I'm just curious as to what your biggest problem(s) is as someone who's just starting out in REI?
I am not a beginner, but I have worked with lots of beginners, the main problem that I have seen is.
1. Stop Getting ready, to get ready. Staying in Analysis until it becomes paralysis.
This problem can be over come by proper goal setting, storybooking, and taking baby steps in the right direction. Bird dogging is a great way to start, because it allows you to go through real life transactions without your own money. You can see how successful people have been with properties that you have located for them. I started out somewhat in the same way, but as a realtor I would get commisssions for all of the homes that I found for people.
I am a new investor also. I would say that the most difficult thing for me is getting enough properties under contract. It seems like I have such an extensive, and eager buyers list, but it takes so much time and energy to get properties under contract. I think it just urkes me to have so many ready buyers and not enough properties under contract. I have already assigned my first contract last week; but this time around I am out to get at least 3 properties under contract at the same time. I just hate to keep my buyers waiting so long before they hear from me about an assignment....I guess you could say that I like to keep my name out there so that investors know that I consistenly have properties to wholesale.
I guess it also makes it difficult when I am REI part-time.
Just my 2cents.
Originally posted by "r2d246":
I'm just curious as to what your biggest problem(s) is as someone who's just starting out in REI?
I guess my biggest problem is not knowing what I don't know. I want to learn as much as I can about the various elements of REI and rehabbing, as I feel I should be as prepared as possible before getting myself into what could be a huge risk with big negative consequences if not handled correctly. I just don't know where to draw the "this is enough knowledge to get started" line. Moreover, I've read that before networking with veteran investors you should know all of the basics, because they don't want you bothering them with questions you should easily know the answers to.
A) What are the basics I should know before networking with seasoned investors and potential members of my future team?
B) What additional information should I learn from seasoned investors before considering myself sufficiently prepared to begin building a team, rounding up quality contractors, and buying my first investment property?
Here's the list of things that I feel I need to learn about before making my first investment:
1. Finding Properties
- Where to look for properties
- What to look for in good rehab properties
2. Valuating Properties
- How/Where to find comps
3. Business Entity
- Sole Proprietorship (operating as self) or LLC
- Hard money
- Private lending
- How does my choice in business entity impact my ability to obtain financing?
5. Expected Soft Expenses During Rehab
- Carrying costs (mortgage, interest, taxes, insurance)
- The necessary insurance needed to protect the property
- Do I get it personally or as my business entity?
6. Estimating Repairs
- How to estimate repairs
7. Working with Contractors
- Apparently in Virginia you are required to have a general contractor license to perform rehab construction, so I would need to hire a general contractor.
- What to look for in a quality general contractor
- What is my level of involvement with sub contractors if I have a general contractor. Does the general take care of hiring licensed subs and obtaining work within a budget I allocate him? Or am I responsible for obtaining estimates and hiring subs?
Does anyone have a suggestion of something I should add?
I'm considering purchasing Stephen Cook's latest version of Wholesaling for Quick Cash. What is your opinion of this book/course? Are there any suggestions for alternative books/courses perhaps more geared towards rehabbers?[/list]
questions, questions, questions.....wow lots of questions.
A) Go to ebay and buy a used or new copy of "Carlton Sheets No Money Down".
B) Start listening to it, too and from work everyday. Simply forming the habit of turning your drive time into listening/study time will educate you in no time.
C) Join a local REI club in your area.
If you actually do this starting right now, I know already for a fact you'll do extremely well and become an expert in no time flat. But if you don't, well then good luck to you.
EWilliams....shop outside of your city in other cities/states. That way you can make a lot more offers. Some investors could care less where the property is. It's only usually the inexperienced or hands on types that want it near by so they can go babysit it everyday. Me, I couldn't be bothered to go see the building. As long as it's cash flowing and under good property management, that's good enough for me.
well, so far my biggest problem is finding property to wholesale or even worse finding the owners of the property.
although I have been spending alot of time driving around and writing down addresses. take tonight for example, I left work and drove around the area and I found 4 houses. 2 of them looked abandoned, 1 was a FSBO and 1 turned out to be listed by an agent although it looked run down it was a commercial/office/residential building aka a home turned into an electrical contractors office.
so back to the two abandoned places. I got home , checked the citys GIS map online and found out 1 is owned by a place called MLQ Investments LP, out of deleware. the only info I could find on them was a bunch of lawsuits against them for unfair collection practices. So I hit a brick wall with that one.
the other one shows the owners name and I followed that to the tax roll and his mailing address is the same as the house address, sure looks like nobody lives there but sometimes you cant tell. Again, I'm stuck....
otherwise I think I have the procedure pretty much figured out, find the property, fill out an intent to purchase form and make an offer, if seller accepts, get it under contract and contact my buyers. If it's something any of the buyers want, I fill out an "assign to" contract and collect the assignment fee. am I missing anything?
