I have been interested in the REI for a living for a long time now, In the last few months iv consentrated on learning and doing.
Im curious to know how most of you got started and what i took to get past the begenning?
Things seem to be getting harder instead of easier, and im looking for ideas and real life scenarios that put you back in the can do it, frame of mind?
Thanks Again
It sounds like you’re doing the “analysis paralysis” thing. I wanted to start doing REI several years ago, but a costly divorce got in my way for awhile. Thank goodness I didn’t get into it back then because that would’ve been another big fight in court. Now that I’m clear of all that, I’m moving forward.
I was looking in my hometown newspaper one day and found the 6-unit building we bought for sale. It was pretty cheap, needed updating, and had a couple vacancies. We ran the numbers and found it would work out really well after we got the two vacant apartments rented. We had to stretch to come up with 25% down and also money for rehab. We got a really low interest loan and that balance went on my credit card. My dad and I did all the rehab ourselves. It was a lot of fun and I learned a ton. I originally wanted to over-do everything (common newbie error). I backed off a bit and everything turned out great. We got a couple ladies in those two apartments for just below market rent and the money worked out nicely. Now I found out I’m going to be moving to an area soon that has numerous cheap houses on the market…some need work, some don’t. We’re looking to buy a house of our own later this year and then about 5 or so of these smaller, cheaper homes to start renting out.
I’m fortunate that I have a decent income that’s allowing me to straighten out our finances and get all of this started. The driving force for me has been the EXTREME frustration with my job and my unwillingness to go the rest of my life working hard for others only to have opportunities pass me by. I’m going to build our business where my success relies on me and not my inability to suck up to superiors. We’re slashing our debt and will continue to drive our same cars for quite a few years. Most of the debt we accumulate in the near future will be by purchasing houses. It’s still early on for us, but it’s a mindset. I have the ability to make this work and I’m not willing to continue working for others.
I started by teaming up with my stepdad and fixing the houses he bought and we split he profit. We did a few a year and I learned about the business and the experience. When I broke away from step dad and went out on my own it was harder, not easier. But here’s the thing…
This business isnt easy, especially when you are just starting out. You don’t make money fast either, it all takes time. I would say that if you are interested and prepared… then pull the trigger, just make sure you know what your aiming at.
And remember, this business is a marathon, not a sprint.
I never gave up.
For me, I thought I was ready to just jump in a few times. I thought I knew enough to get started and would learn the rest as I go. As it turned out, the things I didn’t know would’ve buried me. When I first joined this site, I thought I knew enough. It didn’t take long before I realized the truth. I’m glad I took the time to step back and see how things are done. For instance, I had no personal reserves or business reserves. That would’ve been a HUGE mistake. I also didn’t know the truth about operating expenses. I’m close to building my reserves up to the point where I feel I can succeed. During this time, I’ve looked at about 20 or 30 houses just to get the experience. I now know that I was nowhere near as ready as I thought I was. No I’m finding it hard to find prioperties that fit my criteria for cashflow. That tells me I’ve learned something because I would have jumped on these deals a year ago. There is some fear when just starting out. But I fears have been eased by education. I now even have a goal and plan…
I borrowed some downpayment money ($1200) from my brother-in-law, who borrowed it from his credit union. I paid him back at $100/month. Added that to $1800 savings and bought a 2-on-1 in a so-so area of town. I moved in and rented out the rear unit.
So starting out, I always think it’s a good idea to get yourself out of paying rent first. You’ve got to start somewhere.
Furnishedowner
I thought I was ready few months ago when I decided that I wanted to flip houses. My wife and I spent few weekend driving around an area that we liked. We identified houses that needed work and sent letters/postcards to the owners that we found in the tax record. We probably sent 100 letters/postcards. One guy called - an investor from California. He was interested about selling his property. When he called I realized I didn’t know what to to next… I believe I did a pretty good job marketing my interest in buying houses. However I was not ready to close the deal…
I decided to take a step back, when to real estate school, got my license (I am activating it tomorrow :O). Found this site, started reading and decided to change my objective. Instead of flipping houses I want to rent them out. I created my business plan. I am also opening a LLC this month.
I guess I am not over the beginning yet. However I am feeling really good and I am taking one step at a time. And this time, my wife is 100% behind me… :O)
One thing that I would recommend is for you to put your goals and business plan in writing. In my case it helped me think about this business in a different light. And I am excited to meet the goals I setup for the business.
Good luck with your business.
PS: the other thing I read here is that it is important to connect with other successful real estate investors. I am going to my first REIA meeting this month. I am excited… :O)
Have a good evening!
