I have been reading a lot of stuff on here for sometime now. I finally figure out which direction I might want to start in with Real estate investing which is investing in multi family homes and using a FHA loan then my dream gets shattered by how bad an idea that is. I don't what to do or where to start I need a little guidance. I have about 5 thousand saved up to invest can someone guide me in the right direction?
I got started in rehabs, luckily I missed my ARV by as much as my repair estimate on my first one and still made out OK. I screwed that sucker up in a million ways but still walked with $25k or so. That was in 2000. I've done just about everything out there, but am doing almost all rehabs now and only 1-2 at a time.
My advice? Read, read, read. Not so much that you never do anything, but the more you learn, the more you earn. I spent six figures on seminars my first couple of years and it was money well spent. Not just the info, but being around people that are doing this and killing it is crazy motivation. There wasn't a resource like this back then, there is gold in here if you'll take the time to digest it.
Hard to say what the best course of action is without knowing you or your market. I lost more money than most people will ever see when the market tanked and had to make some pretty significant lifestyle changes so am pretty adamant about not "owning" things unless they are paid for these days. Therefore I dont go for the FHA buying rentals so much, just because I dont borrow money from banks, but do have to say that buying at these prices with crazy low interest makes a lot of sense. $5k doesn't go very far if you have to fix things, though.
If I were starting out I'd be looking at wholesaling. There aren't very many things more important than buying right in this biz and wholesaling will teach you that. Real wholesaling, anyway, not pimping stuff from MLS or other wholesalers like so many try to do. Some of that $5k would be a good head start on a marketing budget. MUCH less downside risk in that game.
Nothing is going to be better than a mentor, though. Go you your local REIA meetings and network, most of the people that are in this game love to share what they know. Just talking to people that are actually doing deals goes a long way. There is a LOT to this business, especially if you do all the angles, but none of it is rocket science.
Doing deals is like drinking when you're hung over: "First two are the hardest!"
Find a REI coach to help you would be your best bet. Someone that's experienced and located in your housing market. Maybe they'll split the yield with you and wouldn't mind taking you in the field with them so to state. Showing you the ropes directly. You've read tons and will read more but you need to see deals worked. You need to find your own niche, that's fact. What works for someone else may not work for you.
Kudos,
Mary
I also have read Rich Dad poor dad, and many other kiyosoki books, I also read the bigger pockets free beginner guide. I just want to know the best way to go in investing for a beginner with 5grand to invest with if someone will help with that. I am also working on finding a mentor to help me as well.
I'm with ya on this one. I'm currently looking for a multi family unit I can acquire with FHA financing. 5k is a decent amount to get your foot in the door with that method providing you get the numbers right. I'm glad to hear you have many Rich Dad Poor Dad books. They have completely changed my mind set. I recommend if you're not feeling confident yet just reread a book or buy a new one. I suggest his "Success Stories" where you can see how others, young and old, have found success.
And besides a couch, find an investor friendly Realtor. This may take a few tries. I got really lucky with my first one I found at an REI meetup (look those up as well) and she was incredibly helpful. I'm rather dumbfounded how many Realtors are out there that have not the slightest clue of how to help you; an investor.
I also recommend "Think and Grow Rich" by Napoleon Hill. Its a great self motivation book directly related to making yourself a success.
Now... by far... the biggest most important thing...
KEEP TAKING THE NEXT ACTIONABLE STEP! You're scared and nervous and don't know what to do next. If you know the next step is to go to a REI meetup, then go! If its to cold call a realtor, then do it. As long as you take another step you're in the right direction.
Good luck.
@Dev Why Welcome to BP. You've come to the right place to begin learning about real estate. You might want to listen to some of the podcasts, and read the Beginner's Guide to Investing (both are under the Learn tab above). Though you may not have enough saved up to get into a property, it's a start. Maybe you can find someone to partner with. Learn as much as you can. Get to know your local market. If your local market is out of reach, research other areas where prices may be lower. One thing I can tell you, it takes perseverance to make it in this business, and it's rarely easy getting started. Good luck.
Thanks everyone for the advice. I will keep striving and learning. My next step is to probably find a mentor or coach in my area that can teach me. If it is not to much to ask I was wondering if some of you could tell me how you got started in the business?
I got started in rehabs, luckily I missed my ARV by as much as my repair estimate on my first one and still made out OK. I screwed that sucker up in a million ways but still walked with $25k or so. That was in 2000. I've done just about everything out there, but am doing almost all rehabs now and only 1-2 at a time.
My advice? Read, read, read. Not so much that you never do anything, but the more you learn, the more you earn. I spent six figures on seminars my first couple of years and it was money well spent. Not just the info, but being around people that are doing this and killing it is crazy motivation. There wasn't a resource like this back then, there is gold in here if you'll take the time to digest it.
