Hi BiggerPockets Team Members,
I took Brandon Turner's advice last night watched the "How to Invest in Real Estate as a newbie". It was great, joined the Pro Membership! I also drove by a property I would like to buy but have no idea what to do next? I have an appointment with the owner this Saturday August 22, 2020 but have no idea what to say or how to present myself. I need money to buy the property which is a FSBO for $369,000. Can someone please give me an idea how and what I should be doing and saying? I appreciate your time and consideration I have no idea what I doing?
Thank you,
Rod Lambe
@Rod Lambe
You are welcome bro!
First off, you need a portion of the funds to buy this property. Most banks look for 20%. A FSBO might be less, but it won't be, 'Just start making payments" and no down payment I wouldn't think. So if you have that great, if not, you probably won't register on this guy's radar.
As a complete newbie, my gut says that this may be too big of a deal for you at the moment. Not that $369,000 is huge... but you might want to aim smaller... just depends on what your resources are I guess. Tell us more about your capabilities. Do you have the funds, etc.?
If you do, it's really just a conversation about what the seller is looking for... is he looking to take the cash and retire, buy something else, etc? Is he interested in seller financing? You would probably want to consider showing him proof of funds... he will likely be looking for that. It's ok to tell him that you are just getting into investing... depending on his experience he will probably be able to tell your experience level, anyway.
Lots of things to think about. Do you qualify? Do you have credit? Do you have down payment? What is the type of property he is selling? Will you be living in it, or renting it out, or flipping it? We really need more info about you and the deal to offer some better advice.
Randy
Hi Randy,
I appreciate you taking the time to respond to me and my question. I am completely out of my league, comfort zone! I don't know what the hell I am doing! I got all caught up after listening to Brandon Turner on the, "how to get going in real estate investing as a newbie" podcast last night. I was thinking that I will stumbling my way through the process and learn. But I have no business wasting this homeowners time. I have no money to put down, no experience in real estate investing, marginal credit mid 600's, and just a wish and a dream! I have never bought my own home or have been in the position to do so. I am just the average older guy trying to change my financial future listening to all these different real estate investing podcast all saying if you don't take action you will never get there to financial freedom. So, I'm taking action with no money and don't even know what to say to the home owner. I have no presentation because I have never done this before. I have tried to get a experienced real estate investor mentor only to get scam emails from fraudsters!
There you have it Randy, I am trying to take action and have even found the house that I purposely drove by but don't know what to do about it!
Thank you for your time & consideration I guess I better just go away,
Rod
Rod,
Nothing wrong with wanting to get started in real estate... you just need to put yourself in a position to be able to start... for instance: save up some funds... you probably need about $25,000 or so be able to by a small property through financing. Of course you have to qualify... but sometimes there are more options there than you think depending on what program you qualify for... for instance HUD offers very low down payment programs where you might need far less than I mentioned. Maybe you buy your own home, live in it awhile, then rent it out after a few years.
Don’t run away just because you aren’t quite ready yet, just figure out a reasonable path forward and pursue it. It may take some time, but it could be a path forward to a new beginning.
But probably a good idea to back out of the $369,000 deal early!
All the best!
Randy
Rod, don't go away, I am in the same boat as you, I am just starting out, and have no idea of what the hell I am doing, but your question and Randy's reply has given me a much better understanding than I had 15 mins ago. It's a small step but it's progress, have you thought about Wholesaling the house? Anyways, great first step and they say the first one is the hardest one.
Hi Lance,
All these RE investing guru's make it sound that as long as I am willing to work hard everything will turn out for a great financial future. After I have put down my money to join the pro program I emailed and ask for 5 minutes of advice. There support team sends me to a forum. Oh well, it great that I heard from you & Randy. You are right, I have learned I'm not alone and Randy gave some great advice. I am the type of guy that will differently do what ever it takes but it sounds like what it takes is MONEY. Hard work alone will not do it!
