Hey all,
I a newbie to this sight. So far find all the info very insightful and inspiring. Ok, I’m still in the research phase of real estate and have not quite figure out which direction to go (still dreaming) reading, internet, etc… I guess what I would like to know is where should I be financally when and if I go down this road. I hope that’s not to vague. I just want to way my options and start out the right way. Thanks.
James
James,
Welcome, glad you could join us.
I’ve changed my views a lot since I first began.
Initially, I started out as a rehabber/retailer. I couldn’t see the point in flipping/wholesaling for the small checks when I could make the bigger checks as a retailer.
I would say you need a minimum of 6 months of reserves in order to start retailing. That’s assuming you’re going to do it full-time. Because it’s gonna be about 6 months till’ your first payday. If you’re going to keep your job and rehab on the side then I’d say 3 months of reserves. Holding properties is expensive. :flush
Due to all the expenses and hassles of rehabbing, (If I don’t see another contractor for 6 months I’ll be just fine with that :banghead ) I’ve changed my mind on being a wholesaler. You don’t need as much money to get started and instead of waiting 6 months for a payday you can have a check in 3 or 4 weeks.
So I would recommend focusing on becoming a good wholesaler. Flip 2 properties a month for $5,000 each more than you contracted them for and you’ve made an extra $10,000 on top of your normal salary for the month. That’s a good way to build up your reserves. And it doesn’t take money or credit.
However, you better know what you’re doing or you’re going to offer too much and wind up not being able to unload them to another investor. Then you’re stuck either closing on them yourself or walking away and eating the earnest money and/or making your agent mad. So learn your market well.
Good Luck,
Stacy
Stacy,
Thanks for that valuable info. What books do you recommend that I read to get me started. Second, How would I go about getting a mentor or help with getting started in the right direction. any and all help is greatly appreciated. thanks a bunch.
I started by reading a bunch of books and going to seminars that motivated me to take a chance.
I would recommend that you and any others start small and buy in an area that people that can afford to buy want to live.
Learn from one of the established wholesalers in your market as a bird dog, and then step into the game only after you have proven to yourself that you can earn money on your own consistently.
Another thing you want to do is learn your market. Most people have a problem figuring out if a house is a deal or not. You can’t use your nose when it has been conditioned by retail prices. You need to do as propertymanager likes to say, look at 100 houses. Find out the condition, time on the market asking prices and what they end up selling for. that way you can tell a deal when you see it.
What I did first was read everything in the Investor Information / Real Estate Articles, EVERYTHING. It’s free why buy a book yet?
Learn to look at a deal in complete form from top to bottom.
I start with the rehab cost.
Then holding costs.
RE Agent fees.
Etc.
That tells my what I can offer for the property based on what I want to make.
If wholesaling then I figure my fee into the deal.
Find a deal work the numbers post it to this site and wait for answers, many people have pointed out wait I missed and shed light on my ignorance.
Also attending a local REI meeting was great, so give it a try.
So far find all the info very insightful and inspiring. Ok, I’m still in the research phase of real estate and have not quite figure out which direction to go (still dreaming) reading, internet, etc… I guess what I would like to know is where should I be financally when and if I go down this road. I hope that’s not to vague.
Financially speaking you need:
Purchase Price plus closing cost for target property.
Rehab money add 20%.
Carrying money, gas, water, sewage, electric, taxes, etc.
and if all you plan to do is this rehab then have 3-6 months living exspenses saved.
So fill in the blanks and that is the bare minimum you need and probally more…
Okay,
Is this a deal you would do? 4b/1b brick house, 1.22 acre. 24,000 600. rent or I would like to do 5000 repairs to rent or maybe 10,000 to sell owner finance. 1400 sf. 300. year taxes,400 year ins. Maybe figure in 3months hold expenses. Haven’t got comps yet but rents are arond 600. Would you guys do this deal and try and fix and sell or buy and flip no repair or rent a year and then try and sell . I am still liking other opinions as I have bought 3 props and sold 1 and rent 2 but still very green. :bobble
I guess it is a matter of investing style at this point in my life I have no desire to be a landlord. If you buy the property outright and rehab it you’ll have near $40K invested the comps and time on market are the key consideration in my mind. Also how do you make the house stand out from the rest in your market while staying within budget? If I could sell the house for $60K+ then I would consider it if not I would keep moving.
depends on the comps.
based on the est rent you’ve given, I’m assuming an after repair value of about $60k. If that’s the case, and you can consistently get at least $600 per month, I would do it.
Just make sure you have enough cash and credit reserves just in case it takes longer than what you anticipate to get it sold.