This is my first posting, and I frankly…I don’t know where to begin! I’m overwhelmed with information via email, internet searches, books. I need to get started in REI but absolutely need some guidance. I plan on joining my local REI club this month, but I was wondering if anyone has successfully used any software program for getting started in Short Sales or any other type of RE investing. (I’m only using short sales in this instance because I do not have a lot of cash on hand to invest.) Has anyone used any type of program with any success? I am a self employed mother of 2 little ones, so I can’t afford to waste either time or money.
You have a common affliction called the Paralysis of Analysis. It happens to many folks, who read and study, and then do it again. The result is a head full of book smarts but no street smarts, which is what is needed to get deals done.
My suggestion is to focus on one technique for the time being. You can’t be all things to everybody right out of the box. Learn this one technique you decide upon, use it to do a few deals, then begin to expand your bag of tricks.
You say you’re new and cash poor. . .like most who start this biz. Well, then, I suggest you start safely by learning about options and lease options. They’re as risk free as real estate gets, and don’t require your money or credit to utilize.
Good luck!
I have found that short sales is the technique that has the lowest probability of success. Therefore, I would not do it as a beginner.
Joining your local REIA is one of the best things you could possibly do. However, it is extremely important that you meet and make friends with the SUCCESSFUL INVESTORS, not other newbies. If you survive long enougn to be in this business for only a few months, you’ll find that there is a constant parade of wannabes and newbies, but VERY FEW doers. That’s because real estate investing is a real business and requires real work. When money doesn’t magically fall from the sky, most people quit.
Fortunately, if you are already successfully self-employed, you’re way ahead of the game. Understanding the realities of business is half of the battle.
I would suggest that you decide which general category of investing you want to pursue: buy and hold, or buy and sell. Then, study that area and put together a basic business plan that will get you from where you are now to where you want to be 5 years from now. Simply doing deals is not a good plan.
REI is an excellent business that can help you raipdly build monthly income and wealth IF YOU ARE WILLING TO WORK HARD. If you don’t have much time to invest, you won’t get much of a return.
I agree with what propertymanager said. Don’t do anything except what has the best probability to work WHERE YOU ARE. Real estate is local. What works her in Houston won’t work in Los Angeles and what works in Phoenix won’t work in Miami. Find out what works where you are. Do that by attending your local real estate investors club and talking to the actual investors.
About a month ago a lady saw my ad for the house in the paper. She recognized it as an investor moving a rehabbed house. She called and asked when we were going to be at the house and we told her we had a showing the next day at 4:00pm and she asked if she could come over right after that. We said sure come about 4:30. What she wanted to do is to do what we were doing. We sat down with her and told her exactly how we do what we do including who we get our loans from which contractors we use and every thing. I offered to let he watch from finding to renting the next house. We even offered to help her find her first deal by running comps on houses that she finds until she is happy with the prospect. We sent her to a couple of mortgage brokers to get herself pre-approved so she can know what she is capable of doing. She never went to the mortgage brokers. When we e-mailed her to ask how she was progressing she never did anything. That is why when people talk about investors not helping you because they are afraid of competition, investors are not. We know that you guys never buy even one house. Our competition is an owner occupant that wants to buy the house fix it up and live in it.
If you are really serious, go to your local real estate investors club and get with someone that is actually doing houses.
the first step to a success real estate investment career is to purchase your own home. make sure you don’t missing that step. its easy to qualify for the loan and you’ll be the best tenant you every had plus you learn the ropes of the purchase process and all that goes with maintaining property.
I would not go after short sales, too much work for some meager discount. One avenue that is fairly safe for newbies would be purchase REOs (i.e. from the bank). With a bit of luck, you can get a reasonablely good deal if you find the right motivated bank, but yet you get all the normal protection of the normal sales process (inspection, etc). The real question is what is your exit strategy (assuming this is not for your own use). These days in many areas this is the big questions since markets are slow and holding as a rental is a money losing business plan.
Lastly, you should assess your skill set and situation and determine if REI is right for you.
I will give you some free advice here. This is what I consider to be THE BEST way to get started in real estate with the absolute lowest risk.
OPTIONS.
