Rental Property Investor · Memphis, TN · Member since 2015 · 203 posts · 135 votes
Background...
I'm in Memphis Tennessee and I've done a fair amount of research, enough to know that I need to jump in already. I have a little knowledge of my market and a little knowledge of real estate. I have a degree in Finance and a background in Data Analysis, Marketing, and Sales, and I currently work for a REIT.
Plan...
I think my best move is get started wholesaling. I love the marketing, negotiating, and analysis (of both deals and marketing campaigns). I have my personal finances in order ( emergency fund, checking, savings, monthly budget ), and I only have $1000 to get started. I think my first move is to buy some business cards, setup a website, get a list, and send out postcards (since they appear to be cheaper than yellow letters). I'd like to put half my earnings back in to generating more leads, and half in savings to pay cash for my first rental property.
Expected outcome?
The way I figure, I'll learn a lot about my market, as I go. I'll sell properties to other investors, figuring out who is really killing it and what they're doing. Watch and learn from them while providing them value.
Does this make sense to anybody? What would you do with $1,000?
@Ben Roberts I love your question. It's a good one. I am a full-time wholesaler in Seattle, WA. The #1 key to success is volume of leads and your ability to convert them to deals, or none of the other stuff even matters. Spend some of your up front education time learning how to effectively speak to sellers rather than focus all on the real estate part. Also focus on just getting a deal (lead) and the rest will fall into place. If you get a good deal, everyone will be here to help & guide you on the next steps. If you get nervous when you speak to a seller just do the best you can and say you will review with "your investment team" and get back in touch within 24 hours with an offer. Then throw out your questions to the BP universe and to your local investment club network and you will get answers/help on how to proceed. Here's what I would do with $1000.
Create a Property Radar account so you can pull lists for direct mail ($50)
Buy some Post It notes / drive for dollars and door knock or leave a post it note, also track those addresses to send direct mail ($50)
Create a Podio account to manage your leads and do follow up - Free basic acct?
Get a phone number to use off Vumber or elsewhere / don't use personal # (cheap)
Buy some bandit signs ($100) - time block and put them out
Buy some direct mail supplies: paper, envelopes, stamps $150
Spend the rest on direct mail postcards (go for volume) Check out yellowletters.com or other services to do it for you. Get it done efficiently and out the door.
Spend the monthly cash flow you can afford on more direct mail that you pay someone else to send out. Don't over think this, just do it consistently
Spend your free time door knocking, putting out bandits and sending out direct mail letters your write and mail out yourself
Pick 2 or 3 local investment club meet ups and go to them consistently.
Find a successful lease option investor in your local market and network with them so they can teach you that investment strategy as well.
Other Tips:
Be yourself. If you are a nice, genuine person, just speak that way to others and be patient with Sellers. Don't just scratch the surface in finding out what the Seller's wants & needs & hold backs are. Go deeper if you can as this will be your road map on how to make an offer they will accept and how to compete against other offers.
Hand write and mail out direct mail letters to the driving for dollars or balance of names on your list that you pulled
Learn creative financing strategies from guru's like Joe McCall so you can identify different deal structures and have a solution for every lead type that contacts you.
Don't set your expectations low on your wholesaling fees to start. Find out what the top wholesalers in your market are getting and set your expectations at no less.
Happy Holidays and best wishes for a successful 2016!
If I only had $1000, I would invest it in an aggressive, no load mutual fund at a company with a track record (i.e. Vanguard) and turn it into $2000. OR I would learn a skill-based facet of gambling (poker, blackjack, for example) and see if I could multiply it that way.
Lack of capitalization is the primary factor in failure for nearly all small businesses. Real estate is no different - in fact, I say it needs higher levels of capitalization than some other small businesses.
Since you have familiarity with real estate from a financial point of view, why not try your hand at consultancy, assuming your job doesn't have some kind of non-compete clause?
