New investor looking for advice

[IlBLisSlI]

Hello everyone,

First I wanted to thank everyone for making such great posts. I've been doing a lot of reading of previous posts so as to not ask redundant questions and all of the info here is really appreciated.

Second, I want to promise that I won't be another RedStar asking a bunch of questions and then ignoring your answers lol.

Third, I was wondering what people think about mentorship programs like that Phil Pustejovsky guy on youtube. Are those things a scam? Are there better resources available?
If you were to recommend a single training video source or book for a new investor, what would it be?


I know i'll be asking more detailed questions as time goes on. But as for now, I won't be investing until April so I am trying to get my ducks in a row and set myself up for success as much as possible before that time. Definitively don't want to get caught with my pants down.

Thanks in advance
Andrew

[javipa]

Welcome to real estate investing.  I probably should welcome you to real estate merchandising, since that's what most people actually want to do, instead of actual investing. 

You don't need a mentor.  Mentors are for buttercups and snowflakes.  I mean really?  If you think you need a mentor, you probably aren't gonna cut it in this business.  It's for entrepreneurs.  Entrepreneurial personalities are notorious for being self-starting, intuition-driven, loners, and the last thing they want is someone holding them back, by holding their hands.

Women like mentors.  They're like husbands to them.  Short term husbands, but husbands who are into real estate.

I suggest instead of farting around with mentors that you simply need quality training, that you can find on this site if you look.  It's all proven and actionable material.

That said, no amount of training will help you, if you wait, or fail to act on whatever little, or much you know right now.  Everyone learns as they earn, or from losing.  Either way it's a learning process.

I believe the worst thing you can possible do, is wait until April, when your 'ducks are in order.'  If real estate is worth doing, it's worth doing badly, and immediately.  In fact, you won't learn squat, until you're actually doing squat. 

I knew a LOT before I could ever pull the trigger the first time.  I had lots of excuses for not moving forward quickly.  Finally, it was a stressful, and yet necessary moment when I made a deliberate decision to actually pull the trigger on a deal.  And the deal sucked drain water, because I was settling for whatever I came across, and listening to the advice of a real estate agent who couldn't recognize an investment-quality deal to save his neck.  But I learned from that mistake.

I was like a brain surgeon wanna-be.  I wanted to do brain surgery, before I knew exactly how to operate the skull saw.  So, I just sawed away, and bone, blood and brains went everywhere.  By the time it was over, I knew how to do it the right way, the second time.  Way less bones, brains and blood.  I also learned not to waste time doing brain surgery on a retard.  Just saying.

However, unlike brain surgery, real estate is enormously forgiving of mistakes.  Time heals most wounds, if you have the staying power.   

Meantime, if you can't afford to buy formal training as you start, you'll pay for informal training the hard way as you go along.  Either way, you're going to pay and make mistakes, but why add insult to injury by trying to 'home depot' your education? 

It's all faster and easier if you have a proven, tested plan to follow. 

Just for giggles:

If people annoy you, it's gonna be an uphill slog, the entire time. 

To illustrate this, I have a friend whom inherited a 10-unit building ten years ago, after his mom passed away.  He's notorious for being irritated by people, and unwilling to trust anyone with responsibilities.  He's a perfectionist, too. 

Well, he decided to empty out the building with the intention of remodeling it, and re-positioning it in the market, to attract higher-quality tenants (meaning less management intensive renters). 

The building's still empty, while he 'gets around to it.'  The bottom line is, he so hates dealing with people, it's easier to sit on this empty, non-performing asset than to operate it profitably.

I know that sounds kooky, but it just illustrates that if you don't like dealing with people, stay away from real estate.  It's all about people and relationships.  End of story.

That's all I've got.

[IlBLisSlI]

Thanks for your reply Jay.

I am a little confused by your response however. You warn against mentors but then say "Meantime, if you can't afford to buy formal training as you start, you'll pay for informal training the hard way as you go along." I know I am probably misinterpreting what you are saying but those things seem to be conflicting.

Perhaps you are saying that mentors aren't formal trainers? If so, are there formal training resources that you would recommend?


