What is stopping you from making your first deal?
Hi Everyone, I am looking for obstacles that are holding investors back from accomplishing their first deal. Leave some comments below and I will do my best to offer insight. -Thanks for your input Sterling.
Other experienced investors are more than welcome to chime in as well.
@Sterling White, I'd have to say that NOTHING is holding me back. Rather, there are challenges I have to overcome, and I'm taking the steps to do that.
In other words, it's all on me! (and you, and every other new investor here).
Sounds like a "define your target market" question. Are you working on an online course, book, article, etc.? :-)
Excuses which lead to not taking action
Originally posted by @Michael Williams:
Originally posted by @Armen Zakarian:Try this. Go onto Craigslist to the real estate part under house for sale and pretend to be a buyer. Many of the low priced houses for sale on Craigslist are wholesalers. Contact the person listed as the seller and ask them buyer questions. Is there an Ernest money deposit? Is it refundable or none refundable? Is this the least you will take for the property? What is the rent in that area (If not Listed)? How did you get your comps? Is that a final price or is it negotiable? It doesn't matter what the questions are at this point, what's important is that you are taking action. Do this exercise 3 times a day for 3 days. It will help you to get out of the analysis paralysis mode by taking action steps. This will also give you an idea of what some of the answers will be to those questions. The worst thing that could happen is you actually get in touch with the real homeowner, which won't be so bad. Take small steps, but most importantly stop second guesting and take them. You goal should be to reach 5 failures as soon as possible. That's five lesson that will improve your business. I've had 5 failed businesses and going all out for this sixth one, but I have learned so much from each failure. Take Action NOW!
This is wonderful advice! Thanks so much for posting. I have been a little stressed with what to say to sellers and building confidence on calls, this will help soooooo much! TY! I am already making plans to put this strategy to use! I am actually looking forward to 5 failures! LOL!
I have the funding to purchase my first deal, but what's holding me back is that I can't find a property!
funding, credit, finding the right deals
Thank you for the share @Philip Pape and completely agree. We mainly hold ourselves back from accomplishing what we set out to do.
I wanted to help people get past sticking points was my initial thought when posting the question. I will also post an article as well on here to further address those sticking points to provide more value.
How are you currently marketing to find these deals, @Andrew Spears?
I'm waiting until I move to the Detroit area in January...trying to think of a way to get started before I arrive...in the mean time I'm just reading and listening to those podcasts
I'm the only worker between me and my wife. I provide for us and my daughter. I'm 23 and I don't have anything saved up for purchases and I screwed up my credit a few years back and I'm making plans now to get that issue corrected.
To add on to those I am also stuck on what I really want to do in real estate. I'm in the process of applying to different apartment complexes so I can get into the property management business as a leasing agent. I'm planning on getting my real estate license next year as well and I'm debating on whether I want to be a RE Agent part time while also investing and owning properties. There are so many directions and my mind is pulling me towards every one.
What's holding me back is understanding the process of wholesaling (ie "assignment of contract"), locating buyers/sellers and TIME. Mother of toddler and now infant, hubby works out of town and I'm really debating not returning to work from maternity leave (in order to free up more time). Guess to sum it up FEAR and lack of full understanding. Need a mentor--- Super motivated with hubby's support. Just many factors holding me back. Any suggestions?
Originally posted by @Andre Cummings:My goals are Fix /Flip and rentals. I need more knowledge, what's a great source to study from? There's a lot of junk out there mainly high pitches/sales pitches.
You should get @J Scott's The Book on Rehabbing Houses and his other book : The Book on Estimating Repairs. You should also @Brandon Turner's The Book on Investing in Rental Properties.
wendell, can you please contact me.
Hey Sterling White
I wanted to thank for you for your time with any possible input . Whats stopping me on working getting my first deal is my ability to get pre approved for any financing from hard lenders due to my age (22) and a lack of a decent income and experience. although I do have a capital and a score of 709... Im looking to get into fix and flips with single families of up to 300k (thats what im trying to get pre approved for ). To add, I dont pay any car loans or school debt . Thanks
Originally posted by @Alisha Magwood:
What's holding me back is understanding the process of wholesaling (ie "assignment of contract"), locating buyers/sellers and TIME. Mother of toddler and now infant, hubby works out of town and I'm really debating not returning to work from maternity leave (in order to free up more time). Guess to sum it up FEAR and lack of full understanding. Need a mentor--- Super motivated with hubby's support. Just many factors holding me back. Any suggestions?
