So far my techniques as a Wholesaler are as follows:
Door knocking -I’m still uncomfortable with it but I’m still going to continue with it
after the gun incident I’m still a little shaken up by the whole ordeal. I learned that technique from reading Than Merril’s course.
Working the Orbits in the newspaper -A great suggestion by FDJake I’m going to send out the mailings this friday. It’s 20 Mailings and I use a bulk mailing service on the internet so I don’t have to go to the post office. I have an excel spreadsheet so I can keep up to date with the mailings. I will mail the same people twice a month and find new ones.
Bandit Signs -So far I have 50 up but I should’ve gone to this site first because I didn’t know about city ordinances. Someone called me about my signs yesterday but it wasn’t a homeowner it was someone that wanted me to take down the signs. They called it “Street Spam”
Driving Neihborhoods -Here I’m looking for homes that are vacant and I will look up the owners to see if I can locate them to see if they want to sell. If the home is vacant they possibly want to sell.
Well, this is what I got, signed your low budget wholesaler…lol!!
I’ll tell you right now to just throw the idea out of hiring a mentor/ buying courses, etc. Most REI are self-taught, or have put the manhours in researching on their own. If you have someone to teach you and take you under their wing, perfect, but likely you don’t and there’s absolutely no need to hire one either. First off, you have no idea what you’re ‘buying’ when you hire someone. Secondly, if you want to make money in ANYTHING you’ll figure out how to do it on your own. You won’t master it right away, but any successful, highly motivated entrepreneur/ investor will find a way to make money in anything they do, or they’ll rack their brains til they do. Also, forget nearly all REI books you’ll find in any commercial book store. They all feed you the same BS over and over and 99% of them don’t divulge into the darker side of investing in real estate. I bought Mike’s (Michael Rossi, a member here) ‘1 Minute to Rental Property Riches’ and it’s by far the best REI book I’ve ever read. The title is supposed to be sarcastic and the book takes you on a walk through some of the darker sides of REI. I’ll admit that I was not as naive to the world of landlording as others may be and was not shocked by it, but if you’ve never lived in a rental property before you’ll likely learn a thing or two from Mike’s stories.
Also, you may find it very difficult wholesaling. What’s worse is you might actually burn yourself out in REI before you ever make a dollar or invest in your own property. Do what you know how to do to make your start up money and then go from there. As Jake said, you’ll likely need 25-30k before you buy a property, and lots of research before you make any real moves. This forum is all you need–forget those courses.
fdjake, while I appreciate your great tactic for getting delinquent tenants out of your houses, I am utterly appalled at your apparent contempt you seem to show for these people…jeez man!
I realize some people are screw-ups but on the other hand people are losing their jobs & homes left & right in this economy. I’d go as far to say MOST of these people are not “losers” or “idiots.” You’re displaying no respect or dignity for ANY of them whatsoever. I’ve dealt with many people in foreclosure and had to evict people myself…I can usually see their mistakes a mile away but at the same time I don’t feign compassion either. I haven’t walked a mile in any of their shoes. But do what works for you I guess.
“We can never judge the lives of others, because each person knows only their own pain and renunciation. It’s one thing to feel that you are on the right path, but it’s another to think that yours is the only path.”
~ Paulo Coelho
I realize people are losing their jobs left and right, but SOMETHING else goes unpaid before your RENT. In an ideal world, everyone would think this way. Instead, you have people that are willing to play poker with their landlords before EVER thinking about dropping their cell phone lines, cable tv, car payments, [insert more frivolous spending here], etc etc. You can ALWAYS afford the rent, PERIOD. There’s very little exceptions and there are always exceptions, but most people will jerk their landlord around longgg before ever thinking of cutting useless and non-essential spending elsewhere in their life. I watched my mother work two jobs growing up as my brother and I went without new Jordans, McDonalds every night, you name it, BUT our rent was ALWAYS paid.
Now every situation demands a different procedure (some would beg to differ, but I’m not completely heartless). If I had a GREAT tenant that didn’t give me grief, never was late, etc, I would work with them on occasions for unforeseen problems. You have to know though when you’re being jerked around and when someone truly just needs a hand. Even then, the bank won’t care if your tenant lost their job. They will ALWAYS want their money.
REI_Chris I totally agree with all of that. I only took issue with the apparent contempt for people who may be just going through rough times or make poor decisions with money.
I totally understand deadbeats…but to paint everyone who is late on rent as idiots is presumptuous at best. I would say the majority of people have no clue how to truly handle money. Hell I didn’t at one time. I don’t know I guess I’m just not too quick to pass judgement.
I totally agree w/ REI_Chris on this. By your comments nsu, you must not have much experience in LL’ing. I’ve had people try to give me BS excuses why they don’t have rent money while they’re sitting in their house with the temp at 90 degrees in the winter, watching their DISH network/cable TV (on a flat-screen TV), and have their cell phone on the end table. They always seem to think they can stiff the LL on the rent and it will be ok.
