Getting Started... Need guidance... in Arizona

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!


I understand your concern & situation. Almost everyone starts out that way.

I still recommend you invest in your education. Keep reading on boards like this one & absorb all you can .

Reagrding mentoring, if you find a mentor that can work with you on a personal basis & see him in real life action & if he gurantees you a deal or 2 under your name, gauging your eyes, then you have a winner!


Hi Eddie, I am just beginning myself. I am 29, which I consider young as well ;). I am looking into Hard Money right now, only because it is readily available. Sure they have short terms and high rates/points, but when you find a deal…no flow then no go. Someone else will take the piece of the PIE! I have a Mtg broker friend and he is shopping around to refinance on my primary Mtg with cash out. I also have a 2nd Mtg with Household finance and the rep wants to give me HELOC for 20K. I have not decided which one to take, but at least it’s a start. I’d rather not dip into my savings either, the 401K is looking pretty good. I recommend Hard money for quick close deals. I am on an Agreement for a 80K home that they are selling for 30K “As Is”, how often do you run into those. You can start by using the equity in your home…these type of loans are much faster to close on. I have been in my home for 8 years and intend to use the equity for my reserves. I also took the real estate investment class at the loacl community college, but it was information I already knew. I think I was trying to build up to this point, but had always procrastinated in the past (why do we do that? :-). My credit score is not the best either, so I have dealt with some bumps in the roads. After we flip it then I can take care of those blemishes, therefore; making it easier to qualify for soft money loans.

Sorry Eddie but after I read that you live in Arizona and want to REI, I stopped reading. Buy new constuction. I’d suggest a something in the highest income area possible. Condo, Twnhse, SFR. They all appreciate well and their easy to rent.

Thanks all for replying and please, keep the replies coming!!

Hey FCC!

You say you are beginning, too, however you are already on an agreement and you seem to know the appraised value of the home very well. I don’t know how to do that yet ??? So, how long have you actually been studying or doing REI?
Also, I do not understand the term “2nd Mtg with Household finance”. I know I have two mtgs on my house, but I don’t understand what you mean “with Household finance”. Is that the name of a lender by any chance?
Also, when you say “you can start by using the equity in your home”, do you mean doing the HELOC loan?
Actually, I have a GREAT (knock on wood) credit score, but I don’t know how to use that to my advantage in REI.
When you say “after we flip it”, do you mean the 80K house? So, you are going to flip it? I want to learn how to do that! Do you want to say where you are located?
The option you are considering of “refinance on my primary Mtg with cash out”, that’s pretty much refinancing more than you need to pay off the loan and keeping the difference, right? Isn’t that already using your equity on the house?
Sorry for the flurry of questions and thanks for taking the time to reply back to me.

Good Morning Eddie, sorry for the REI Jargon… ::slight_smile:
It’s 9:30 in Hawaii right now (on vacation). I live in North FL. I know the town well since I was born and raised there. If your credit score is great, you may consider getting a conventional loan, start by talking to a Mtg Broker in your area who can be trusted and is experienced with helping investors. I actually am in the Mtg business right now but maintain a position with a large Bank with great benefits. I intend on doing REI Part time, until I become the self-made-millionaire that I plan to be by age 40 ;D. I actually will be closing on my first deal in the next 2 weeks or less and it will be enough to build some capital and pay off all of my credit obligations, except for my Mortages on my primary home. Household finance is a direct lender owned by Bank of Hong Kong or is it China? (the largest bank in the world). You can also learn more from an investor if you see his process. Try grabbing one the next time you attend the local REI club meeting. It would not be difficult for you to get 100% financing. My loan will only be for 6 mos. and I will pay it off in about 3 or so, after the home is rehabbed and sold. I need to take off for aminute and we can chat later…FCC

When you say it would not be difficult for me to get 100% financing, you mean with a conventional loan and bank? I mean, I went to talk to this guy that comes to the Credit Union of my company and the loans they have for a second home (investment property), you have to have 10% down. Like I mentioned above, I don’t have that kind of money. Also, even though I haven’t talked to the guy that came to speak at our investors club meeting directly, what he presented in the meeting was that the terms of the loan were great (negative amortization and a lot of other jargon I didn’t fully understand), but from what I understood, the most they would do is 90% LTV. Doesn’t that mean the same as 10% down, since regardless of which way you look at it, I still have to come up with 10% purchase price in cash.