Basically, In this business FINDING properties that you can buy for 50% to 70% of their value IS the whole show. It is a slow process. Most people do not sell their homes for big discounts. You need to advertise, use signs, business cards, be creative, get the word out that you buy houses AS IS for cash and you close in 10 days. Word it anyway you want.
Now you ask. How the heck am I gonna buy these homes when people call me? Answer is: You won’t . Huh?? First off most of them will be too high priced, to beat up, ect. But, when that deal comes along you can use an option to CONTROLL the property without having to buy it!
A lady calls you who wants to move to Florida. Her house is old and needs updating, she wants out NOW. The house is worth (I’m making up numbers here to make the math easy) $150,000 AS IS, you ask how much?? NEVER offer a price, let the seller come to you. She says she’d take $100,000, you ask her to see it. Get all the info (size, lot size, sewers? problems, ect.) then get the comps. You meet her and explain that you can get her what she wants for her house, and, YOU WILL PAY HER $500 to secure the deal. That’s the price of the option. You can negotiate that too, whatever you want it to be. ($500 was just an example) Have a lawyer draw up a simple option agreement for you. You explain to the owner that this $500 is hers, not a deposit, not a loan, HERS, go spend it. By taking the money she agrees to give you 60 days (or more, negotiate the time too) to get her money. Anything you get over her $100,000 price is yours. I have never made less than $9,000 on one of these deals. Not bad for $500 worth of risk. And the best part you have a legal right to that house at that price, she can not cut you out as long as you perform in the time spelled out.
I recommend this to newbies for 2 reasons.
You don’t have money, that’s why you want to start investing.
You don’t have to take on the risk of a mortgage to make a profit on a property. It’s a no lose. (well maybe a SMALL loss)
Now this sounds like a very interesting way to get started with no cash. I too am in the same boat as Two Leos…been studying the @#$* out of real estate investing but have no initial money to get past the paralysis by analysis gate. The wife and I literally have ZERO dollars in savings since I am on my second career as a pilot (starting pay is embarassingly low) and just normal bills along with daycare for two little ones have us barely breaking even every month. My question is, even for this option way of starting, where would the $500 come from initially to lock in the deal for 30-60-90 days??? Also, where do I get the money to pay a real estate attorney to draw up the options paperwork. Last time I checked attorneys were quite costly? Not playing devils advocate here, just want to know how even the small details work. Thanks! :banghead
Listen, If ANYONE tells you that money can be made without money… RUN!
Dude, come on, if you can’t scape together $500 your reading the wrong books. Try “The Richest Man in Babylon” The premise is save 10% before you pay ANYTHING or ANYONE. It can be done, and is probably THE best way to develope the money management skills you will need to successfully invest in ANYTHING. READ IT!
As far as lawyers go. It’s a simple option agreement you don’t need Roy Black to draw it up. If a lawyer wants more than $250 for one, find another lawyer. Oh yea, ALWAYS ask how much? These guys love to cultivate the country club mentality “Oh I never talk prices” Yea, that’s ALL these guys talk believe me. Find a lawyer who works for himself. I love guy’s who work out of small converted single family homes. Their overhead is low and so are their fees. explain to them you’ll be sending ALL your closings their way. (closings = $$$) If they don’t want to treat you right look up lawyers in the phone book, they’re like ants. You’ll find one.
P.S. I pay $600 to my attorney at the closing of one of these deals. That should give you a ball park. He handles the sales agreement, the option assignment paper work ect.
Funny you should mention The Richest man in Babylon. I just recently read it and we are putting aside as much as we can each paycheck (albeit very little) aside to save.
Its not that I’m reading the wrong books, its the fact that becoming a pilot aint cheap. Not complaining in the least but the situation is what it is so I’m no need in looking back at what I haven’t done so far. I’m looking forward.
My second question is this : Where do you come across these individuals who’s properties are no longer on the market but need to sell fast fast fast and if they HAVE been on the market and didn’t sell, how is it you can tell them you’ll get them what they are asking if they weren’t able to for months AND sell it yourself for MORE for a profit???