I'm in Memphis Tennessee and I've done a fair amount of research, enough to know that I need to jump in already. I have a little knowledge of my market and a little knowledge of real estate. I have a degree in Finance and a background in Data Analysis, Marketing, and Sales, and I currently work for a REIT.
Plan...
I think my best move is get started wholesaling. I love the marketing, negotiating, and analysis (of both deals and marketing campaigns). I have my personal finances in order ( emergency fund, checking, savings, monthly budget ), and I only have $1000 to get started. I think my first move is to buy some business cards, setup a website, get a list, and send out postcards (since they appear to be cheaper than yellow letters). I'd like to put half my earnings back in to generating more leads, and half in savings to pay cash for my first rental property.
Expected outcome?
The way I figure, I'll learn a lot about my market, as I go. I'll sell properties to other investors, figuring out who is really killing it and what they're doing. Watch and learn from them while providing them value.
Does this make sense to anybody? What would you do with $1,000?
My friends @Account Closed are both here in Memphis, both on BiggerPockets, both have started wholesaling in the past month or so, and both got a property under contract last month.
I don't know this, but I'm guessing they didn't put more than $1,000 into their start up costs.
If they are willing to share with the BP world, it'd be awesome to hear how they got started.
If they aren't ready to share all the details yet, maybe you could send them a private message and see if they'd give you a few tips so you can get a deal lined up.
At the end of the day, wholesaling is a business not a hobby, which it sounds like you totally understand. When you pull the trigger, I recommend you just get after and stay after. I know you can make it work if you want it bad enough.
@JD Martin, thanks for the advice. I LOVE poker but I'm not sure that gambling is the way to go... My regular job provides me with a few hundred dollars each month that I can toss towards real estate (which is how I got my current chunk of change). How much capitalization do you think I need to get started wholesaling?
@JD Martin, thanks for the advice. I LOVE poker but I'm not sure that gambling is the way to go... My regular job provides me with a few hundred dollars each month that I can toss towards real estate (which is how I got my current chunk of change). How much capitalization do you think I need to get started wholesaling?
Ben, not being a wholesaler myself, I can't really say what is an appropriate budget - but I would imagine that, at a minimum, you would have some type of website, a phone number, business cards, and an advertising campaign. If you did direct mail, every 100 pieces will run you about $60, including materials and postage but assuming you do all the rest of the work yourself. I would also assume a purchase of some type of specialized mailing list, as a generic campaign might be a complete waste of time. So I would imagine you might be able to send out maybe 1,000 pieces total. I don't know what the response rate is on things like this, so you would have to take that into account as well.
Personally, I think it sounds like a hell of a lot of work with anyone's guess at success rate. Have you spoken to other wholesalers in Memphis? What is their experience & annual income from wholesaling?
Finally, I suspect most people get into wholesaling because they don't have any money to do anything else, not because they have any real knowledge that it's a great way to make money in real estate.
We will definitely talk more about wholesaling on Monday night. I'll tell you all about my buddy who went from 0 experience to full-time wholesaler in just 24 months. It's a great story!
Thanks @JD Martin. Already set up with a phone number and business cards. Working on a website now (I've got those skills) and looking to start the marketing campaign. I'm currently looking to connect with other wholesalers, networking, etc. I expect to gain more knowledge than profit initially, that's part of why I'm looking to start wholesaling.
In previous endeavors, I've found about 2-4% response rate from a mail campaign, and from what I've read on BP, that seems to be true in real estate as well. I think I need to send out about 5000 pieces of mail to get 100 responses. I'm just not entirely sure what the conversion rate should be from there. If I get 1 deal, I'll break even on the campaign. 2 deals would double my money. But I doubt most people start with a $3,000 marketing campaign. So I'm definitely looking to figure out how to make those numbers jive.
@Ben Roberts at least you're thinking about numbers that way. Nothing is impossible with the right mindset, but you are facing long odds with such a small amount of money. I know you mentioned an emergency fund - are you funded at least 1 year of living expenses?