PS. background info on my situation. My wanting to wait until April is due to a sizable inheritance that is stuck in probate until that time. While i would agree if something is worth doing, its worth doing now. That winds up being a difficult prospect for me as i just bought my own home about 6 months ago, so i don't have the cash on hand to put up for hard money lenders down payments and such. Things just wind up being much more economically feasible in April.

[javipa]

If you buy quality training, you can figure things out without a mentor.

Some training is crap.  So you refund on it.  Simple.

Other training has one nugget that nobody else teaches, or has an angle on it that makes it that much more profitable, and it could be the most expensive training you could imagine, but it'll make you more money than anything else you've studied.  It just works that way.

If any of the training available on this site were garbage, you'd hear about it.  They've been here 'forever' and there's virtually no meaningful, negative feedback anywhere that you'll find on them.

There's always a crank out there that will say something unfair and non-representative of the quality, and one of the worst offenders, on steroids, I have ever read is John T. Reed. 

I only mention his name because he bashes a couple of real estate 'gurus' that I've learned so much from, and made money following, that I now make it a point to expose him as the self-serving real estate guru that he is, but I digress.

Meantime, the investors that don't figure things out, are the same ones waiting for a mentor.

I realize there is training out there with mentoring offered as an up-sell.  In these cases, the mentor only provides help to purchasers of the primary training, and don't want to mess with those who need ground-floor assistance, such as not knowing the difference between an equity position and an equity quote, much less what 'equity' means.

Again, if you're waiting for a mentor to ensure your success, maybe real estate isn't for you.  This is a business that requires the willingness to make quick decisions; think on your feet; analyze situations; and deal with people effectively.  Mentors can't really teach those things.  You just have to practice until you're good enough for whatever you want to accomplish in real estate.

[javipa]

PS. background info on my situation. My wanting to wait until April is due to a sizable inheritance that is stuck in probate until that time. While i would agree if something is worth doing, its worth doing now. That winds up being a difficult prospect for me as i just bought my own home about 6 months ago, so i don't have the cash on hand to put up for hard money lenders down payments and such. Things just wind up being much more economically feasible in April.

OK, this is where most investors go wrong.  Waiting for the money.

IF you can learn to find and use OTHER people's money, you're going to be so much further ahead, and ABLE to jump so much faster and FURTHER than the average investor, that you'll kick yourself for ever thinking about waiting for your own money to invest.

Let me ask you...

You just put all of 'grandma's money' into buying an income producing rental house.  Yay for you! 

You have no more money.  You're done investing. 

Now what?

[IlBLisSlI]

OK, this is where most investors go wrong.  Waiting for the money.

IF you can learn to find and use OTHER people's money, you're going to be so much further ahead, and ABLE to jump so much faster and FURTHER than the average investor, that you'll kick yourself for ever thinking about waiting for your own money to invest.

I understand this in theory, but having just seen how many hoops I had to jump through to get a loan for my own house, I can't imagine it will be any easier for investment properties. I am of course probably wrong about this, but that is why i'm asking about good training resources. If i can get started in this business before investing my own money I'm all for it!

Let me ask you...

You just put all of 'grandma's money' into buying an income producing rental house.  Yay for you! 

You have no more money.  You're done investing. 

Now what?

I never said what type of investment I would be making. It is possible that I would be buying rental property, but not just one. Hopefully if I did buy rentals instead of flipping these would have a decent positive cash flow, and also possibly be set up for a buy and hold scenario to resell at a profit at a later date.

Why would anyone be done investing if you have properties that are making a good positive cash flow or profit from flipping? Shouldn't there be a snowball effect when it comes to investing? This may be faulty logic, but again that is why I am here. To learn




Also, I would like to clarify that I am not in any way married to the idea of getting a mentor or anything of that nature. I was just watching some videos and was just curious as to if those things were scams. My real question is which training resources have you found valuable. For instance, who are the couple of real estate gurus that you learned so much from and have made money following? These are the nuggets of wisdom I am hoping to excavate

[javipa]

OK, this is where most investors go wrong.  Waiting for the money.