Well Alisha since you have a toddler now it is more important to spent that time with the baby. Learning real estate can be a long task or short task depending on the time you have. While you are at home on maternity leave utilize every moment to research real estate strategies ( I realize that is easier said than done with a toddler). First I would let everybody in my family know that you are doing real estate and you are looking for people that are in trouble with their house or just want to sell. You can get all of your first leads from family and friends because every one knows someone that is in trouble of losing their house. Another good source for finding leads that a lot of people look over is church. If you belong to a big church ask the pastor can you put up a bulletin. If the church leader promotes businesses have them announce it to the congregation. If there is someone at your church already doing it volunteer to help them and learn all you can. Your mentor my be under your nose. Your husband should let all his friends and colleges know as well. You are in nursing you are around people all day, always work what you do into the conversation, always. The skill comes in when you work it in without it coming off like a sells pitch. Here is one for you; "Girl between this baby and becoming a real estate investor I don't know if I'm going to make it" or "I just read this book on real estate investing and I see why they have all the money. Now I just took away all of your hurdles so no more excuses, go make that money. Your Welcome.
Originally posted by @Vincent Johnson:
Hey Sterling White
I wanted to thank for you for your time with any possible input . Whats stopping me on working getting my first deal is my ability to get pre approved for any financing from hard lenders due to my age (22) and a lack of a decent income and experience. although I do have a capital and a score of 709... Im looking to get into fix and flips with single families of up to 300k (thats what im trying to get pre approved for ). To add, I dont pay any car loans or school debt . Thanks
Hey Vincent,it's a damn shame to have a good credit score and still have problems getting money. But don't be afraid their are other strategies that don't require your credit or your money. What if you can get that $300k house without using your credit, or any of your money and cashflow. That's the strategy you should be looking at. PM me.
Originally posted by @Quincy Knighten:
I'm the only worker between me and my wife. I provide for us and my daughter. I'm 23 and I don't have anything saved up for purchases and I screwed up my credit a few years back and I'm making plans now to get that issue corrected.
To add on to those I am also stuck on what I really want to do in real estate. I'm in the process of applying to different apartment complexes so I can get into the property management business as a leasing agent. I'm planning on getting my real estate license next year as well and I'm debating on whether I want to be a RE Agent part time while also investing and owning properties. There are so many directions and my mind is pulling me towards every one.
Hi Quincy, I know how it is to be pulled in several different directions. Unfortunately that's also what held me back for so many years, consistantly focusing and refocusing on more than one thing. Well now my focus is clear and I'm quitting the job next month and going full MONTY!. I'm sorry...... full time. Narrow it down my man. Once you decide on which direction, execute. Contact me if you need help.
Originally posted by @Russel McMillan:
I'm waiting until I move to the Detroit area in January...trying to think of a way to get started before I arrive...in the mean time I'm just reading and listening to those podcasts
Hey Russel. You can get a head start by asking a question at the top about the Detroit market. Ask something like, "Anybody here doing well in the Detroit market"? You'll get plenty of responses, because I've seen the conversations. Thank me by becoming successful. Let me know how I can help.
Michael Williams Thanks for the advice. What do you think helped you narrow down your decision? I know it's a broad question but I'm curious as to whether there is a strategy behind it or if there was an area that made your more comfortable than the others.
Hard money loan give 70percent were would I get the rest of the money
My credit and capital were excuses. Nonetheless, set a goal to get to $50k cash reserves and an 800 credit score by Summer 2018. I'm still working towards that by aggressively paying down debt borrowing against my TSP at 1.5% to pay down debt in the teens. I'll have all debt aside from primary mortgage, leased vehicle, and student loans paid off by next summer. That leaves 1 year for some old delinquencies and inquiries to fall off. Should put me where I want to be.
The other obstacle is location. I live in Woodbridge, VA and I'm priced out. I've looked in Baltimore and I want nothing to do with it. Same goes for DC. I was looking in Killeen, TX, but I'm completely blind on that market.
