In my first blog post for BiggerPockets I talked about people breaking into real estate and how they oftentimes skip the most important part of their investing career: getting their financial house in order. I’ll expand on that a little by telling my own story. It’s by no means pretty and I made numerous mistakes and just enough good decisions to make $35k+ profit on my first flip.
Whats more, this post (and the next several) will chronicle how I transformed from spending $3k+ a month in miscellaneous expenses, gambling, and partying to being a successful real estate investor with a new outlook on life in the span of 4 months. I have the unique distinction of saying that not only did real estate put more money in my pocket but it changed my perspective on life, changed the way I handle money, and put purpose into my everyday actions.
Real estate saved my life; It can save yours too. Heres my story and how my first deal went down – the mistakes, drama and the dirt. Most importantly, the cold hard hustlin’.
We’ll start from the beginning and every week I’ll breakdown the most important lessons:
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
Step One: Education and Reviewing Financials
April 01, 2011 2:00 AM – I was bit by the real estate bug – HARD. I don’t remember the exact trigger per se, but something got a hold of me and I was eating, sleeping, drinking real estate. For an entire month I devoured book after book, blog after blog, thread after thread. I barely slept 3 hours a night. Eventually I made a decision to start off with a flip and that allowed me to focus my education on flipping and rehabbing books and resources.
A background on my financials: I had just graduated from college the year before, was making really good money (spending a lot too!), and not really saving. At this time in my life I was pretty young and dumb. I had just bought a $30k+ brand new car I had no business buying, spent nearly $15k in man toys in the span of a year, and was leasing a swank high rise apartment with a floor to ceiling glass window that overlooked the city (talk about awesome!). I only had $1255.82 in my savings account after one year of working professionally! Luckily, I wasn’t going into debt and my credit score was actually really good.
So right after being bit by the REI bug I started tightening up my expenses and started pouring money into my savings. I sold a lot of man toys – TV’s, high end cameras, project cars, computers, extra laptops, old cell phones (lets just say I was an electronics geek). All told I went from $1,255.82 in April to $10,710.20 in early May. At this time I also went out and took out a 0% interest credit card for $4k as well as asked my credit union to increase the credit limit on my current card from $4k to $15k. Grand total = $29,710.20 of “cash” to mess with. Others will balk at credit cards (and rightfully so) but just wait and see how they came into play later on.
Enter the awesome, financially sound, no fear girlfriend who for some reason had faith in her crazy boyfriend. Together we had great credit and she had a few thousand saved of which she wouldn’t tell me the real amount (smart on her part I suppose).
Lesson #1: Education, education, education. Read everything you can get your hands on. Be obsessed. Do not read to just read, but read to understand. Not gonna harp on this because its the obvious. If you don’t find a way to enjoy the education portion of real estate – you won’t make the cut.
Lesson #2: You have to get your financial house in order! Save, stop spending, sell stuff, and get your credit in check. Second, get the support of friends and family if possible. In one month I went from just a little more that $1k to a $30k+ war chest and was ready to start looking for deals.
Next week I’ll cover – Networking 101 and Finding the Deal.
What was your life like before being bit by the Real Estate bug? Was it anything like mine? Let me know in the comments below!