Hard to say what the best course of action is without knowing you or your market. I lost more money than most people will ever see when the market tanked and had to make some pretty significant lifestyle changes so am pretty adamant about not "owning" things unless they are paid for these days. Therefore I dont go for the FHA buying rentals so much, just because I dont borrow money from banks, but do have to say that buying at these prices with crazy low interest makes a lot of sense. $5k doesn't go very far if you have to fix things, though.
If I were starting out I'd be looking at wholesaling. There aren't very many things more important than buying right in this biz and wholesaling will teach you that. Real wholesaling, anyway, not pimping stuff from MLS or other wholesalers like so many try to do. Some of that $5k would be a good head start on a marketing budget. MUCH less downside risk in that game.
Nothing is going to be better than a mentor, though. Go you your local REIA meetings and network, most of the people that are in this game love to share what they know. Just talking to people that are actually doing deals goes a long way. There is a LOT to this business, especially if you do all the angles, but none of it is rocket science.
Doing deals is like drinking when you're hung over: "First two are the hardest!"
@ Darrell Shepherd thanks for the advice I will def take it. How do I go about wholesailing? I have been looking at a lot of information on here and it really doesnt explain how to get into it or what it is exactly. I will keep on looking for information.
@Dev Why - Dev, it doesn't always work out this way for everyone, but it may take some time for you to get going in this biz. It was two years for me before I ever made a penny. And then another two years before I started having any decent success. Not trying to discourage you, but there's a lot to learn. And if you make a big mistake with the multi-family buy that you're wanting to make, it can cost you all of that 5K and then a lot more (ask me how I know). Keep reading, keep studying, keep learning, but also start taking action.
, did you really mean to say you spent 6 figures on seminars to get started in the business? That's quite a lot - would you mind sharing some of the more impactful topics and how they added value?
@Dev Why - Do you own your own home, or do you rent? Either way, buying a foreclosure (REO) to live in is a GREAT way to get started in this business. Just be sure that you don't over-pay so that you get some instant equity. Then, get a home equity line of credit and start using that money to do more. You will learn so much by doing this.
if your plan is to use FHA to buy a multi that sounds like a good strategy, but like it was mentioned everyone's market is different. In my area single families cash flow better, but in other markets multis do. $5,000 seems bit low to get started with a multi depending on how much you qualify for and if you ar maxing yourself out. I think the most important thing is you talk to a lender and money everyone month.
Here is how I got started. (Disclaimer: This will not be flashy and exciting, nothing quick about this get rich technique.)
I joined all the local investor groups. Found who was actually doing deals. Took them to tons of lunches, asked them a million questions. Then I got my real estate license, now I am still working full time elsewhere, I had to, I needed to make money, But now I have access to the market, MLS, and I started studying the trends, neighborhoods, absorption rates, list to sales price ratios, investor activity, cash purchase areas, absentee owners, etc.
Now my investor friends, they all had "we buy houses cash" sites, they get leads, lots of them, they make offers on those leads. If the seller was not in a position to accept an offer that made sense to the investor, they said, "No problem, I have a really great agent that can help you sell your house retail and try and get you more money than I can offer." Then I would just start getting listings from my investor friends. I would in return send them leads I found that might be good investor deals. 18 months later, 20-30 transactions down the road at, I now have more cash coming in than expenses, created great relationships with lenders and contractors, and am now in a position to start buying.
It wasn't fast, it wasn't sexy, it wasn't full of clauses and contingencies, but I was neck deep in real estate the whole time, helping people with problems, and that was my passion - as I am sure it is yours.
So, my opinion, which may be the slower route, is get into Real Estate somehow, work for someone, and investor, management something. Maybe even get your license, learn the business on the transactional side so you can see a smoking hot deal from a mile away and then have funds or resources to take advantage of it.
Write down your goals, create an action plan daily and stay focused and move forward. One of my favorite quotes is "I'm not there yet, but I am closer than I was yesterday."
@Dev Why If it makes sense to YOU then yes, get your license. It fit my long term plan, so that's what I did. I am now 100% full time real estate, was able to build a business in three years that now my wife doesn't have to work, and we are buying properties.
Getting a license is not that difficult, but you have to check in your state. I can connect you with some good brokerages in your area.
Can you do it part time? Yes, absolutely, I did - for a year. Did it suck sometimes? YES, I was being pulled in several directions at once. Are you willing to hustle for a year or two to get to your goals? Then it is absolutely worth it.
This forum is great in so many ways. There are so many roads to your goals. The one thread that you will continually see is "it works, only if you do."
Action is the thread - not perfect action, or polished action, but informed action and a willingness to look silly and fail along the way making changes as you go. The biggest difference between successful individuals in any field and civilians is that the successful individual is willing take action faster, and adjusts for results sooner. So those who are killing it in any industry are just those who have made more mistakes and fixed them before others around them.
Sorry to wax poetic on you :) Hope this helped.
@Dev Why Check your inbox, I'd be happy to share my story and help in any way that I can.
