How much money do you need?
I will tell the story again about the 21-year old Japanese girl who ran away from Japan to the United States because her parents constantly beat her and according to her; in Japan it is common for the law to do nothing when parents beat their children.
When I met her she was already in the United States for only seven years, was single, never had a job with the exception of babysitting, never had a driver's license and never had a vehicle. She saved $7,000 and bought a co-op apartment in downtown Los Angeles for $30,000 with a friend. Her friend invested $7,000 and she invested $7,000.
One year after investing in the co-op, her friend moved back to Japan and she bought her friend out for a small amount of cash. Can't remember how much.. She saved a little more money from babysitting, took money out of the co-op and purchased her first condo in Torrance California. Torrance is a fairly high-priced area in California.
She rented the condo (more of a townhouse style) to about 12 Japanese college students. She had kids living in closets, the laundry room and the living room. She took money out of the condo and purchased a brand new 4-bedroom home in Gardena California about 1/2 mile from El Camino College and rented the home to about 12 college students.
When I met this girl she was already in the United States for only seven years, owned 15 properties including one in Las Vegas, Victorville California and I did the math and figured if she cashed out she was worth $2.3 million, at the age of only 28-years old.
I have another friend who owns more than 6,000 apartment units in the Los Angeles, Torrance and Long Beach areas. I met him 45 years ago and he was an engineer for an aerospace company. Were both buying properties, but I knew nothing and was buying single-family homes. He was buying multi-unit properties and I was working on his properties doing plumbing and construction upgrades. Today, he still purchases one large multi-unit apartment building every month. He started 45 years ago by purchasing a few buildings with his money. Since he is from Pakistan, he has a huge network of Pakistani investors and his followers throw money at him like he is a god. Today, he is a syndicator.
You don't need a lot of money to get rich in real estate. You do need qualities that very few people have e.g. the ability to understand and see a clear path that will result in reaching you projection. Most people have good projections, but they don't have one quality or skill to reach that projection Put another way. Most people don't have the qualities it takes to reach their goals because they don't have what it takes to foresee what will and what will not work properly when it comes to being business savvy.
For example, again. The Japanese girl could see what she had to do very clearly and her business she knew exactly what she had to do to make her business model work. My Pakistani friend understands the power of the numbers for multi-unit properties. When people come to me with ideas I know from the start that most people don't have a clue about managing properties, how to repair them, how to find and evict tenants, how to do simple math to know where they are going, how to do the books and after one or two insignificant problems with tenants they hate tenants with a passion and they hate the rental business.
I see a high percent of people wanting to get rich in the real estate business, but my opinion is that is the worst way to think when it comes to making money. Most people I know who made a lot of money, including myself, really don't make a lot of money because we have deep desires to be rich. We make a lot of money because we love being entrenepeurs. We love trying to figure new ways to make our businesses work better. We don't get excited when we make a lot of money. We get excited when new things we try give us better results just like some people get excited when they solve crossword puzzles that don't pay any money.
Everyone wants to be a millionaire, but I always say we can't take the money with us when we leave this world. As long as we have enough food to eat and a dry place to sleep we are okay. Ten thousand dollars in the bank or a million dollars makes no difference as long as we have the necessities to live comfortably.
I have more than enough money to retire and even gave my children about 18 houses that were paid off. I live in a commercial building with my wife and two children on concrete floor with no furniture and I love it. My Japanese friend lives in one of her condos, still has no driver's license and she has a college student living in her bedroom closet. My Pakistani friend lives in a 1200 sq ft modest house and he drives a small car that is about 25 years old. He is worth more than $100 million.
My point to all this is; stop trying to get rich with real estate and spend your energy just trying to get the knowledge and experience you need, FIRST. Anxiety is the biggest killer for both business ventures and our bodies. Anxiety, which is also in the form of the wanting to be rich, inhibits our vision to see a clear path. My Japanese friend did not become rich fast because she wanted to be rich fast. She became rich because she did not have anxiety that would have caused her to make poor judgments.
Today, my Japanese friend is worth about $30 million, is still single, still lives in a bedroom with a college student living in her closet and still has no driver's license. Many people tell me that people like her are crazy, but for people like her, my Pakistani friend and myself, we are the sane people because we are not in the business to make money and at the same time we know that with our philosophies we will make and give away more money every year than most people can make in a lifetime.
My last point. I meet many people who want to get into real estate every day to get rich and they have less than 1% of the needs to be successful. They know real estate makes some people a lot of money, but they don't have what it takes to do the math, see clearly, make good business decisions, buy the right properties, manage the properties and almost every one of these wannabe investors rely on advice from other people and brokers who don't know what they are doing and have different agenda that don't align, at all.
What is the herd doing. The herd buys properties that make negative cash flow to an annual 5% return on your money, if you are the lucky investor in the herd. You can listen to the herd, take your chances and make from losing money to a small amount, or you can keep your money in your pocket until you know what a sure-thing is and how to find the sure-thing where you can make 50% to 100% on your money, every year.
For 5% annual return, or a $200 to $300 per month cash flow property where I have to invest $50,000+ with hundreds of hours of work to purchase and manage, I will be far ahead when keeping my money in my pocket and wipe tables at Mc Donalds since minimum wage in many areas is $15 per hour and I can earn an extra $400 to $600 per week, or $20,000 to $30,000 per year vs. earning $3600 per year on a whim that came with anxiety and will put me in an early grave.
I say all this because people constantly ask how much money they need to get started in real estate and the answer is not about 'how much money you need'. You can already be a millionaire and lose a lot of money. You are not ready to start in real estate with any amount of money until you get to the point where you can tell other people the answer to the questions you ask rather than asking the question.
BOTTOM LINE: Keep your money in your pocket until you see a clear path and find your sure-thing where you are so positive it is your sure thing you will not have to ask anyone for their opinion or advice. You will be able to tell the experts what is right and wrong because you should never every trust the opinions of others or brokers because other people have their own agendas that seldom align.
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