I totally have compassion for people who had been out there working hard and lost their jobs. I understand that, but this crap is from people who still have their jobs and just can’t figure out how to manage money. I found SEVERAL unopened bills in the house I just evicted a family from. That’s absolutely irresponsible to not even open your mail to figure out when things are due. If you want to stick your head in the sand, you deserve to be booted out. This family also had several streams of welfare coming in. The sixteen year old son and mom were receiving SSI benefits. They also had food stamps and I’m sure many other things too. There is no more poor in America because the gov’t is there to swoop up the “down-trodden” (mostly lazy). If someone wants to, they can find a plethora of programs out there to give them free money, a place to live, a free cell phone, food, housing, etc. No need to work.
I’ve been working since I was 10 yrs old. Don’t know why it’s so difficult for so many others…
Justin, I think you all are misinterpreting what I’m saying. I’m not saying let people squat in your house! Five days after the due date I’m filing for eviction. I ALWAYS charge late fees, no matter what. I enforce my lease agreements to the T. I just don’t have contempt for them. I don’t look at them as “idiots” or “losers” by default. Some are, sure. But there are sincerely people out here in this economy that are just in a bad way. I just choose not to paint them all with such a broad brush by default. That’s just me.
See what I know is this: I’ve been broke before, I’ve been stupid with money before, and I never considered myself a “loser” because of it. I just didn’t know as much then as I do now. Having been there gives me a different perspective I guess.
Well congratulations because you worked your way out of being broke. Too many other people are too lazy to do that. I’ve been there too and made stupid financial decisions. Most people have. The difference is that we were motivated to get out of that. I flipped burgers 80 hours a week for a couple years during my college breaks. That netted me a whopping $360/wk. I knew I was on my way to something better…those days were just a stepping stone.
Not all poor people are losers. IMO, people like I described in my other post definitely are.
Honest hard working poor do exist. Some of the folks living on a small SS payment are decent folks.
But when you landlord, you have to deal with a lot of losers. They are people who routinely lie when the truth would serve them better. They make bad life choices over and over and over and never learn. They cheat and steal and think it makes them clever because they’ve gotten away with something.
Bad economy is no excuse for not paying the rent and trying to steal a free place to live. I’ve had too many tenants lose their jobs with this bad economy and what DECENT people do is to call the landlord and give 30 day notice and move out because they can no longer afford the rent.
Decent people don’t lie and write bad checks and dig in their heels and refuse to move until the sheriff carries them out by force.
As far as I am concerned the landlord’s most important job is to screen tough to keep the losers out of his rental units. There are a lot of them out there, trying to trick and lie their way into their next free place to tear up and destroy while the landlord is trying to get them out.
I’ve read this thread with a great deal of interest. Lots of good stuff here.
I can relate to what Justin is saying…
I’ve worked for the last 35± years and occasionally have collected unemployment. I’ve always kept my bills paid and have been fortunate enough to find a new job usually with better pay. I’ve always lived well within my means never forgetting that it could all come to an end one day. Well, that day finally came. I got laid off 2 years ago from a well paying job because the type of work I did was offshored to India. When it happened it did not come as a shock, rather I actually had my desk packed and ready to go 8 months before knowing it would eventually come around. Given the economy and my advancing age of 53 :rolleyes I knew it would be tougher this time to find another job.
So now I’m treading water working at one of the well known big box home improvement stores at nearly 1/3 of my prior salary. I’ll be Ok because I have resources but most importantly because I’ve always lived by the follwing creedo: Never let your monthly expenses exceed that which you can collect on unemployment. It’s served me pretty well thus far.
Where I’m going with this is I have some distant 28+ year old nieces and a nephew that learned from their mother how to milk the system and are always looking for the next free ride. One niece called me the other day just giddy, giddy, giddy over the fact that she qualified for food stamps. I guess it’s something to brag about in the socioeconomic circles she elects to associate herself with. For me, having worked my entire adult life, it was enough to make me gag. It’s hard to be around freeloaders, family or not.
So back to me, I’m at what appears to be a crossroads…do I try to go back into some 9-5p job (which now makes me shudder) or stick with the big box home improvement store where I can transfer between stores, work part-time or eventually full time, get employee discounts, and set about supplementing my income by doing some real estate investing in the available free time. I tend to think it’s going to be the latter but worry about the eventual outcome. But as they say, nothing ventured, nothing gained!
My first project on the plan is a HUD home in an area of the state where the cost of living is lower. My venture started back in August '10 when I found an attractive prospect. It started as a shortsale transaction, then went into full foreclosure, and now is a HUD property pending it’s first listing. I’m keeping my focus narrowed to this particular property at the moment for educational purposes.
I had the house inspected during the short sale phase and know what it needs and what the eventual value will be if I’m cautious in how I renovate it. My plan is to bid as an owner occupier home and if successful, spend the next year renovating at which point I will know if I actually want to live in it and make it my center of operations (I can transfer to the local big box) or sell it and do another. Just as importantly though, I’ll know for sure if I’m physically and mentally up to this type of activity as a mainstay (I’ve renovated other homes I’ve owned).
It’s all a risk but the returns can be pretty satisfying if undertaken with due diligence.