my biggest problem is financially im still working on my credit and do not want to take the steps needed without having good credit to back me up in case i need more money, plus im jobless as a fulltime student
Well you have the right idea, but I use to drive neighborhoods at times but I didn't find it overly productive. I think you could do a lot more by finding all the major MLS sites in your city/state/country and the private type listing services such as "Loopnet". And just focus on reviewing them. Even for that matter to review properties in your city/town. Driving around using up a lot of time and a lot of gas. One way you can do it more productively though is if you drive to work each day then just take a different route through the areas that you think might be good areas to invest in. That way you're killing two birds with one stone, cuz you have to drive to work anyway. Another way is to do one of those "I Buy Houses" bandit sign campaigns and see what kind of results you get from that. That way the sellers who are also driving around will see your signs and call you. My friend use to do that. He said once in a while you find a deal. In general though it's all a numbers game. So you're goal should be to be trying to get to writing 100 offers by any means necessary. That way at least 1 is bound to reap you say $30k or more. Then just keep flipping those funds over and over, until you have your 10% downpayment to go apartment shopping.
Here's what you do. You get some store cards, like Sears, Home Depot, etc. Buy stuff on the card (it doesn't have to be a lot), make a few minimum month payments, then pay them off. Get a credit card. Do the same thing. Order some stuff. It can be anything. Make some minimum payments, then pay off the cards. Then go to your bank, get a car loan. Go buy a cheap car, and then make some minimum payments, and then pay off the car loan. You're not getting any of this credit because you need it. Do it knowing full well in advance that you have the cash to pay off the card. But do it as a way to build up your credit. As doing each of these things: a few store cards, a major CC, and a car loan will get your credit back up.
The other thing though is that you don't need credit to buy property. The only time you need it is if you're dealing with a lender. But if you borrow your money through either private investors such as well off professionals who want to invest in something but don't have the time or energy to actually do REI, but might lend to someone and take first position on the property. The other way is through seller financing. Find a seller who has a house that's been paid off a long time ago. Is selling to move away to FL or AZ to retire. Tell them that you'll pay list price for their home, you'll close quickly and you'll pay them a premium on their money, as long as they agree to lend you the equity in that home. Then lastly there's a lot of lenders who deal with people who have bad credit, and they simply charge a higher interest rate for their mortgages. But if you do it right you can make out pretty good. Because once you take possession of the home you have various options. You could immediately try flipping it for profit, or another idea is to just basically turn the place into a rooming house and rent out each room. So for example if you could find a home that had 3 bdrms up and 3 in the basement, you could rent out each room. Just get a lock on each doornobe and do that. If you rent out each one you'd have more than enough to cover the mortgage and have a little bit of cash flow every month. The other thing to remember is just that it doesn't matter what anyone thinks, or how you get from point A to point B. You just have to get there. And if that means doing things that seem a little unconventional that's okay. It's unconventional thinking that will get you ahead often times much faster than thinking things can only be done one way. Anyway good luck.
I thought the mls/realtor listings were just a waste or time because seems the realtors dont want anything to do with you when you're offering 30% under FMV. maybe I'm just looking at it wrong and need to rethink my strategy.
I'm trying to get this place for our own residence and they are asking $190k, the realtor was acting like i'm out of my mind offering $120k for it. But I told her, look, thats just how the numbers work out. it's 3.5acres of property with a 1998 DW mobile home sitting on it (depreciation). I figured 30k an acre for the property and about $30k for the home
I dont think i'm all that far off the FMV for that.
No I think you have it all wrong, see realtors want to sell. I don't think they care too much about if they're client gets top dollar like they say. Because think about it, they're doing lots of deals. So it all becomes a blurr. All that matters is that they get paid and fast. So they don't care if the house sells for $200 or if it goes for $170. All they care about is getting the deal done and over with and onto the next deal so that they can get paid. Only the seller is really hoping for absolute top dollar. But at the same time a realtor knows the market and if you present something way way way too low they usually will not give it decent consideration. But the key to low ball offers is making tons and tons of them. You don't care about the property. All you care about is making so many offers that one is bound to come in. Never make a low ball offer on a house you want to live in and buy for your family. That's a different type of buy. That's the type you want to get, so if you love the property then you just want to get it. So you offer list price and "get it". That way you and your family can enjoy it together and have years of good memories there. It's an emotional buy. Investments are different. You have no emotional attachement because it's not like you're gonna be living there, so you don't care. All you care about are the numbers, are you making money when you buy. So when you flip it in a month you will make your five figures.
As for the acerage, in my opinion that is quit a low offer. Even though it might break down to that, you can't go by that. Because are you talking like pasture land or are you talking land that has been nicely landscaped around this house with all the infrastructure done. Like those are two different ball parks. So you have to go by what other acerages have sold near by which are similar in size and scope, and also go by what other acerages are selling for. Ya that's just too low, no one is going to look at that. See here's the thing, when you make a low ball offer you can just as easily insult the buyer as you can try to get into a negotiation. You want to at least be within the realm that they'd consider getting into a negotiation with you. I'd say perhaps something more like $145 or 155 and they might at least give you some consideration. But even then you're pushing the envelope.
i went and did a detailed inspection of the place and I told the realtor I would offer $140k
i can pm you some pics and you can see what i'm lookin at
okay send them to me.