Low Money Down Real Estate

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Low Money Down Real Estate

Cody Duval
Member since 2021 · 10 posts · 2 votes

I just got done watching a video by Kris Krohn who claims you can "make a fortune" by investing $1,000. I am currently working on getting debts paid off so that I can focus on assets that will earn me money, but I am spending this time researching the best ways to go about getting into it when the time comes. He is saying that you can structure deals so that the seller doesn't require a check from the bank upfront. I'm assuming he is implying that you find somebody who is currently renting the property out, and you tell them you will basically take over the property, increase rents slightly, their money will continue as it was, and you skim off the top. Is that what he is driving at? I can't think of any other way of buying a property and having the seller not demand upfront funds. Now, of course, he wants these people who are trying to figure out how to invest $1,000 to buy his $10,000 course, so he doesn't give much in the way of details.

I'm just trying to poke around the internet and read as many books as I can so when the time comes, I'm ready. I'd love to find a mentor who can help me out and show me the ropes, but it seems like everyone realizes the value of their experience and they want to sell these insanely priced courses online. Is there any way out there to find a successful mentor that doesn't want absurd amounts of cash for their trainings, without wasting time going to meet-ups and rolling the dice on investors that talk a big game, but come to find out, are only a slightly larger fish, than most beginners, in this massive ocean? I want to get some money flowing sooner rather than later, but I don't want the money I do have to go to waste.

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Jeff SchemmelBusiness Member
Real Estate Agent · Saint Paul, MN · Member since 2014 · 384 posts · 401 votes
5y

eh, in my opinion, nothing beats house hacking.  learning by doing is very important, and house hacking is a lower-risk way to do that.  The fact is, even if you went through his $10,000 courses, you would still learn by doing :)  Your best friends in this business will be those middle-aged investors who have decades of experience, I would jump in and connect with as many of those types as you can and you will quickly find someone who is willing to give you some tips.

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  • Jeff SchemmelBusiness Member
    Real Estate Agent · Saint Paul, MN · Member since 2014 · 384 posts · 401 votes
    5y

    eh, in my opinion, nothing beats house hacking.  learning by doing is very important, and house hacking is a lower-risk way to do that.  The fact is, even if you went through his $10,000 courses, you would still learn by doing :)  Your best friends in this business will be those middle-aged investors who have decades of experience, I would jump in and connect with as many of those types as you can and you will quickly find someone who is willing to give you some tips.

    3Reply
  • Dell J.
    Member since 2010 · 210 posts · 158 votes
    5y


    Not familiar with Kris KRohn but becareful with all of these Gurus. There is no easy get rich quick path to wealth.

    He may be referring to seller financing but that scenario you described sounds impossible.  If the landlord is already successfully renting out his place how does it benefit the landlord for you to come in just to skim money off the top?

    You have started off good by paying off your bad debt.  Next pay your bills (good credit) on time and live below your means (save for down payment).  Then, as you said, read all the books and continue reading up on bigger pockets.

    Also dont look down on the "slightly larger fish."    Someone 1 step ahead of you may be able to offer you more and better assistance than a billion dollar real estate developer.   That billion dollar real estate developer probally wont waste time with you and the deals he is working on are completely different.

    Nobody will be there to spoon feed you.  Its up to you to make it happen for you.


    Originally posted by @Cody Duval:

    I just got done watching a video by Kris Krohn who claims you can "make a fortune" by investing $1,000. I am currently working on getting debts paid off so that I can focus on assets that will earn me money, but I am spending this time researching the best ways to go about getting into it when the time comes. He is saying that you can structure deals so that the seller doesn't require a check from the bank upfront. I'm assuming he is implying that you find somebody who is currently renting the property out, and you tell them you will basically take over the property, increase rents slightly, their money will continue as it was, and you skim off the top. Is that what he is driving at? I can't think of any other way of buying a property and having the seller not demand upfront funds. Now, of course, he wants these people who are trying to figure out how to invest $1,000 to buy his $10,000 course, so he doesn't give much in the way of details.

