Please, excuse the length of my post, it is VERY long.
Hello all!
My name is Eddie and I live with my wife in Chandler, Arizona. We are a young couple (late 20’s) but we want to get into REI as a means to supplement our income and with the hopes that it enables us to achieve our goals (dreams?) of financial freedom in a not-so-far future. We had talked about the fact that we wanted to buy a house and rent it out, but there were many questions in my mind. So, at the start of this year (2005) we made the resolution to start for real in REI. I started getting on every place I could find online and read a lot (found a lot of “gurus” out there :-X). I also went browsing through books, although I did not purchase one because I wasn’t sure what all the different options in REI where. All in all, we have been reading articles, e-books, online forums, and everything we can get our hands or, for two months now. I have read A LOT!!! And now I know enough to know I don’t know anything, which is even scarier :-.
Like I mentioned above, we live in Arizona, and anyone that reads the local papers here, even if once a week, will tell you that the real estate market here is RED HOT! I mean, it’s like everybody and their uncle wants to own a home in the Valley of the Sun (Phoenix metro and suburbs). There is a large number of people moving to the Valley every month, so I know there is opportunity.
One of the ebooks I downloaded came with an offer for “Mentorship” and I said, “Sure! Why not? Coaching is what we need!” But I knew so little back then and I can say I’ve come far in these past months. A couple of days later, this nice lady called me to do some kind of an interview to see if I “qualified” for the mentorship program. She then said she would put me in contact with one of the “mentors”. But just before we ended the call she mentioned the fact that there was going to be a “seminar” in Colorado in March that we should attend and that the cost of the mentorship program was $6,000… I was so shocked that I don’t think I could react!!! Did I hear you correclty, lady???!!! Did you just say $6K, SIX GRAND??? I’ve never seen that amount of money together in my life!!! So, then I get to thinking, “hmm, here are these guys who talk about ‘No Money Down’ techniques, yet they want me to shell out $6,000 UP FRONT???!!!” Dear Lord! That’s a downpayment on a property right there!!! And with the property, at least I know where the money is going!!! So then I started reading more and more (after dodging a few phone calls from the “mentor”) and found out that there is an abundance of these courses and that a lot of people have gotten in the bandwagon and proclaimed themselves “gurus” (by the way, the term has already gotten annoying) to sell a $5K-$10K course!!! I could not believe it! I mean, some of these courses must be good and teach you real stuff, but with so many out there, how do you know which ones are good and which aren’t?
Anyway, we don’t have a lot of liquid cash to put down on a property, let alone buy a course, so we were set in not buying any of those expensive courses. After all, I thought, these people (the ones that really know their stuff) probably learned on their own, or had someone to help them along the way (without robbing them blind first, I mean).
So, we first thought of becoming birddogs for a good investor who knows what they’re doing and wants to teach us while we learn. I found this company in the local paper that had a website and they have what they called a “Referral Program”, so I contacted them to start in the program. The guy that took my call was like a robot. He started asking all this info about if I wanted to sell a house or something else, and I tried to stop him, but that seemed to set him off his memorized speech so, after taking my info, he said somebody would contact us within 24-48 hours to talk about that. I don’t think I need to tell you that nobody ever did. We even went around the neighborhood looking for FSBO’s or FRBO’s, since that’s what they were interested in, and I could see why. I received an email from a guy in response to an inquiry I made in their website and I sent him another communication and that was the last I heard of him. We had already identified 4 properties around the neighborhood, even though we didn’t know if they were motivated sellers, but we had already started, which is what counts, but we abandoned this practice because I knew I had to find somebody to sell these leads to quickly, because they were not going to last.
The next thing we wanted to try was to join an investor club, so I sent a couple of emails to an REI club that meets really close to where we live. They sent us a few articles to get kind of our feet wet about a few different topics related to REI and invited us to their next meeting, which took place last week (March 17). In the mean time we kept reading everything else, and there are various aspects of REI that interest me. I think my wife and me are leaning more towards wholesaling (flipping, or whatever other names they may had for it), but I am also interested in foreclosures, bank REO’s and pre-construction, among others. So, the great day was finally upon us and we went to the REI club meeting hoping we would meet people that knew about REI and was willing to mentor us or help us along the way. I have to say that we found an incredible group of people!!! They were all very informal and they had a speaker that evening talking about loans with very favorable terms for investors and even though I quickly felt overwhelmed, I raised my hands and asked a question… then a few more. And I was very glad to see everybody around the room “chipped-in” on the answer. So I felt these people really knew and where very much willing to share their knowledge. Anyways, to make a long story short (or actually, not so long ;D), we found out that the people in this group invest a lot like the “traditional way”. That is, they buy a property, rent it out for 3-5 years and then sell it. I mean, I know this is a good way of investing and I like the fact that it seems a solid way of doing it, taking much of the guess-work out of the equation, but here is the heart-breaker. At this point we cannot do a “traditional” deal even if we wanted to. Even though we both have jobs, we don’t have a great deal of cash at our disposal. I have about $3K that I’ve been saving for two years and I try to “scrounge” about $200 more per month into savings. I don’t want to use all that because I am trying to build my “safety net” in case I loose my job or something else unfortunate happens, God forbids. I’m trying to get to the recommended point of having six months of fixed expenses in savings in the bank. My wife doesn’t have even that much because she hasn’t been working for that long, plus she is also paying student loans. So, it doesn’t matter how attractive or favorable the terms of a loan for an investment property are, if they ask for 10% or even 5% (the median home price in the Valley is above the $200K, so 5% would be $10K), that is something we cannot afford. And this is without taking into account that we should have a few months’ worth of payments as a backup in case we cannot put a tenant into the house as quickly as we would like.
Yet, I keep reading about how people are doing this with no money down or a minimum amount out of their pockets. This is why we would like to start maybe wholesaling first and doing a couple of deals to build up a decent cash base that we can then use to do bigger deals. But how do we get started??? I mean, I consider me and my wife to be smart, intelligent people. I don’t say this to brag, but what I mean is that neither of us is the “shoot-from-the-hip” type of person. We both can AND WANT to learn how to do this right. We are both organized and can follow instructions. We need somebody to help us in building a plan to follow.
I said before that I have been reading so much that now I am aware of how much there is to know about this. Well, I worry about liability issues, laws, taxes, and other people trying to somehow take my money after I’ve worked hard for it. But let me put an analogy, if I may. I am an engineer by trade. But I learned engineering from the very basics, and I needed guidance throughout the whole way. I did not go into the library and bought a senior-year level book when I was just a freshman. I would not have understood it. I followed a curriculum that was designed to help me understand everything step-by-step. So, in the same way, I know that sometimes I read some article or excerpts from books that are way too much over my head, and I feel overwhelmed.
OK, at this point I want to say sorry for making this so long and thank you for sticking with me through the whole thing. I know I can do this, and so does my wife! We have the desire and the attitude to do it. We have the wheels running, but they are not grabbing onto the road. Is there anyone out there that can help us get those wheels to stop slipping and to grab onto the road and drive us ahead??? I feel we are kind of stuck, because even though we met investors at our REI club, but we didn’t meet any of the “creative” ones. So, how can we get started in wholesaling in Arizona, if you think that is the best way to get started??? Or how can we get started otherwise??? Needless to say, even though we don’t have a lot of money to put up-front, we would be very happy to split the profits of a few deals that anybody help us put together.
Thanks a lot for “listening” and God bless you all with a lot of success and good luck!
Eddie