IF you can learn to find and use OTHER people's money, you're going to be so much further ahead, and ABLE to jump so much faster and FURTHER than the average investor, that you'll kick yourself for ever thinking about waiting for your own money to invest.

I understand this in theory, but having just seen how many hoops I had to jump through to get a loan for my own house, I can't imagine it will be any easier for investment properties. I am of course probably wrong about this, but that is why i'm asking about good training resources. If i can get started in this business before investing my own money I'm all for it!

OK, yes you are wrong.   

You're talking apples and oranges.  Your home loan was infested by tons of rear-end covering bureaucrats whose job it is to interfere with the free market.  That interference doesn't exist with private money.

You find a deal.  The money finds you.  Of course, you have to ask for it, but I digress.  And yes, you have to demonstrate it is a deal, but the money source will do that homework for you as a rule.  So, you're holding up the deal and asking, "Want it?"  And the lender says yes, or no, based on whatever criteria is laid out.

Which brings me to say that different lending sources prefer to make certain kinds of loans.  So you learn what kinds of deals they loan on, and bring them those kinds of deals.  EZ-PZ.

Let me ask you...

You just put all of 'grandma's money' into buying an income producing rental house.  Yay for you! 

You have no more money.  You're done investing. 

Now what?

I never said what type of investment I would be making.

It is possible that I would be buying rental property, but not just one. Hopefully if I did buy rentals instead of flipping these would have a decent positive cash flow, and also possibly be set up for a buy and hold scenario to resell at a profit at a later date.

Why would anyone be done investing if you have properties that are making a good positive cash flow or profit from flipping? Shouldn't there be a snowball effect when it comes to investing? This may be faulty logic, but again that is why I am here. To learn

Also, I would like to clarify that I am not in any way married to the idea of getting a mentor or anything of that nature. I was just watching some videos and was just curious as to if those things were scams. My real question is which training resources have you found valuable. For instance, who are the couple of real estate gurus that you learned so much from and have made money following? These are the nuggets of wisdom I am hoping to excavate

I was using a hypothetical.  It makes no difference what your intentions were.

My question was supposed to mean, "What happens when you run out of money for down payments?  How many grandmothers have to die before that source dries up?  And if that does dry up, what are you going to do?"

Unless you have an ever-green source of down payments, you're done investing.  I should say, you're done accumulating assets, for the time being. 

The solution is to find 'evergreen' sources of down payments.  They can come from a variety of sources, but the first one and obvious one is the seller himself.

This is my first (and only) source for one of my investment schemes.  For example, I'm buying my neighbor's empty house for the cost of a notary and transfer taxes, and enough cash to seal the deal. 

She's walking away with enough money for Jack In The Box, and I'm walking away with her old deed.  She's also financing the deal.  Actually her bank is financing her, and she is turning her financing obligation over to me.

I am financing the first buyer that agrees to give me twenty-two thousand dollars as a down payment.

I am going to take a small portion of that money, and put it right back into my ongoing marketing, and wait for the next seller to give me his deed, finance me, and be willing to walk away with just enough money to buy two Jumbo Jack meals, and two cheesecakes.  Then I've got to hide as much of the balance from the IRS as possible; pay my bookkeeper, the CPA, my attorney who handles my Land Trusts, and my bandit sign installer, Molly Maids, Stanley Steamers, the loan servicer, Jesus my landscaper, the other Jesus who cleans  and rehabs my algae-infested pool, and the utility deposits, etc.

As long as I keep accumulating money for overhead I keep investing and creating cash flow.

That's why I'm asking, how can you keep going, if you're depending solely on grandma's money to invest with?  Once grandma's money is buried (in a deal), you're done accumulating for a long, long, long time, unless...?

Here's a link to something I stole from Robert Allen regarding "no down financing" or more commonly referred to as 'creative financing,' http:jaypalmquist.com/nodownpayment.pdf and a referral to anything you can find from Bernard Zick.  Zick is dead, but Allen is still alive and you can easily find his books online, which you should have one copy of all of them; especially his original classic, "No Money Down."  Of course, this one depended a LOT on assuming FHA loans, which is no longer an option.  But the idea of "taking over loans" is illustrated in this book, and is worth careful study. 