, did you really mean to say you spent 6 figures on seminars to get started in the business? That's quite a lot - would you mind sharing some of the more impactful topics and how they added value?
I didnt say I spent that "to get started" you dont need to do that much training to flip a house. I was pretty ambitious back then and jumped in with both feet and put a high value on education, but I was doing houses when I spent that and the stuff I did was expensive. Not too big of a deal to drop $2-5k on a seminar when you're making $25k-$50k a house and doing any kind of volume. I think I did 12 my first year, probably 20 or so my second. I went full time right out of the gate.
I was doing a seminar or two every month, so that included travel, and not all of it was RE stuff, I did some Tony Robbins and some other "get your head on straight" classes in there, too, plus a mentorship program (that I cancelled because I knew more than they did) but yes, I spent six figures on my education. Being around other investors that were actually doing stuff really fired me up, I got a good return on investment just from that. I'm sure there were plenty in the classes that wasted their money because they never took action.
Not sure I can share the topics in any usable way here. Some of what I learned is out of date, and there was more than just how to buy and sell houses. Entity structuring, tax strategies, buying notes, using trusts, marketing, etc. There's plenty to learn when you want to. This kind of resource wasn't around back then either, most of what I spent all that money on can be learned here and online. Nothing beats having colleagues doing this to push you to take action, though. I really liked the live events.
To the OP:
Wholesaling is just finding a really good deal and selling it to another investor as a good deal. Find a house worth $100k for $60k, sell it to another investor for $65k. Use the investors money to buy the house, you walk with $5k with no money in the deal.
The game these days around here is to sell rentals based on cap rate. There are a lot of people building up rental portfolios around here paying way more than they should, including some serious wall street money. I tend to think more along the line of rehabs when I think of wholesaling, though. Plenty of guys like me that will buy anything you've got if you can get the numbers in line.
Lots of ways to find deals, but the most consistent is to market. Bandit signs, direct mail, ads, etc. Keep in mind you generally talk to 100 people to see 10 houses to buy 1, so make sure your expectations are in line. What works varies a good deal by area.
I'd start with something cheap to get the phone ringing- bandit signs or an ad in the Thrifty Nickel/Penny Saver type publication, although ads dont pull anywhere near what they used to. You're not going to be good on the phone at first, so you want to keep your lead cost down.
Pretty simple stuff when they call. You are looking for a situation you can solve, not a house. That can be a lot of things. House is trashed, behind on payments, tired of being a landlord, whatever. People who have a reason to sell their house at a discount. I basically just say "can you tell me about your situation?" and listen to see if there is something there.
Follow up with "how much do you think your house is worth?"
"What kind of repairs would be necessary to make it perfect?"
"What do you owe on it?"
You should pretty much know if you have something to work with by then, but the follow up questions are "would you sell it for what you owe?" and such. I haven't used a lead sheet in forever, but I bet someone on here has one they'd share.
You want to build up a list of buyers in your area, which is just networking or calling the ads from other investors.I'm not going to give a full blown seminar here, but thats the basics.
Just start reading, dude. Its not rocket science, but there is a LOT to learn, especially if you want to learn many strategies.
Hey @Dev Why welcome to the site!
Welcome.
Check out the Start Here page http://www.biggerpockets.com/starthere
Check out BiggerPockets Ultimate Beginner's Guide - A fantastic free book that walks through many of the key topics of real estate investing.
Check out the free BiggerPockets Podcast - A weekly podcast with interviews and a ton of great advice. And you get the benefit of having 40 past ones to catch up on.
Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet fellow wholesalers and all the cash buyers you will need (rehabbers).
Consider checking out HUD homes for small multi's owner occupied gets first crack.
Good Luck
Paul
FHA financing is low down at 3.5% and rates fixed for 30 years comparable to conventional loans for similar properties. The big catch for many buyers is that you must "owner occupy" property with FHA financing at least initially.
You will be required to sign a document at settlement saying that you will occupy the property as your primary residence for at least 1 year. Do lie on that form, penalty is a Federal crime of $250,000 fine and fine years in prison (owner occupied,of course.)
Tons of advice here and I am sure it has already been said but I am going to repeat it. Real Estate investing is a Team Sport and the most important thing I believe you can do is Network then do more Networking!
If you learn how to recognize a good deal then you can work on building a partnerships but you will only find the information and people you need through Networking.
hey man i find my self in the same spot, overwhelmed by all the info. I've read a lot of good advice all ready, but I'll throw my two cents in. What I'm trying to do is get focused I guess. Get a general outline of a particular niche, then research each item in the outline in more detail. Then when you're done, you have a detailed plan for that particular niche. That's how I kinda control the information overload.
Finding a mentor is a great way of getting started if you can find one.
It isn't hard to get started (I did it on my own)... a good real estate agent who has had experience managing rental properties would be a good mentor if you can build up a good relationship with them.