Real estate is a business that is get rich slowly... definitely not quickly (on average).
Lance mentioned wholesaling, which is where you find a great deal on a home, get a contract on it, and then market it to an investor with the funds to act on it. It’s pretty cheap to get into it. You are basically your own little marketing company. I would search the forums for wholesaling and study up on it. There is A LOT of knowledge in the forum posts you can learn from. To give you an idea... you can make $5,000 to $10,000 a deal and never have to buy or own a property. You do that a few times and you can be in a position to buy a property of your own (to live in or potentially rent). So it’s something worth investigating. Whatever path you take, it requires getting educated about real estate and BP is a great place to start.
All the best!
Randy
Rod,
I was introduced to this world by someone I met surfing, he told me about Rich Dad Poor Dad and how he just followed what the book said to do. I started that book back in June of this year, after finishing it, the first thing I did was invest in myself and bought a crapload of more books. I quickly realized that I had to educate myself and gain more financial literacy, so I could at least learn the lingo and know what I should be looking for and how what members are key for your team. Found out about BP from Josh and Brandon's book "How to invest in real estate" signed up 2 days ago.
As Randy said, it's not going to happen overnight, I know this, so I have set myself small realistic goals that should put me into my first RE investment Purchase hopefully by the end of the year. I look forward to following along on your journey Rod, and who knows maybe we'll work a deal together in the future. Hell Yeah!!!!!!!!
Hi @Rod Lambe!
Reading your post and the responses really hit me hard. I'm sorry that you felt so discouraged that you would "just go away". I've been in this business for 17 years and I can tell you that it's not as easy and glamorous as people make it seem. There is a lot of hard work, disappointments, and learning that goes into this--it's not a get rich quick thing by any means. Most people you see out there having success don't share about the fails and the hard times they went through to get where they are now. All of that said, here are a few things that might be helpful:
Work on your mindset. If one little setback is going to knock you down, then being an entrepreneur is not for you. You've got to get mentally tough to overcome the million difficult things that this business is going to throw at you.
Start small. If you are just getting started, maybe you don't jump right into a big expensive deal. Have you tried birddogging? What about wholesaling? Both require little to no money and a much lower risk.
Continue to educate, but make sure to take action. Sure, you're never going to know everything--there's too many variables there. But choose one or two exit strategies and learn all you can about those. Also remember there are a lot of ways to finance properties, not just the conventional way. There's hard money out there and private money. I believe Bigger Pockets has a book by Matt Faircloth on raising private money. I would suggest reading that. I've used private money exclusively since day 1. I don't ever recommend leveraging your own money to do deals. If your deal is good enough there is always going to be a buyer, which makes me wonder if you know how to analyze a deal properly--you may need to educate more on that aspect. The property is FSBO, but is that price the full market value of the property? I never suggest offering the asking price, that's just a starting point. You may also want to learn about negotiating to help know what to say when you go on the appointments. Power Negotiating is a great book. Also anything from John Martinez is awesome, he teaches negotiating specifically for RE investors.
Build your network, buyers list, and critical industry relationships. If you're going to wholesale a deal you will need buyers to market to. And a title company to close the deal. Contractors if you plan to rehab. A Realtor if you plan to list. Keep those things in mind and take the time to find key people you can leverage in your business.
Be patient. Getting your first deal takes time and consistency. So many people throw in the towel right before things are about to happen. It's awesome that you're fired up about REI, but keep in mind this is a long game if you plan to do this seriously. It took months to get our first deal. Also understand that the deals will ebb and flow, so be prepared for that. Be consistent with your marketing and ALWAYS follow up, even if you lose out on a deal. You'd be surprised how many deals fall out, and if you're good at follow up you will be there to pick it up later.
Last of all--YOU CAN DO THIS---but ONLY if you want it bad enough and are willing to put in the work. I wish you all the best and will be so excited for you to get your first deal.