Dude, thanks for the advice on the attorney. I had no idea if we were talking $250 or $2500 for one. I’m a pilot, not a lawyer. :biggrin
what you first need to to is a cost analysis of how much all that advertising will hit your pocket. business cards, signs, etc.
figure out all of the costs. while you do this - join a local rei club - again - that’s another cost.
figure out the costs of doing business.
every single successful business starts by determining its bottom line and profit potentials.
you’ll also be smart to contact an insurance agent to see about insuring your investment company - cost.
your business entity will be another - cost.
then determine your comfort level with using available credit to make this initial investment. you don’t need money to make money in this world - contrary to the poor man’s mantra.
but - you do need to be comfortable with risk and BORROWING money to achieve greater wealth. without using OPM - you won’t get there.
but as many investors will tell you - wholesaling (assigning purchase contracts) won’t cost you big money - because you don’t need to finance the deal because you’re not buying anything.
however - you must, as a noob, consult and attorney to protect your bottom line - getting a good contract that protects you is paramount.
and the lawyer - is another cost. :banghead
lol
the more you learn will certainly benefit you however you will need to make your mark and actually invest or become involved with someone who does (and does it successfully ON THE UP AND UP).
Congrats on becoming a pilot. If you had the stamina to complete that, real estate investing should be a lot easier.
As far as finding those properties, here’s the deal…
If they’ve been on the market already it’s too late. You need to get these people BEFORE a realtor or anyone else does. That’s the trick. Now, finding these homes IS THE BUSINESS. To do that you’ll need to advertise, get the word out that you’re looking to buy these things.
Don’t get scared, you don’t need to spend big bucks for this stuff. One of my best ads costs $50/month to run and it brings in 3 deals a year.
Yes, you read that right 3 deals a year. Here’s some great misconceptions about real estate.
You can do as many deals as you want. (true, if you don’t care about making money)
I’ll quit my job and be a full time investor.
Last year that little newspaper cost me a whopping $600 for the whole year. Net profits from ads $45,000
Be very patient with ads, they take a great deal of time to work. People have to see it, remember it, and find it when they need it.
You’re definitely on the right track. Don’t worry about the money right now. Just get that lead generating machine going. Even if it’s just one small paper, that could be the start. Once you find a deal, and I mean a real home run, you can always get a CC cash advance for $500 to get the ball rolling.
A VERY smart man once told me “Don’t ever risk what you can’t recover from” If you look at an investment and you weigh the possible outcomes, if you can’t get hurt, then DO IT!
P.S. I don’t consider losing $500 on an option deal getting hurt. I’ve blown $500 on some stupid sh*t. I’m sure you have too.
I get it. Have to get 'em beforehand. I’ve tried to go to some of my local REI club meetings to network but since I commute between Chicago and New York, I’m always out of town when they are held. Its rather frustrating.
How do you find potential buyers if and when you are able to lock an option in?
Oh and believe it or not starting out as a real estate investor with literally no cash is infinitely harder than becoming a pilot will ever be. :rolleyes
I usually wil put an ad in a big metro area news paper.
Handyman special: Owners wants out! Moving to Florida, needs TLC, great location and potential profit. comps are $175,000 Selling this weekend for $135,000. Must close in 30 days. Showing Sat. and Sun only 10am -2pm
Believe me, selling 'em isn’t the problem!
But remember, you make your money when you set that option price.(the owners must have number)
So how willing are real estate agents going to be to give you access to MLS to see what the market is like in a particular area when you are doing options and basically not using them at all?
Pete,
Any good books or online resources on option buying? Specifically looking for good examples of the forms you mention so I can have something to base my own customized forms off. Something that explains step-by-step and all of the needed forms would certainly help.
First, You can access most mls data from your home computer. Just google the state you live in and mls. If that doesn’t work you shouldn’t have aby problem just calling a realtor these days and getting all the info you need just emailed to you. I wouldn’t get into why you need it, just say you want to research a certain area,
Rich,
I just had my lawyer draw up a simple one page option agreement with fill in the blanks for the info. I figured this way it meets all MY STATES requirements and he just emailed it to me. I run off copies when I need them. Cost me $200 for his time and nothing there after. Priceless!
When you do the initial deal with the seller of the home…do you only introduce an Option Contract at that time…or do you also have a Purchase Agreement?
I’m wondering how you then assign the purchase to another buyer once you’ve found someone that meets the price point that you want.