Hey, I also have another question. When people say they buy houses CASH, what exactly does that mean? I understand that doesn’t mean they actually dump a truckload of cash on your driveway, so it must mean they take out some kind of loan that pays my asking price (if I’m the seller) , right? So, why do they call it “cash”? And then “cash”, as opposed to what? What other form of payment would I, as a seller, accept? Sorry about that, but this is something that I’ve been trying to understand for quite some time now.

PS, enjoy Hawaii!!!


If your lender will loan 90% of value, you may not have to come up with the 10%. Lets say that you have found a property that is appraised (by an independent appraiser) for $150,000 (150K) but the seller is in a hurry to sell the property, so he will accept the offer you made for $120k, then the $120k is 80% of the appraised value. If your lender will loan up to 90% of appraised value (90% LTV) then he should loan you all of the money for the house plus closing costs (typically around 5 to 6%). In this scenario, you would not need any money down.

Also, make sure that you understand all of the terms that the lender was using. Neg Am stands for negative amortization. What it means in real life is that the balance on your loan goes up instead of down when you make a payment. Your payment is less than the cost of the interest for the month, so the mortgage company will add the difference between what you pay and the interest due to the principal. It is the inverse of paying your mortgage off.

When people buy houses for cash, they do not have to get a loan based on their credit worthiness and so it is quicker (no loan approval). It typically takes 4 to 6 weeks to get approval for a conventional home loan. When you buy for cash, you can close in from 3 to 7 days from the time the contact to buy the property is signed. Of course, some times it may not be a whole lot of cash that is needed if you buy Sub-2. Also, it may not be your cash that you are using if you are going to wholesale the deal.



Thanks a lot for clarifying the part about the 90% LTV. I guess I’ll have to talk to them and see where we can go. But the last paragraph in your reply did not do a whole lot for helping me understand what they mean by “buying houses for cash”. I’m a little slow, sorry about that. Would you mind explaining what is the “cash” we are talking about and where it is coming from? Is this by using hard money lenders?
Thanks a lot!

Cash is the “green stuff” issued by the Federal Government and is “Legal Tender for All Debts, Public and Private”…it comes in $1, $5, $10, $20, $50, $100, etc. denominations…

Seriously though, some people buy houses with their own money rather than taking out a mortgage on the property.

For instances: I bought a HUD repo for $51K. When I paid for it, I drew a certified check from my own funds to pay for it (if it is all your money, it is still considered “cash” even if it is actually a check…). Once I have finished the renovations on it (very soon!), I will have the house re-appraised and get a mortgage based on the new (and higher) appriasal. Thus, I will be able to get all of my upfront money back to put back into the bank and have avoided the high rates charged by the HMLs.

Hope that helps…(sorry about the little bit of sarcasm-- I’m from New England – it’s a way of life!)


Hi Eddie and let me say you have found a great forum to learn the business of Real Estate Investing (REI).

REI with the proper education can be one of the most lucrative forms of investing and building long term wealth.

You have taken a great step in the process of REI before making choices.

You are in one of the hottest market states for REI, you will find that with the proper education, guidance, and a lot of hard work at first you will find some great deals in Arizona.

You will find many choices of mentorship programs running all price ranges but most are not a great as the sales job so do take some caution in the selection process.

Many years ago I taught with a Real Estate Teacher who charged 18K for his full program and now the same program runs just about 60K.

When it comes to a mentorship program, you can not lest cost be a factor unless it is simply cost prohibitive for you. I have a belief that if you can learn one thing that will make you money for the rest of your life for me cost should not be an issue.

I do get a lot of opposition for this type of statement and yes my opinion is vary biased, as I’m an educator in REI as well.

However, your choice needs to be made on research and what is in your best interest as real estate investors no another’s opinion on the cost of education.

I have been in this industry for over 20 years and when you seek out a mentorship program make sure it comes with hands on training, follow-up coaching and a lot of handholding to get you through the tuff spots of REI.

You will find that becoming a birddog for other investors will be a great launching pad for success and John Locke has a great course on this subject. You truly need to develop a relationship with true investors and find their wants and go hunting. You will not build wealth doing this but you can make some good cash to get you to the next level. Most fees run from $500 to $1,500 and can go higher dependant upon investors profit and how efficient you are in research.

My friend you are just all over with REI and this is understandable so let me share my thoughts on getting started in REI:

You have to get out and take a few steps to become a successful real estate investor.

One vary important step is to research your question on this forum before posting as this will teach you proper research techniques to become a successful investor.

Your next steps will be to dedicate time each day for investing in real estate.

Treat this as a job and your rate of success will grow.