Jd Martin I've been investing in the stock market using vanguard etf's for years. That's very unrealistic to expect a 100% return on your money in a short period of time. I agree that vanguard etf's/mutual funds may be a good option but an investor can expect an average return of 8% per year (long term) which is much more realistic. Let me know your thoughts
No. I'm NOT giving up my day job. But I would like to be able to walk away from it eventually. I've got $1000 in the e-fund and savings accounts fully funded for anticipated large expenses over the next year (Kids camp, school and car repairs), so I feel I'm prepared for 2016. Obviously I cant predict everything but the savings and e-fund have helped me gain wiggle room in my monthly budget, enough that I'm ready to take this plunge. I expect it'll be slow going at first. I love building, growing, working on projects, so the long small amount of money and long odds is more appealing to me.
I have no doubt in my mind that I will, someday, acquire at least 1 new property each month and then, eventually, live off of my passive income completely. But before I can run, I've got to crawl. I'm on my knees and ready to go...
Jd Martin I've been investing in the stock market using vanguard etf's for years. That's very unrealistic to expect a 100% return on your money in a short period of time. I agree that vanguard etf's/mutual funds may be a good option but an investor can expect an average return of 8% per year (long term) which is much more realistic. Let me know your thoughts
:) I didn't say you'd turn it into $2000 overnight. I invest with Vanguard's Capital Opportunity fund and have almost tripled my money in the past three years. I believe this fund is closed to new investors at this time, but there are other aggressive growth funds that are about as good. My real point was that $1000 is pretty easily to just toss into the wind on something like this, with limited likelihood of success.
@Ryan Dossey, yes. I do have $1K and I do for work for a REIT with a very niche small, though very expensive, niche market. I can't leverage my current employer to get started in local residential real estate. Someday, I hope to compete with my current employer but I've got a LOT of baby steps to take first.
Start with your 1000, go buy a pickup truck that does not run but has a good tranny, body ( I say pickup because a LOT of folks that work need trucks...market is decent) Comp your area and find a medium average number of 4 grand for this truck WHEN IT RUNS. get it fixed for say 1-2k now you have up to 3k into it. but it sells for 4000, you now have 2000 to do things with right? Ok now, take your 2k and go buy another 2 trucks (or whatever your market has a good demand for) and do this again, ok so now after a month or 2 you have about 4-5k saved from NO investment from you other then time ....now....If you are a first time home buyer go find a house that takes a 5% down, one that's in need of repairs that you can do yourself. Again, your going to use your down you made from flipping cars to buy the home, your going to live in this **** hole while you sub rent out your primary home or apartment. What your going to do is work your *** off weekends and nights fixing this crapper up so it's decent, make it charming, get Craig list help for 8 bucks an hour.. they may have bad criminal backgrounds so watch your stuff but work them like no tomorrow ok, and do this off your extra income your making per month and ALSO be finding another car to flip on the side to fund this fix up of used wood, old doors, some paint and a LOT of HARD LABOR...but here is the key, by doing this if you BOUGHT WELL BELOW MARKET on this UGLY house....guess what your doing. you are MULTIPLYING your value from your low cost labor and skills at finding good deals for free stuff to fix it up...This is pure brain spit so I am just typing as I think sorry...so....Here is the thing, IF you did this right, you took 1k and in less then 6 months you could and should be turning it into lets say 25k in profit when you sell this house that is now "nice" "cute" and a good "first time home owner home"
so, that's one way to take 1k and start to become financially free, it's basically what I did but I started with a little more cash, and now my personal value after many deals has a decent amount of zeros in it.
The really bad part is trust me when I say this the first part is THE WORST and the HARDEST. the more you do. the more capital you have access to the less work it becomes in a somewhat unfair exponential curve. lol
Oh and lets not forget, screw your brain on that is counter to what the entire society yells at you from the adverts, the marketing etc etc....become a man that LOVES to spend ONLY on things that make him more INCOME, not on anything that depreciates. that is the truly and only GOLDEN KEY needed to become wealthy over time. Once your brain is re-wired, and I literally mean RE-WIRED you will and forever become more wealthy then you where the day before.