That said, the issues with any of these resources is the lack of mechanics.  The connections, nuts and bolts to 'physically assemble these concepts' just begs for mentoring.  And that's where contracts, forms, and details you find in specific, and yet unrelated training packages becomes quite useful.  I mean once you find an assignment contract in one course, you can use it pretty much anywhere with some minor adjustments.

And just for giggles the law says that any real estate contract IS assignable, as-is, but for practical purposes I include the Latin term, "et al" after my name on every purchase agreement, which means 'and others,' which immediately causes the title companies to ask to whom the contract is being assigned to.  FWIW

One of the most effective and actionable courses on negotiation is from Zick.  It's called "He Who Talks Last First Wins."  It's a hard-to-find 6-tape series.  Buy anything else you can find from him.

[IlBLisSlI]

Thank you again Jay. I'll definitely look into the sources you've sited. I appreciate your insight on the subject.

[DLee]

We were new once. ALl we did was buy an education package ($499) that included a ton of videos and the contracts needed.  We realized quickly what analysis paralysis was and we decided to just dive in. Honestly you do not need any mentorship or none of that. ALl it takes is knowing the first 2 or 3 steps. The next steps (4,5,6) will become obvious after you take the first 3.
Good luck. We have actually documented our step by step process in detail when we first started to our first deal. PM me for the blog link. It is a diary of our success from beginner to where we are now!

[caroline]

Hi,
Before investing in real estate, you should take advice from professionals real estate agents.
Here are some tips which will be helpful for you:-
1. Know the real estate market
2. Consider the location
3. Know the financial ramifications for real estate investors
4. Invest in your real estate education
5. Become a licensed real estate agent
Thanks!!

[AIP123]

Andrew,
 I feel like there is so much information out on the old interweb that you can learn everything you need to get started.
 Read, read and read and then watch video after video on you tube.
 The forums are great also.
 Just put the time in and then jump in with both feet.
 I studied this stuff for years before I started buying and selling houses and acquiring rental properties.
 
 

[fdjake]

I see this all the time from new investors.  Its the same BS over and over.

I need to "BUILD MY TEAM"

I need to find a "GREAT REALTOR"

I need to "RAISE FUNDING"

WRONG, WRONG, WRONG!!!!!!

Want the SECRET to REAL ESTATE INVESTING?????

Are you listening???

Here it is.......

F I N D   A   D E A L  !!!!!!!!!

That's it.  Overly simple????   It's not...

Here how.....

When you start out you know almost nothing.  So start out with the simple.  Single family RANCH HOUSES.

Become an expert in prices for those properties.  LEARN a specific area in your territory and learn it like the back of your hand.  There shouldn't be a house that goes on the market that you're not going to and walking through.  Take detailed notes while you're IN that house.  Is it updated? How many bedrooms? How many baths? Is it on a busy street? Anything near it that is a drawback? (like a big commercial building in the back yard)  Then write down EXACTLY how long that property was on the market, what was the ASKING PRICE vs SELLING PRICE and LEARN WHAT SELLS FAST!!!

You would think that houses that have been completely updated and look like a magazine cover would sell the best right???

WRONG!!!

The BEST selling houses are the ones that are UNDERPRICED!!!!  They can need everything, but if the price is right they'll be gone on day one.

So what do you do with all your research???

Start sending letters to every house in your target area.  Tell them you are a cash buyer, will buy their home in ANY CONDITION and you'll even HELP THEM MOVE!!!!

This is a numbers game.  The more you mail, the more response you'll get, and you won't get much.  But you don't need a lot.  JUST ONE.

When you get that call.  Find out what the PROBLEM IS.....HINT.....It's not the PROPERTY...It's always something else.  "I have no where to go."  I don't have anywhere to put my stuff."  "I need to find a place for my animals."

These people need you to FIX THEIR LIVES.  In most cases the property is secondary to the PROBLEM.

