriguez
    New York, NY · Member since 2015 · 173 posts · 33 votes
    11y

    @Joel Owens I like that even if it is a loose example.......

    I rather be grounded in the truth then sold on a lie

    0Reply
  • Will Pritchett
    Rental Property Investor · San Antonio, TX · Member since 2011 · 513 posts · 290 votes
    11y
    I agree with showing your wife what you like about RE so she may become more empathetic if not all out enthusiastic. Keep learning and your vocabulary will expand to better explain why you are interested. Listen to the latest podcast and learn what they mean by the acronym "IDEAL". These are some of the aspects of real estate that set it apart as an asset class. As far as your cash limitations listen to the podcast regarding sub 30K properties. I wish I could recall the woman's name who did that one but she is making that work in her area and she is a positive person that is fun to listen to. Lots of opinions here. Some say sub 30k won't work. Others do it every day. Find a starting point. I would focus on inspiring your wife to see what you see in real estate. Success is much better when it occurs because of someone's support rather than despite their roadblocks. You have my support! Stay the Course. Good luck!
    0Reply
  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    11y

    @Jon Carter

    There's one thing that's not spoken about here and that's dealing with terms deals that do not ta a lot of money and 

    I would advise you to look at expired listings and talking to those people about selling on terms which doesn't cost a lot of money. 

    P.m. me if you're interested

    1Reply
  • Richard Dunlop
    Investor · Detroit, MI · Member since 2014 · 755 posts · 462 votes
    11y

    @Jon Carter

     Hide the $10,000 under the mattress and pretend you lost it on your first deal.

    Ask for just one more chance and get $10,000 more; now with $20,000 to invest...

    It's called Creative Financing!

    3Reply
  • Account Closed
    Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
    11y

    Maybe you could get more money from your Mom without all the dream crushing conditions.

    2Reply
  • Richard Dunlop
    Investor · Detroit, MI · Member since 2014 · 755 posts · 462 votes
    11y
    Originally posted by @Account Closed:

    Maybe you could get more money from your Mom without all the dream crushing conditions.

    Good suggestion.

    There deals in AL that can be aquired for that amount of money.

    Do you have to cash out to prove your success? Or if you put $10,000 down on a property that is rented and cashflowing.  Is it good enough if a real estate agent's opinion is that you now have $20,000 equity?

    You are setting yourself up to give away all of your profits in transaction costs if you try to cash out.

    1Reply
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