    I'm just trying to poke around the internet and read as many books as I can so when the time comes, I'm ready. I'd love to find a mentor who can help me out and show me the ropes, but it seems like everyone realizes the value of their experience and they want to sell these insanely priced courses online. Is there any way out there to find a successful mentor that doesn't want absurd amounts of cash for their trainings, without wasting time going to meet-ups and rolling the dice on investors that talk a big game, but come to find out, are only a slightly larger fish, than most beginners, in this massive ocean? I want to get some money flowing sooner rather than later, but I don't want the money I do have to go to waste.

    1Reply
  • Cody Duval
    OP
    Member since 2021 · 10 posts · 2 votes
    5y

    Thanks for the insight @Jeff Schemmel. I kind of jumped the gun on that a bit and bought a house a few years ago, prior to realizing that I wanted a future in real estate. It was just my income at the time, and the market in New Hampshire is priced quite high. I found a house that seemed to be a phenomenal deal, priced at $223k, but it is a single family home, with no real way of even having a roommate without it being very close quarters. Everything else that was around my budget was an absolute dump and needed tens of thousands of dollars in repairs to make it livable or up to code. At times, I wish I lived somewhere else in the country, because real estate is far more affordable, but unfortunately this is where my work is. Once I generate enough income, I'd like to move elsewhere, but for now, I need to figure out how best to leverage my own situation to make that happen. Also, to be clear, I have more than $1,000 that I can work with right now, but the basis of his video was how best to invest $1,000. 

    I likely will end up lingering at some meet-ups, I'm just fearful of wasting my time or money ending up following somebody's advice that doesn't get me any further than what I already know. I understand that, with any form of investing, there are associated risks. I'd just really love to come across somebody that would let me join them in some of their smaller deals so I can get a feel for it and potentially gain a bit of capital on it as well, so that it generates income while I learn, rather than eats away at capital. 

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  • Cody Duval
    OP
    Member since 2021 · 10 posts · 2 votes
    5y

    @Dell J. totally valid points. I also don't want it to seem like I would look down on somebody at any point, I value any and all experience. I was just trying to say that I know that there are some people out there that start making a little bit of money, and it goes to their head, and next thing you know you're following their advice and everything is falling apart because their advice isn't based on valuable experience at their point in their journey. I'm a professional pilot, but I got here through years of training, including spending time as an instructor. Using this as an analogy for what I mean; I knew what I was doing when I got my pilot certificate, but it doesn't mean I was certified to do it professionally. Even when I got my commercial certificate and could make money, it didn't permit me to teach others how to fly. It wasn't until I got my instructors certificate that I could legally teach, and even then, I was brand new to instructing. So, what all I'm saying is, I don't want to spend my time, money and effort learning from folks that are only a bit further down the path than I am, but I also wouldn't expect a multi-millionaire investor to waste their time with me. Any and all experience is valuable, but I want to make sure I hone in on what will get me where I want to go in the most efficient manner possible is all.

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  • Dell J.
    Member since 2010 · 210 posts · 158 votes
    5y

    Understood.  

    1Reply
  • Jeff SchemmelBusiness Member
    Real Estate Agent · Saint Paul, MN · Member since 2014 · 384 posts · 401 votes
    5y

    @Cody Duval yeah if you're looking to buy with less capital upfront shoot for FHA, unless a VA loan is an option for you. 3.5% down via FHA will get you into something worth 300k for around $10k invested plus some up front for inspection/appraisal cost. I recommend having at least $5k on top of that for cash reserves, $10k, if you can, will help you sleep a little easier at night. If you're trying to save and pay down debts, house hacking is a great way to put some money to work, although I wouldn't recommend it if it meant you'd blow your entire emergency fund. I think this whole idea of investing with zero money is kinda impractical, it implies you're already financially irresponsible or disadvantaged which is going to distort your idea of a good investment and making good decisions as an investor. If you have an e-fund, and you have an extra 10k, then maybe start looking for a MFH to house-hack, that's my free advice! :) Lastly, Meet ups are GOOD, but it's easy to find yourself in a sales pitch in one of those. If you feel like that, dodge it, but keep looking for those good ones. I've had the best luck in FIRE meetups (financial independence retire early). they're filled with people who used real estate as the vehicle for FIRE, and that's what it's all about right? Hard to make a pitch in one of those and you can link up with people you meet outside the meetup.