Sorry to hear about your job loss, but it sounds like you have a pretty good outlook on things. Realize if you buy that HUD house under owner-occupant rules, you’ll get to bid on it right away. The other part of that is you will have to sign a form that states you intend to make that your primary residence and you will reside there for a year. When the house first gets listed, it will go open to owner-occupants only. If there are no offers for a set period of time, it will then open to investors. If nothing happens, next will be a price drop but it will go back to owner-occupant only. This will continue as the price walks down to a point where someone gets it.
I did lose out on a HUD home to another investor who bought under the owner-occupant premise. I’m not sure what the repercussions are if they pressed the issue, but we don’t run our business on lies so we were waiting to bid on the house.
bldfw you are very smart to keep your expenses and liabilities under control. This is where most people screw up. They predicate a lifestyle based on the “good times” and rarely make plans for the inevitable scarce periods.
With that in mind, I would absolutely keep your big-box job and invest in real estate at the same time. The problem with getting back into the 9-5 rat race is just that…it’s a rat race. Most of your waking hours would be sucked up at the job, between 40-50 hours a week working plus commuting, etc. That time could be invested into finding deals to make the real money. Also it’ll be easier to quit the big box once you have a good real estate track record going.
Regarding your HUD home strategy, I think that’s a good plan assuming you have some cash and don’t mind the work. However, just know that rehabbing is by far the HARDEST way to make money in residential real estate by far, bar none. No other strategy is rife with such pitfalls, roadblocks, and plain old hard work. The risks are high, although the payoff can be great. If you’re just kinda getting started may I suggest you look into other easier strategies at the beginning.
I’ve always been fairly fiscally responsible and have never lost sight of where I could be in the blink of an eye. Somewhere around 45 I started to be concerned about what retirement was going to look like so I started contemplating options. When I lost my job and given the continue state of the economy, my contemplation coalesced pretty quickly into “better do something soon!”.
I live in the Dallas metroplex which is getting increasingly expensive to live in not to mention just plain “busy” for lack of a better word. Given my reduction in income, I’m thinking it’s time to pull up stakes and relocate somewhere more relaxing and less expensive hence my search for a new home with some potential built in equity on day one. That lead me to focus on this one HUD opportunity.
I think here I need to offer a clarification to Justin and others…
I’m not using the HUD owner occupied premise to game the system, rather it is my legitimate goal to buy, renovate, and occupy the home for myself as my primary and sole residence. However, as with all things of this type of financial importance, it’s best to have a contingency plan should things not go the way I’ve planned (or fantasized).
If at the end of the renovation process I find I’m capable of doing this type of thing well and still like the new community as a place to live then I’ll stay and sell my Dallas home which I own outright and reinvest those funds in other local opportunities. Those likely won’t be HUD related due to the 2 year restriction on buying another HUD property, rather I’d likely go the “buy, fluff and rent” path to generate an income.
On the other hand, again if at that the end of the renovation process I find it’s not going to work out as originally thought, then I have a descision to make. I could stay in my new home and community, still sell my Dallas house and live pretty much within my means on the big box store salary --or-- sell the HUD home and return to Dallas and figure out where to go from there.
A lot can happen in a year so it’s best to keep the options open but I’m sure leaning towards real estate opportunities!
As a new investor, I have to say this is one of the best threads I’ve read since I started coming here. Thanks to all the contributors. Great info and varying points of view.
Have you thought about tax liens/certificates? Texas has some of the best if not the best interest rates and I believe they have sales pretty frequently. Florida is also a popular state due to high interest and frequent sales. A guy on this forums I think his name is TaxLienAdvisor does this for a living and he has written some good posts on the subject. Since you live in Texas you could actually drive around and get a better look at these properties than most of the out of state investors. Look up TaxLienAdvisor’s posts and/or ask him some questions.
Hi, I know you’ve gotten many responses on this, but you pose a good question. Of course it varies, but being a successful real estate investor takes alot of work. However, once you put in the work to get things going, gain experience, put in good systems to support your business, automate as much as possible, etc. it becomes less time consuming and you can start to realize the time & financial freedoms desired. Most people that have wealth, have multiple streams of income; that’s the wise way to approach it. I agree, I would not pay $20K for a course although I believe balance is required because educating yourself is very important; you can avoid some of the pitfalls if you get some education. Just be sure to take action and not get caught on education alone without doing the work necessary to craft deals. The flip side is that if you don’t educate yourself, you could wind up making some poor investments and still pay $20K for your mistakes. I’ve seen that happen too, so essentially they took a seminar through the school of hard-knocks instead attending a formal seminar. You can shop around and compare courses because you’ll find that there are many great courses available for much cheaper than $20K that can give you a great foundation without breaking the bank. Best wishes!!
Tax liens/certificate sales are new to me though when I was on the courthouse steps monitoring the property foreclosure sale I was interested in, I did see several tax lien related Sheriff Sales going on. At first I thought those folks might be just bidding on properties but later it occurred to me they were bidding on tax liens. Not 100% how that works as of yet but I’m open to input. As I recall, people do it because of the interest rate on a prior owner buyback. Is that something you’ve done yourself?
In the meantime, I’ll check out TaxLienAdvisor’s postings.