Once you know the problem...ASK them what THEY want for their house.  NEVER OFFER!!!  You might be thinking $60K.  They're thinking $30K.
If they are willing to take short money for their house, DON'T BE A PIG!!!!  Get them signed, thank them, and GET OUT OF THERE!!!  I've seen IDIOTS who blew deals because they had to grind a seller another $5K just "because"  The seller tells them...."Let me think about it" and a neighbor ends up buying the property because the "genius" real estate investor was a PIG.

Once you have your first BARGAIN in the hopper.  You can assign the sale agreement, buy it, option it.  It's endless.

Here's the bottom line.....FIND A DEAL

If you found a 1967 Shelby 427 Cobra in garage and the seller wanted $2500 for it......Would you need "A TEAM" to sell that car for $1,000,000???

YOU WOULDN'T.....The MARKET would set the price on that car as word got out about your barn find.  Within a week you'd have people from all over planet EARTH calling you to buy that car.

Finda 3 bed ranch for 50 cents on the dollar and it'll be the same story in your local market.

And one last thought.....

You DO NOT need to renovate a house you buy for 50 cents on the dollar.  Clean out the junk, cut the lawn, and price it at 80 cents on the dollar.  IT WILL SELL IN A BIDDING WAR between the following buyers:
1)The guy who THINKS he's a real estate investor.
2) The contractor who wants in as a rental
3) The parent (who's a contractor) who wants it for his son or daughter
4) The homeowner who watches too many home improvement shows
5) The neighbor who wants it for a rental

ALL these people will GLADLY pay you 80 to 90 cents on the dollar for that property.  If you purchased it for $100K and properties in that area in good condition sell for $200K it's a MATH PROBLEM....Reno costs are lets say $20K.  So take the $200K minus the $20K and you're at $180K....Leave some meat on the bone for the buyer and realtor and you can easily sell that property for $150k by just cleaning it up a bit.

In my experience, it RARELY pays to do a "TV SHOW rehab" on any property.  In fact, unless I can CLEAR 6 figures on a full rehab....I don't do them.  I'll fix the stumbling block items.  The roof, the heating system, the plumbing.  Whatever may SCARE a group of buyers.  There's not much difference in the profit.

Case in point.

I recently purchased a 100 year old house in a great area.  House was NEVER updated.  Knob and tube wiring still in use. Old boiler, windows, kitchen, awful bathroom.  I paid the sellers ask of $100K.  It would have cost me another $100K to make this a RETAIL READY property and it would have taken 4-5 months.  I would have made $80K after realtor commission.
INSTEAD.....I cleaned it out.  One 30 yard dumpster for a lifetime of crap.  $500 for the dumpster, $400 for the labor to fill it. then immediately listed it for sale at $159K.  It sold in 3 DAYS for $178,000.  I paid a 5% realtors commission and walked away in ONE MONTH TOTAL TIME with a check for over $65,000 with holding costs included.

OR.....I could have spent 4-5 months rehabbing it, tens of thousands more in costs, and dealt with every idiot HOME INSPECTOR in the area.  Instead it sold to a CASH BUYER who closed in 2 weeks.  The difference in profit would have been about $15K-$20K

GET IN.....GET OUT.....Move on to the NEXT ONE!!!!!!!

[skyehomes]

FDJAKE said it very well and it's the tough truth for newbies. You have to FIND A DEAL first and foremost. Everything else (besides a business card, maybe) is a waste of time. Education and networking for 3 months max, then go out and hustle. You can learn enough from podcasts and books to get started. Gurus are for people who want their hand held.

I took my first few deals to experienced investors who I built relationships with and asked them to JV with me. That's how you get a mentor. Doesn't have to be only ONE full-time mentor. Can be one for each deal.

[House Buyer COS]

John Martinez sales training on YouTube!

[SPBuyersLLC]

A lot of these posts have given great responses. At the end of the day you don't need a mentor. The basics of wholesaling/investing are very simple. You can learn everything you need to know about wholesaling on youtube and podcasts.

I learned everything to get started from Sean Terry's free podcasts. I listened to one on the way to work and one on the way home. Once you have the basic knowledge, start marketing. Once you find a deal, contact the most successful wholesaler in your city and ask them to JV. They will be happy to help you out.

Cheers.