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  • Cody Duval
    OP
    Member since 2021 · 10 posts · 2 votes
    5y

    @Jeff Schemmel awesome advice! I'll look into the FIRE meetups. That sounds like it will help mitigate the sales pitch environment that I am not interested in dealing with. I am planning on refinancing my house once some comps hit the market this spring/summer (I live in a lake town). Once that happens, I should be able to go conventional, and then I could make use of another FHA mortgage, as that is how my current house is financed. It sounds like your advice is pretty much in line with what is going through my mind, so that's a sigh of relief. Thank you very much for the advice!

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  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    5y

    @Cody Duval I am going to say almost the exact opposite of what @Dell J. Stated. You can get rich quick through real estate. However, the words “Rich” and “Quick” are both subjective and it depends on your definition of “Rich” and “Quick” that will determine if it is possible. So let me give some more defining qualifiers. You can become a millionaire in 5 years or less if you are willing to work really hard and strategically. What people are really trying to say when they talk negatively about get rich quick programs really applies to get rich easy schemes. And I don’t believe in get rich easy. I But getting Rick quick is not only possible but it happens all the time.

    At the beginning of 2016 my net worth was about 300k which was mostly the equity that I had in my primary residence and one rental because of the appreciation that happened from buying both properties at the bottom of the market crash. By the end of last year my net worth was 10 times that amount. I created a post sharing about increasing my portfolio by 110 units last year using the BRRRLO model a couple of days ago. But it didn’t get a lot of traction because growth like that is not very relatable to most of the people on BiggerPockets so they aren’t sure how to respond to posts like that even though I invited any questions or comments.

    Speaking about Kris Krohn in your original post, I think Kris took about 5 years to become a millionaire also. By the way, I know Kris. He and his wife are both really nice people. I am in a mastermind group with them right now. He is not one of the facilitators of the group. He is just one of the 80 or 90 members of the group. The mastermind group cost 30k for me to be a part of. With my 190 units, I am definitely the little fish in the group. Some of the group members have net worths of over 100 million dollars.

    The reason I am telling you this is because a lot of people on BiggerPockets give you the best advice from their perspective. However, each of our perspectives is based on the limit of our own experience. So even though @Dell J says the opposite of the things I say, he is doing the best to share with you the best that he knows according to his own experience. What I would suggest is to find a way to gain proximity or access to others that are at the level where you want to be. That is why I joined the mastermind group I joined. It gives me access to people who are playing at the level I want to play at.

    As far as earning while learning, that is definitely possible and that is something that do with people all the time.

    What I would suggest is listen to people humbly and appreciate and consider their advice or feedback. But if you really want to perform at a high level, I would encourage you to seek proximity and counsel with those people performing at the level where you want to be.

    Good luck.

    480-206-1209Podcast Guest on Show #287
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  • Justin Thorpe
    Member since 2020 · 437 posts · 675 votes
    5y

    @Cody Duval

    If you are watching these “gurus” who are teaching you how to get rich by doing very little, just know they are sitting on top of the most profitable and high margin business in the world which is preaching for a massive fee and hooking in the young, foolish and naive. The guru business is massive and growing. My brother has lost millions of dollars in real business bf now pays his pays as a guru. The only business he could sustain given his business practices.

    I’d advise not following them but if nature forces your hand just becoming them. That will get you richer faster the only thing you will lose is your soul. So figure out what your guru product is. If this guru is telling you it’s 1000. Can you undercut this guy and launch your own guru business with a 500 dollar preach product. In the end I don’t have a gripe against gurus. It’s a 50 - 50 split between the gurus who preach and the people who follow them. If people were smart enough to call BS, guru won’t exist.

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