I started out by converting my primary residence into a rental. I bought another primary residence where the rental income from my first property would cover the mortgage payment for my second property.
After a year or so, I converted my second property to a rental and bought a third property to live in. The rent from the second property covered the mortgage payment for the third. After I acquired four properties this way, I started buying investment properties from the pool of HUD/VA foreclosures.
With only two exceptions, all the properties I purchased between 1986 and 2003 were bank, HUD, or VA REOs.
You have to keep in mind that I started in 1981 when prices were a lot cheaper and 95% financing was typical. My initial experiences may not be replicable today.
Its nice to learn of others experiences. As mentioned iv dreamt of this business for along time and am excited to make things happen. My issues now are the no’s and that will not work from most of who i share these ideas with.
Some days i pay little attention to them, and tredge foward as this is not a sprint nor a business for the week at heart. But then theres days like this whole week where all that i do seems to be shot down. I am just getting started, i have two properties now one is a rental and the other i live in getting it ready as a rental a well. Reading all the post helps me to know that i must keep working and nothing comes easy, especially the begenning.
Please keep them coming.
Tomorrow will come, make it a good one.
Understand that most people are “trained” to think go to college, get educated, go out and work job until you’re old enough for Social Security, etc. We’re only now starting to see a little push for people to even take any initiative to invest for their retirement due to the scarce amount of jobs which will actually pay a pension. Also figure a lot of that push is from investment companies who stand to profit from those investments.
Most people are going to think anything you do differently from the above scenario will not work because it’s not “normal.” Look at some of the most financially successful people of our time. Many of them were told they wouldn’t make it…others flirted with financial disaster by putting all their assets on the line or being in bankruptcy.
Look at a thread I started called “getting the support of your family for REI”
There are many people on here who are getting the “no’s” that you speak of.
This business will not work for everyone, but if you start having a little success it’s amazing who will come around and warm up to your ideas.
When it comes to retirement. I was shocked when I ran the numbers between REI and a 401k. You could pay off 5 houses in 15 yrs. and have 500k in equity. When I ran the numbers for a 401k to get the same amount, I had to contribute 30% of my earnings. With REI, my contribution should be little or nothing for the same 500k. I’d have the option of living on the cashflow, a cashout refi ( and have the tenants pay for it), or reinvesting. If I wanted to do a cash out refi, I could cash out 50% of the equity and stuff it in the bank for reserves. That money is tax free because its a loan, not income. I’d have to pay taxes on the 401k when I took it out. The great thing about REI is that someone else pays for your assets.
All the reading here is great. Now im still in this Funk and trying to to think past it, as i seem to be a one man band. Im working on finding a local REI group. Im simply looking to keep my glass half full. My additude is right now my biggest asset.
Again all the thoughts are encouraging, keep then coming
Salsadunes - it is good that you are upbeat and have the right attitude. However, don’t overdo this. You don’t need to work to find a local REI group. If you google Real Estate Investment Association and the name of your city you should be able to find one. Then you can either go to ther website and check for the next meeting or call them to find out… Done!
Good luck. Have a good Sunday!
Salsadunes,
I started with desire, indulged myself into REI audios, Ebooks, books as well as personal development and self help information , then I found a REI mentor and did what he taught me plus MORE! and never gave up!
The right REI Information and understanding the market that you are targeting are all vital!
You are closer than you think!.
Keep going…
salsadunes, my father and I just started full time and have been at it for about 3 weeks to 1 month. It has been slow, and we’ve made many mistakes but none were too costly and we’re learning how to better run our business each and everyday. Some days seem slow and you feel like there is no progress, where other days seem like the greatest days ever and you see a bright future. Just stick to it is all I gotta say, my father and I know we won’t have success overnight, and for now our goal is to buy one house a month. Once we can do that successfully then maybe we’ll turn up the pace, but for now we’re just learning what works, what doesn’t, how to find sellers, and making offers. I’m only 23 so I’ve got plenty of time to put into this and the main thing that drives me is the majority of people that I’ve met who are successful and happy with their lives are those who took the risk to run their own business, and work for themselves. Their family is closer, they have larger profits, and they are not so stressed and overworked in their lives, I’m willing to take that risk, at my age either way I’d be working my butt off, but I’d rather do it for myself than some manager or boss profiting off of my work.
Salsadunes, I don’t think you need to worry about a lack of a local REI. You can start one yourself. Is there a landlord assoc. locally? Besides, this site is full of experienced investors to help yo out.