Dan, basically a lack of capital, and a lack of success when trying to use no money/little money down methods. I have been interested in getting into real estate investing for a few years now, and when I found this site I got excited and thought there was money to be made without having a lot of startup funds, via wholesaling.
After trying that gig for about a year, I am now 100% convinced that wholesaling is the biggest crock of s**t there is. It may work in the midwest, but here in the northeast, it just doesn't fly. The average homeowner is way too smart, they pick up that you're an investor in about 5 seconds and they know the game - they know you're looking to make a spread - and then they just won't cooperate. Plus there are too many other investors that will just buy the properties outright for cash, which is a lot easier for most people to understand/accept then the idea of options and contracts to buy and so on and so forth. People around here understand exactly what an option is - they just all seem to think that the second they tie their property up by selling you an option, someone else will walk in and offer them exactly what they wanted, and then they won't be able to sell.
So, if wholesaling is a bust, how do you get started? It seems like basically you need 20k or so to even think about buying anything. Which I do not have.
I know there are methods out there where people try to get around having to put down cash, but in my experience that simply just DOES NOT work around here. People in the tri-state area are used to getting screwed over. When you try to talk to them about a sub2 deal, or owner financing, they either have ridiculous expectations that make the deal impossible ie "I will only owner finance it if you put 30-40% down." I want to say to these people, what are you stupid? If I had 30% to put down, I wouldn't be talking to you and offering to pay higher rates! If I had 30-40% to put down I could just walk right into chase and get a normal damned loan. Or, often they CAN'T owner finance because they don't own enough of the property. Or with the sub2 deals, they always think there is some kind of catch and you're going to screw them. They think you're going to take ownership of their home but then they will still owe the bank and you just won't pay, and then they'll be screwed. They think it's a convoluted scam.
It's really really hard to get through to people around here, especially since there are so many get rich quick schemes like multi-level marketing companies and the like.
I'm not letting it get me down, I'm still trying to find a way to crack into the market, I just haven't found it yet. I wish there was a way I could get started now though, instead of having to be delayed until I can save up enough cash to cover the down payment and closing costs on my first deal.