Get a feel for your market, property prices, property sale prices for your market area by talking to realtors, brokers, researching the tax office and by picking up the real estate magazines.

Look for classified ads that have:

Owner finance

Just to name a few. This will give you a feel for the marketplace.

Drive through local neighborhoods focusing on Vacant, FSBO, & for rent properties. Take down the telephone numbers and or address of each property.

Check with an office supply company or the Board of Realtors to acquire a local contract for purchase of real estate.

Invest in business cards and letterhead to let people know you are a professional investor. You will want to pass out 1,000 business cards per week your first 30 days.

Prepare a contract or an agreement. Check figures and clauses. Be sure you have a couple of ‘Out’ clauses such as ‘subject to partners’ approval’. Submit your offer to the homeowner And see what happens.

The homeowner could ignore the offer, let the deadline expire or counter offer. In the event, the homeowner does not respond to your contract put them in a database with a note to contact them again in 30, 60 or 90 days. Things do change over time!

Get accustomed to viewing property and take a clipboard, notepad, pen, and flashlight before going out to the property.

Evaluate the property and look for the opportunities. Could the property be assigned? Could you acquire the property through assumption? Could you structure the deal with limited money or no money down?

Examine your credit profile and increase your available credit.

Search out other investors and or money sources to finance or assign your deals to.

Talk to your banker let him or her know you are beginning to invest in real estate. Ask for timely information regarding interest rate changes, bank properties, areas to invest in the local market and potential investors they might know.

Inform friends, associates and who ever will talk with you that you are looking for properties, providing an incentive if necessary. “Offer a carrot.” A finders fee for locating a deal, investor, or even a homebuyer.

Visit with real estate attorneys and title companies. Inquire about their fees, services and time it will close a deal. Ask about open title closes, assignments and trust purchases and how they handle them.

Go to the courthouse and research a property. It is not a scary place and you might be surprised how friendly it actually is. Start by researching your own property or a friend’s.

The first time or two the clerks will help you in your research or in pointing you in the right direction. While you are there, also check out the Tax record office. Inquire about the office that handles tax and mortgage information.

Be present at several foreclosure auctions just to learn the process.

Develop a database of buyers and spread the word among your contacts. You might consider passing out business cards, posting flyers or ads to acquire a buyers’ database.

Look at a minimum of 100 properties per month.

Set up a mailing campaign to:

  1. Other Investors
  2. Expired Listings
  3. Homeowners facing foreclosure
  4. Homeowners facing legal problems
  5. Homeowners facing law suits
  6. Homeowners behind on property tax
  7. Probate announcements
  8. Engagement announcements
  9. And the list goes on

Drive a new way to work or to the store and look for real estate.

Never let lack of money stop you! Your mission is to never stop, never give up! “Never, Never, Never, Never Give Up!”

All right!!!
Thanks a lot, John Michael! I will get started with a plan and I will definitively take this to the next level.

God Bless you!

i agree that education is invaluable, but i don’t think you need to start out by spending
a ton of money on it. go to your local bookstore for every weekend for a few months and
read EVERY book on RE they have.
read every post on this site and for a few years. i spent 2 years reading
and wasting money on seminars that taught me nothing that i couldn’t already find out
at my local library.
i bought my first property 100% financing and paid 3700 in closing costs. i also overpaid
for it, but thats part of the learning process. i bought in a great neighborhood and
i bought at the right time and i made a 20 times my investment in 1 yr. that enough
to pay for some real education, although i still think 90% of all seminars are a waste
of time. what i usually do is buy courses off ebay at 25% retail price.
i’ve also read every book in the local library on RE.

one thing about most ZERO down deals is that you need a lot of free time. if you’re
doing pre-foreclosure, short sales, rehabs or whatever you’ll do better if you don’t
have a fulltime job. if you do, you’re kinda screwed.
so the only option is going the traditional route - buy and rent for 2-3 yrs.
for this you need some money. if you dont save enough from your regular job, get
another one. its just temporary and it’ll get you the little extra you need.

you also need to learn about real estate cycles and investing psychology.
currently i’m buying new development out-of-state at a discount from appraised
values, with the builder paying my closing costs and i’m usually using 100%
financing. on top of that, i do lease-options rather than renting so i actually get
3-5k when the tenant moves in. since they’re new homes, the advertising starts
30 days before closing, so i usually have a tenant in before my first payment
is due!!!
so you can still be creative while using traditional methods.
but make sure your credit is stellar and you have enough money coming in to allow
you to save and fund your emergency savings too!

good luck and happy investing.