@Rod Lambe
This one as you stated might not be the best first boat to jump into. If you want to get started with no money you gotta be useful to someone with money. Go to a local REI meet up, show your enthusiasm and offer to knock doors for people and help find them deals. Offer to cold call for them etc... this way your learning without paying, just from hard work and experience. Then you'll learn how to source your own deals where you can talk to home owners with no money in your pocket, you'll know what price is good for an investor, get that deal signed and wholesale it!
Now you’re making money! Save the money and then fund your own deal! 🙌
@Lance Trezona @Rod Lambe
Same advice as Randy.
Take a year, I know it seems long but trust us real estate and “deals” will still be there albeit anything you’re looking at now won’t. Take a year and 1- listen to a BP Show per day, 2-cut your living expenses as much as you can believe it or not you can find $1,500/month by reducing rent & car & cutting luxury expanses and in a year you will have $18,000 - this will suck but it’s an investment!! 3-Network! On BP forums, meetups, REIAs, coffees, find your local experienced operators/NOT paid gurus and see if you can help them find deals, drive for dollars, analyze deals, line up contractors - it’s your unpaid internship to soak up as much experience as you can handle - - best of luck!!
Hi Lance,
All these RE investing guru's make it sound that as long as I am willing to work hard everything will turn out for a great financial future. After I have put down my money to join the pro program I emailed and ask for 5 minutes of advice. There support team sends me to a forum. Oh well, it great that I heard from you & Randy. You are right, I have learned I'm not alone and Randy gave some great advice. I am the type of guy that will differently do what ever it takes but it sounds like what it takes is MONEY. Hard work alone will not do it!
Well... sadly, that's what many "gurus" do - they tell you all the positives without all the realities.
That doesn't mean that you should run away, nor that whatever excited you about this to begin with isn't still valid/real... it might just mean that you need to lay some foundation first.
Hard work will get you there... but at this very first stage it may be that your initial work should be focused on getting some money in hand. Spend a bit of time working, selling things, downsizing, cancelling the pro memberships... whatever it takes to gather that initial investment - and then you'll be in a better to place to make those appointment, place offers and allow that money to work for you and making your hard work even more valuable.
Anyone who tells you that this is "easy" or a "get rich quick" plan is probably just getting rich off of whatever they are selling you... but this IS worth the hard work and CAN lead to the great financial future you're trying to achieve.
Hi @Rod Lambe
I think you should do some research at first. Know the active mortgage liens and it's remaining balance, IRS liens (if any), property taxes owed, and HOA liens. Then, comp the property and see if it's worth paying $369000.
@Rod Lambe
I've got something you could do ..it's free and it's easy and I doubt anyone here has tried this (would love to know if anyone has).. so I'm a flipper I've never wholesaled a property, not the biggest fan of wholesaling. That being said I know the importance of a buyers list. So I already follow every REI/deals/FSBO/wholesaling page on FB looking for deals. Well when someone post a deal 10 people will drop their emails in the comments. I was like "that's not even a good deal and theres 10 potential buyers for it. I could find a crappy deal like that!" So I started screen shotting all of the email addresses took a month or so but I ended up with close to 500 email addresses of potential buyers. I had to put them in excelle then I was off. I told one of my wholesaling friends I built a buyers list asked if he had something he couldn't sell. He did. I put it out to my list got 3 or 4 interested parties and sold it in 1 day . I only made 2k bucks but all I did is forward an email. Just an idea. I should have found the buyer then negotiated the wholeseller down would have made 5k but hey easy money either way
@Frank Hinck
Thank you for the advice, appreciate it.
@Melissa McRay Johnson
Melissa,
Your heartfelt message really made me read your message 3 times over! What you explained to me makes all kinds of sense! Here I have been in sales over 30 years but RE Investing is completely new to me! My nature is to be impatient but I am realizing that I need to slow down and do my daily homework in this new industry. You have given me some great books and RE Investing people to check out. While I am doing my self study of the RE Investing field I need to continue to save my own money.
