I decided to finally go with my gut instinct and start investing in Real Estate. I wanted to start by using the Carleton Sheets approach and use a NO money down payment system to begin with. This afternoon I’ll be going to a couple of banks in NYC to get a list of foreclosure properties. Am I going about this the right way or do I have to start by getting an attorney first, also I don’t have that much money to begin with is there a sure safe way to invest with out being taken advantage of by vultures who are only out for there own personal gain.
A friend of mine also requested I take a look at the www.hud.gov website because there are some listing in there as well.
Different people have different opinions about what you should or shouldn’t do when starting out, and there really is no ‘one size fits all’ answer. Since you say you have very little money, wholesaling would probably be your best bet. Stay away from HUD foreclosures for now as they require a sizeable earnest money deposit ($500-$1,000), and do not allow assignable contracts, among other things (there may be a ways around this, but they are too advanced for new investors, so I wouldn’t try).
Also, you don’t NEED an attorney, CPA, etc., when first starting out (except maybe to verify your documents are legal for your state). Get a property or two under your belt first. Interestingly enough, once you start buying/selling properties, your “inner circle” will start to find you.
Just make sure that you have a strategy. Are you going to flip or hold? (I recommend holding). How are you going to manage your property once you have acquired it . . . land trust, lease option, land contract, etc. Always have a plan with an exit strategy. Take your time and move slowly at first. It will benefit you in the long run. As for an attorney, ONLY if you need one. Good luck.
Thanks for the great advice. So it would be in my best interest to start out by wholesaling…Why are so many new & former investors sold on the Carleton sheets method of buying and then renting out properties, is it due to his high success rate, what’s your take on that? I’m seriously contemplating on purchasing his program? What do you think would be wise since I’m just getting my feet wet?
I welcome any and all advice regarding this topic, because like many of you on this forum I too want to reap the rewards that investing in Real Estate has to offer.
Thanks da wiz…I plan on actually holding onto the properties that I invest in and rent them out for a very long time if need be, I’m a lil leary about flipping properties I’ve hear so many horror stories.
If you plan on buying properties to hold, you better have enough cash reserves to cover a lot of “knowns” and “unknowns”. Yes, you can buy properties with no money down, but it is hard - extremely hard - to do. If you buy conventionally, you will need to have good credit in order to get 100% NOO loans. Even then, you will need to come up with money for closing and holding costs. Likewise, you can always take deed of properties Sub2 with very little closing costs, but you will still need to factor in holding costs. How will you pay for all these things? Let’s not forget that IF all the stars are aligned and you can get into a property for <$1,000 total (closing costs + holding costs + other), who is to say the tenant doesn’t up-n-leave or whatever? Where will you get the money to get you through until you find another tenant? And just how will you find a tenant with no money for marketing (or for RE agent fees)? Again, this is if you plan to buy and hold. You MUST have some cash reserves for these (and more) types of things.
Wholesaling is a good way to buy-n-flip properties to work up some cash reserves.
Now I see why they say you have to carefully map out a plan before jumping in. So I guess it would definetly be in my best interest to start off by wholesaling. So all this talk from some of these Real estate gurus who say you can get a NO money down payment even if you have bad credit, is just a ploy to get you to try out there services I guess.
All I wan’t to do is learn the ropes through trial and error hopefully with people like yourself helping me the road won’t be that difficult.
Should I still go to different NYC banks and get a list of some distress properties in my area?
Plus, wholesaling will give you an opportunity to get a feel for the REI industry. who knows? You may not even like it. Also, you can gain a lot of experience in the REI industry by wholesaling without having a lot of risk.
Personally, I’ve never wholesaled a property. I jumped right into HUD foreclosures, and I’m glad I had some cash reserves to help me through. Closing costs, holding costs, minimal repair costs, utility fees, etc., pretty much put me in the hole rather quickly. Luckily, I found a tenant two months later who has been paying everything for me since then. I’m still about $8k in the red, but I also have about $40k of equity in the place. Since then, I’ve picked up on a few other techniques which will help me in my venture.
In computer science, one of the basic things they teach you is sorting algorithms. One in particular is called Qsort (which stands for Quicksort). The premise behind this sorting algorithm is to partition the list to be sorted into two parts. You then break each of those down into two partitions, and so on and so on. And then work yourself back to the beginning while sorting each parition. The analogy to REI is to do the same. Look at the Big Picture and then break it down a level. From there, break each thing down further and further and further until things get more and more detailed. Before you know it, you’ve developed your plan. ;D
Edit: The answer to your question will rely on your plan’s objectives and how you will attain them.
for instance, I plan to…god how many times have i used those three words in the past 3 months…but i digress…
i plan to ;D purchase properties in the range of 20 to 50k. rent them with a ROI of no less than 30% [under the worst-case-scenario/most conservative numbers]. i plan to use banks for financing as well as seller’s who will offer terms.
is 40k enough for reserves?
secondly, i plan to ;D also invest in any property that comes along, whether through REO or other opportunity where the possibility to rehab and sell presents itself with a minimum ROI of 70%. These investments would be venture-specific - meaning, I would probably be in a position to offer possible investor shares of profits, in order to increase my cash reserves for an individual deal. The result being - (1) Increased $ security for rehab investment and (2) Increase to cash reserves to achieve more in the area of purchasing and renting (1st and primary objective).
Just out of curiousity:
[can you buy REO properties as Buyer’s nominee - put the down payment and assign contract to another buyer?]
What is the best method in obtaining a list of foreclosure properties.
I was just made aware that NYC no longer gives out a list unless you pay a substantial amount. It’s was brought to my attention that private investing firms buy from local branches at an alarming rate to get these properties. What is my best option? ;D