After the learning, studying, and research I'm now ready

7 Replies

Hello BP,

After months of watching videos and building a good educational foundation I just got a loan for $25k from my 401K, and I'm ready to take action.  I must admit, i am nervous as all get out.  I have always been known to be the cautious, frugal type amongst my friends, so this is a big step.  I know this is the right thing to do, and as I read in Rich Dad Poor Dad, I am going to acquire assets and not liabilities.  I'm going to have my money work for me instead of the other way around.  

I have a good understanding and knowledge of Wholesaling, Flipping, and Renting. I'm going to be investing in the suburbs of Detroit, Mi., and maybe in Detroit if the right deal presents itself. There are a lot of different ways i can start and i know it all depends on what i want from REI. Long term I want i want to rent houses and build up a large portfolio of houses so that i can transition from my 9-5 in a few years. This is the very beginning for me and i finally stepped up to the plate. I have a real estate agent sending me daily reports, in which i see some good potential deals. There is also a tax deed sale auction coming up that i was interested in, but with me being new i am a little nervous purchasing in this arena to start with. I would hate to purchase a tax deed and find out that there are back taxes, or its inhabitable, and other unknowns that will eat up my start up money. (I know there is a risk in any decision i make)

For the new or experienced investors, what would you do if you had 25k at 3.25% interest for 5 years (60 months) for your first purchase in REI?

Thank you very much!  

Leon

Hi Leon,

I am a new investor in Macomb county and have been wholesaling for the last 6 months. Like most REI savvy people will tell you, wholesaling is a lot of work, and will, more than likely, be somewhat overwhelming to someone that has a 9-5 already. I'd recommend wholesaling only if you're willing to spend some money on marketing ($500 minimum/mo) and commit 10 or more hours a week to the business. A Buy and Hold strategy in one of the many low-income suburbs of Detroit, can provide great cash-flow. I personally focus on wholesaling houses that investors can be into for less than $30,000 and rent for $850+/mo in safe neighborhoods. In short, I would say that your commitment level should determine what strategy(ies) you decide to implement.

- Jeff

It really depends on what you want to do. Do you want to start building a portfolio of rentals or do you want to start flipping first? Or both? You can do either of these in Detroit with $25,000, but probably not outside of Detroit. Plus, flipping inside of Detroit isn't a good business plan, only rentals are. As far as wholesaling, you don't need very much of out-of-pocket money for that. The first thing to do in my opinion is attend many, many investor meetings and start to meet people that you can start building relationships with and that that you can trust that are in the business in Detroit. Then ask questions and they will guide you and you will figure out what your niche is after a while. I personally would steer clear of Detroit proper but any outlying areas are going to cost you more than $25,000. I wish you all the best in your journey!

@ Jeff Soloway, Thanks for the response and your feedback.  I'm no stranger to hard work and I'm absolutely dedicated to committing my time and money to anything that will give me a return of investment.  I will probably do a mixture of Wholesaling, Flipping, and Buy and Holds anyway, but I just wanted to see what might be the best direction.  However, I'm leaning more towards the buy and hold so that i can begin paying off the loan with the cashflow i receive for the rental property. 

Thanks again for the response, and I appreciate you taking the time to offer your advice. Good luck to you and your REI endeavors as well.

Leon

@Kathy, Thank you as well for your response and feedback.  Yes, the end goal will be to build a portfolio of rentals.  Although, I probably should have clarified my initial post about how i wanted to spend the $25k.  I'm not necessarily looking to spend the whole $25k on one property (if i don't have to).  If i can stretch it to two properties in the form of down payments and rehabs, that would be cool too. (which would be really a stretch)  Or a down payment on a house and another income producing asset.  Yet, i wouldn't be opposed to spending a portion of this on the down payment and using the rest on repairs.  I wouldn't be looking to invest in Detroit unless there was a very good deal that i couldn't pass up.  I'm familiar with the good and bad areas of Detroit, but I will focus more of my attention in the bordering suburbs.  Thanks for the tips on the investor meetings.  I'm going to sign up for some of them as well.  I have listened to countless webinars, and scoured the internet that has given me an abundance of good information.  

Again, i really appreciate you taking the time to respond and your recommendations are duly noted.  I wish you much success in your journey as well. 

Thanks again,  Leon

Leon,

I am just getting started in REI as well. Obtained my RE license so I can control and be first to good deals. Not to mention the $ savings. I also finished Rich Dad, Poor Dad a few months ago. IT definitely makes you WAKE UP and see things in a different perspective.

This is something I have to keep telling myself and that is to be focused and determined. It's nerve racking breaking from a "complacent" state that a 9-5 job develops in you. I don't know about you, but having seen the world outside of that state is ridiculously exciting!!

Originally posted by @Tim Puffer :
Leon,

I am just getting started in REI as well. Obtained my RE license so I can control and be first to good deals. Not to mention the $ savings. I also finished Rich Dad, Poor Dad a few months ago. IT definitely makes you WAKE UP and see things in a different perspective.

This is something I have to keep telling myself and that is to be focused and determined. It's nerve racking breaking from a "complacent" state that a 9-5 job develops in you. I don't know about you, but having seen the world outside of that state is ridiculously exciting!!

 Thanks for the response.  It really means a lot to know that there are people out there will share their knowledge and experiences for newbies.  

I just downloaded Rich Dad, Poor Dad August 1st from Audible.com and I have already listened to it at least 4 times.  That book is amazing, and my whole outlook on life, and being an employee has done a complete 180.  The "Rat Race" is real!!!  It was good that i already read books such as Think and Grow Rich, The Millionaire Next Door, Good to Great and many others that made RDPD easy to understand. 

Having your Real Estate License is a huge benefit, and that is something that I'm considering down the road if not sooner.  I am also excited about finally taking action, and even though i haven't made my first purchase, I know this is something that i should have started doing years ago.  I think back to all of the liabilities i have purchased and money i have blown just because i was financially illiterate, and i cringe.  Since reading RDPD, I cut out so many unnecessary things in my life, almost immediately.  By doing that i calculated at least $600 a month more that i now have to invest.  I wish you much success in your endeavors and hopefully we can cross paths on our journey to financial freedom.

I have to add that BP has also been pretty much a one stop shop for a lot of the questions that I have by surfing their videos on YouTube.  

Take care,

Leon 

One year later, i wanted to provide an update to my original post.  Although i haven't been as frequent as i would like to be here on BP, my desire and dedication to Real Estate Investing hasn't wavered.  I'm glad to announce that i have one successful buy and hold in place, and in the process of selling another.  I would like to thank everyone who responded to my initial post with their suggestions as it truly helped me make a decision on what i wanted to do, and provided additional areas that i needed to study and research on.  My next goal will be to purchase a multi family via portfolio lending with a local bank before the end of 2016.  Duplex to Quad, and/or 5 units and up (commercial).  I am still learning as much as i can, and even with a buy and hold as well as another house i'm selling, i still have a lot to learn.  I could have still been stuck trying to learn as much as can before taking action, so it's not cliche' (TAKE ACTION!!!)  It is really the best experience that you can receive.  

Again, BP has provided me with a wealth of knowledge from the forums/podcasts and i know i wouldn't be this far along if it wasn't for the great people here sharing their ideas and experiences.  

Thanks again, and i look forward to being more active and hearing more from my fellow investors. 

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