I realized I had to get creative. I overheard my wife and her friend talking about the friend's sister trying to get rid of a paid for SFR. She was going thru a nasty divorce and landlording was taking its toll. I almost closed the deal on a Seller Financed deal, but her brother told her she'd be better off taking the income for herself. Oh well, i was going to be negative cash flowing until I refi'd anyway. But once refi'd it would've been at about 7% CoC. Still trying to make the deal work, I've agreed to managed the property for her at no cost and in return, she agreed to lock in my offer price and hold it up to 2 years assuming I continue to manage it for her.
If market trend stays constant, I should close with 40 to 50k instant equity, plus 2 years of landlording experience already under my belt.
Not ideal (I mean it's no money in my pocket now), but I'm in it for the long game.
Long story short. Once I cancelled my limiting beliefs, my mind automatically started finding solutions. I am taking what I learned from this experience and contacting all absentees with at least 90% equity in their homes and seeing if they will seller finance.
@Tim Kaminski find owner financing deals, use the money for some down payment and repairs, then refinance it when your credit is up to speed. Find something real cheap so you can get started and gain some experience.
@Stephen Seaberry There are TONS of property available in Killeen, Tx at a very low price (20-50K) price range, the only challenge I find on that market is that you have a high rate of turnover for the rentals and properties do not appreciate much in value due to most of the population being in the Army and coming in a out every so often. If you manage to get good tenants on your first try you will cash flow very high. Don't get stuck on that one property you are trying to buy, there are plenty of more you could get your hands on. Let me know how that goes as that is a market we have been scouting to get into.
@David Coleman you need to find the properties at 20-50% of ARV and then put the difference in between the 70% and the purchase price into rehab. Ideally you want to be 70% all in on your deals so you can have a 30% profit if you flip it. If you decide to rent it and refi it then your property most likely will be cash flow positive.
@Sterling White I have a great funnel of properties at my disposal most currently cash flowing. My management company is fantastic and all expenses thus far are squared away. The problem I've run into is my current private investor does not have the capital needed to fund the deals we're looking for. Yes we can always look at getting into a lesser amount of property, which is still a possibility, but why pull the trigger right away when there is the possibility of something greater. searching for start up LLC funding and/or other private money has been difficult as well . I have a great network of investors but all without the type of capital I'm looking for 10k here 20k there, but I am looking for a stronger investor we can grow with. Hard money rates can be out of control at times, the only other option is the bank, however we would need even further capital for down payments. I've been on the hunt for start up investors however continue to find nothing but fakes and ads. Any suggestions?
Lack of funds for me.
Originally posted by @Quincy Knighten:
Michael Williams Thanks for the advice. What do you think helped you narrow down your decision? I know it's a broad question but I'm curious as to whether there is a strategy behind it or if there was an area that made your more comfortable than the others.
As a serial entrepreneur I was good at all of my passions. I was good at graphic design, making websites, writing business plans, designing clothes, trying to finding properties to flip, but I sucked at network marketing until know. All of those things gave me joy even though I was not making much money. I was getting up every morning doing them til I went to work and doing them when I got off work. Then my wife started asking me, "What did you accomplish today, what task did you complete"? Some days I could answer and some days I couldn't. Then all of a sudden it hit me, I'M A DAMN HAMSTER ON THAT WHEEL THING. So I asked myself, "which of my passion will bring the fastest and most income per deal. Hands down it was real estate. So that's when faith stepped in an i re injured my knee at work and had to go out on disability. Reality really kicked in when I couldn't afford the $1,300 deductible for the surgery. So now I have no choice but to be focused. I got a new program that I have been test driving for 3 weeks and it's the game changer for me. My wife has given me the green light to quit the job after the surgery. (There is nothing like a good wife that understands what an ambitious man is trying to do).
I was told 10 years ago that I needed to focus on one thing by a wealthy individual. But I was stubborn and said I could do it all. But if I had listen I would be a multimillionaire by now. But then I would not have met my wife, so the timing is perfect.
Basically to answer your question don't do what I did for years, learn from my mistakes. Decide which strategy will bring you big checks quickly (like 3 weeks) on the front end, cashflow in the middle, and a nice haul on the exit. and focus on that and nothing else. If you can't find one that gives all three, two out of three ain't bad. But if you want all three you must look into the Pretty House business. PM me if you need anything else.