Is there any private lenders you would be willing to share at this point? If not, I understand the merits of establishing my own. I just want to say, thank you so much for your advice and empathy with someone like me just getting started!
Have a great weekend,
Rod
@Frank Hinck
Great advice Frank! I am finding a tremendous amount of support from people like you on BiggerPockets I appreciate all the wisdom! I will take the time to educate myself about RE Investing I just got overwhelmed that I need to take blind action. But, I am finding that would backfire on me by not having money or the knowledge to hold an intelligent conversation with a seller!
Thank you Frank,
Rod
@Bryan Danger
Bryan, I really can relate to your advice to me! Thank you for taking the time to write to me. I will take some time to educate myself and save some money. I will be seeing you again on BiggerPockets and hopefully down the road some success stories!
Thank you,
Rod
@Dustin Mathenia
Hi Dustin,
Great job and effort on your Buyers list! Thank you for emailing me with your experiences and advice. I will let you know what and how I am doing down the road of RE Investing! Let’s stay in touch.
Thank you,
Rod
Too late to thread, but like they say in stock investing, you should have an investment policy/strategy. You need to do same for your RE investment. There is no free money, shortcuts for long term investment, instead of jumping heads first, make a strategy, plan that you will like to follow. There is tons of info on this forum that you can use, but there is going to be real work and time you need to spend to get anywhere, RE investing is not same as lottery, it is a lot more then quick bucks and luck.
You are on the right track. For books, use your local library, why spend money on books when you can borrow, infact this can be core guideline to follow for your RE investment as well :-)
Hi BiggerPockets Team Members,
I took Brandon Turner's advice last night watched the "How to Invest in Real Estate as a newbie". It was great, joined the Pro Membership! I also drove by a property I would like to buy but have no idea what to do next? I have an appointment with the owner this Saturday August 22, 2020 but have no idea what to say or how to present myself. I need money to buy the property which is a FSBO for $369,000. Can someone please give me an idea how and what I should be doing and saying? I appreciate your time and consideration I have no idea what I doing?
Thank you,
Rod Lambe
I saw many posts about educating yourself and I agree, but I think it is important to know where you currently stand. Have you talked to a mortgage broker or bank/credit union to see what you currently can qualify for? FHA offers some high Loan to Value (LTV) loans for owner occupied (house hack). This implies that a fairly small down payment is required. I recommend you start with having a mortgage broker or bank inform you what you currently qualify for and various loan options.
Whatever amount you qualify for will dictate possible options: If you do not qualify for what you want in your market you can continue to save/earn, you can look for elusive other finance options (owner financing, lease to own, etc.), or you can choose a different market. What you can qualify for will dicate the direction of the conversation with the seller. Does the seller have any interest in financing the purchase? If you do not qualify for the conventional loan and the seller does not want to finance the purchase, there is little chance you will be able to purchase that property.
I am on record of recommending newbies start local and I believe that most newbie investors should start local. However, a key word is start. If you cannot start local, then maybe starting not local is better than not starting at all. Note Midwest has very low prices compared to other markets. I get the @JamesWise emails on his RE for sale; he has some cheap properties for sale. Be aware cheap does not imply profitable; I suspect newbies should avoid the cheapest properties in any market but especially a market where they are not intimate with.
Find out what you can currently afford. Continue to educate yourself on RE (I suggest starting your education with house hacking, alternate finance methods, and BRRRR). Be patient.
Good luck
Hi Dan,
I am thrilled how intelligently you laid out your response to my frustrations, lack of money, and no experience in RE Investing! I did try to find out what I would qualify for but once my credit report came back mid 600’s I no longer heard from that mortgage lender. I will do it again with another lender. I would like to get my first home somewhere in Washington State where I have always lived.
I will continue becoming a student of Real Estate Investing. Thank you for your guidance and sharing your wisdom with me!
Thank you,
Rod