Another note: CREDIT...build it....keep it high as a kite. it will serve you so so well when the time comes that you need mountains of cash to make a deal happen. once you have good credit, banks should become as common for you as a drunk is to a liquor bar. Really, banks DO contain mountains of cash, IF you know how to play the system, from lines against good props, to loans for commercial buildings, to personal lines of credit, to large credit card limits..and just like McD a bank is on almost every corner of ever town. They are all WAITING for you to get good credit so they can LEND you piles of money, over and over and over. Never discount Credit.
Also a good side note here: once you learn this way of being as a person, no matter what happens in the world or how hard you fall back down you will KNOW HOW to get back up and do it again, over and over so you have literally empowered yourself for success, as corny and cheesy as that sounds it's actually true.
@Obin Olson I smiled reading your reply. In the last 3 or 4 years, I've flipped about 6 vehicles doing EXACTLY what you said. I love turning wrenches. Without diving in to the details of my personal financial history, the money from each flip was used to pay off/down some debt or large unforeseen expense. The last 2 or 3 flips I reinvested the money each time and wound up with a free to me Dodge Durango. Leather seats, running boards, 3rd row. All the bells and whistles. I'm no longer in that sort of financial situation and there are a few other people that I need to take in to account when choosing living arrangements and debt accumulation. My aim is wholesale and reinvest the funds. Probably half back in to the business and save the other half until I can pay cash for a property. By the time I've got enough cash, I should also have the experience to market and identify just the right property. I'm willing to take a slower but disciplined approach to build a business with as little debt as possible. I'm not against using leverage but I don't think that's the right approach for me at this point, just starting out.
Glad I brought a smile man. the sun always rises so should you and embrace the grind. If you play this like a game it's always fun, and the rewards keep on coming as you grow it.
Also of note try your BEST to BUY AND HOLD, make the purchase so that it cash flows monthly positive. this is how you really get the bang for the buck, at some point you start to live off the cash flow, and after that you start to have more then you need and you just take it right back and put it into another deal, and that deal puts it's self into another deal and before you know it deals are growing on trees like leaves. You are the CONDUIT to a system of energy, and like a good magician you wave this energy around like your wielding a sword and where you point this energy you can suddenly grow things without effort because people always want to work, you just have to give them jobs to do that increase your value along with feeding them. It's a really fun game, I am just starting to get to the point where it really starts to work and I can maneuver not hamstrung by not enough funds.
Ben, I would focus on your human capital right now since your financial capital is not large but as a young guy with a marketable degree your biggest asset is your future earnings. So we want to boost that asset. I would not run around town on the side hustle just yet. I would focus on your day job (and increasing your earnings and position in your organization), go all out learning and reading every real estate book in the library, even buy a few used..listen to every free podcast on the Internet....then put the savings in, like the others say, a low fee index fund.. As it grows, so will your knowledge. Meet and network with every investor in town that will talk with you for free (or cost of coffee or lunch at most) ..In a few years you will have the equivalent of a self taught masters degree in real estate and maybe, if you keep saving, and your money grows, enough for the down payment on an owner occupied duplex or something... Then maybe grow from there..A much stronger start, in my view, than spinning your wheels chasing leads for someone else... A real start not a false start...At least this is what I would do but to each his own. Best of luck...
if i only have $1000 bucks i'ld buy me 5000 business cards. then i go to the biggest shopping center there is and buy me a pair of comfortable shoes or sneakers. while doing this i would be giving out my cards.
with my new sneakers on i would knock on as many foreclosed distressed properties i could get to . walking the neighborhood that you want to invest in is the most effective way to find leads. leads equal money. you will find a deal then wholesale that deal.. and repeat
