OK here is my story….I will try to make it short. ANY honest, relevant advice would be greatly appreciated.
If this is too much info. I apologize….I just want you to have a complete picture before you gave me some advice.
I’m 35, married (8 years), 2 kids (6 months and 3 1/2) live in Jacksonville, FL were property values are skyrocketing. I have a good job (60k a year, senior programmer) that I have been at for 12 years that I am getting real tired of doing, actually I feel like I’m going to die if I stay here much longer. Its like something inside me is telling me this is not my purpose in life (Thank God). I just sold my part-time lawn business that I had for the 6 years in addition my job (enjoyed but not enough $ for the effort). I also have an on-line retail business that has become very busy in the last 6 months (much less work and waaaaay more money $500k in sales this year….probably net around $200k……very unstable, could end any second……I believe in having multiple income streams, because you never know when its going to dry up) and more importantly I wanted to be home more with my kids. Financially, I am 100% debt free (house, cars …everything paid for), net worth around $550k but most of that is in my home and retirement ($415 home, 70k in retirement) currently less than 10k in savings but now growing quickly. I don’t know my credit score but I would guess its golden (never late).
I know I should be doing something in real estate…….flipping, rehab …….something. I love everything about it. Flipping and rehab (to rent) interest me the most because I really enjoy home improvement and I like the thought of fixing it and getting rid of it (not real excited about Capital Gains) but not against renting it out. Definitely not afraid of hard work or long days. I consider myself fairly handy and really want to give it a shot. I have spent at least 15 hours in the last 2 days on this site reading tons of threads that just make me feel more confident that I can do this. Not to mention I have seen numerous shows on TV (Property Ladder) on first time flippers and I think to myself “ IF these knuckleheads who seemingly don’t have a freaking clue about what they are doing or how much work it takes and still make a killing in the end ………I know I can do this better faster and more profitable.”
My problems are convincing my wife that we should give this a try, and not knowing how to get started. I am in the process of joining the local REI Club and would love to TAKE A MENTOR TO LUNCH. Just like in my online business I would like to start slow and minimize the costly newbie mistakes…….in the online business mistakes have only cost me a few hundred and I have only had 1 or 2……1 mistake in REI could cost many 1000’s. However, after gaining some knowledge I want to put the pedal to the metal so to speak so I can quite the job I hate and do something I love…and I would like to have a business that I can pass on to my boys.
Would going to Real Estate Agent School benefit me?
Are there products I should stay away from……course, books, local lists
We have a great deal in common. I left an accounting position in August of 2004 in order to pursue the same life changes you are seeking. I was nervous to leave my $50,000/yr regular paycheck. I live in Phoenix Arizona, where we have seen over 35% increases in the cost of homes in the last year. I could not have timed it better!
I’m no Guru; however, as of the end of July 2005, I have a net income of $260,000 since I left my job. I suppose a great deal of that was luck…given the extraordinary market conditions. But I’ll take it.
Two things I would like to tell you after reading your message. First, be careful of the thoughts you might have about this income being “capital gains”. If you buy and sell in less than one year, the income will be treated as ordinary income. This is taxed at a much higher rate than long term capital gains. Second, you’ll probably make lots of mistakes in this business no matter how great the advise of experts. Don’t let it discourage you.
Finally, I have a real estate license. I am also a CPA. I find the education and experience I draw from both of these careers very beneficial.
I really like your post; you sound like a hard working guy with a good head.
Here’s a few thoughts:
Don’t quit your day job; steady income is good thing. I’m engineer and I have been done the self-employment thing as well as steady pay-check. While people will tell you about the nice upside, there are 10 other folks who flamed out. You have a family and some good level of security so that a risk
Buy ONE property and see if you like. It sound nice in practice, but you might hate it. The message is take it for a test drive. Doing "good "deal is a pain in the butt and a lot of work to find them.
Forgot about high priced courses, “boot camp” and gurus. Head down to Barnes and Noble. Sure there are a lot of crappy books, but buy a couple and learn the basics. Plus the Internet is FULL of TONS of info.
The best “start course” is buy and rent it out. Sure you can make a lot of money flipping but there are plenty of horror stories out ther ethat never make it to the internet. With that, look for low end propeties that are a bit rough around the edges, but basically solid. In the end, they should be cash neutral. This can be extremely tought ot do, but you can find it with a lot of hunting. This way the bills are paid and no cash out of pocket and in a few years when you slowly upgraded the place (and raise the rent) you have something worth a lot more money or at worst is generating some nice cash.
Here’s my deal. I got a very well paying full time job with family, mortgage and the whole nine yds., but I have done about 10 deals in last 5 years. My first deal was with a 10K downpayment (it was great buy). I have been doing RE investing since '98 (long before it was fashionable) My goal is to do one or two deals per year. I am sure there will a bunch of people you tell you can do 10 deal in the first 6 months, but I am very slow and patience always do deals that make plenty of money (even before the markets got hot). How to go about that is a ton more typing. Just send me a message if you are interest to talk more.
P.S. I am not a “guru” and I do not charge money; I am simply willing to spend time to talk to people who are interest
Thank you for taking the time to reply to my posting…I love to hear how you got started and how you found that 1st deal.
I also like your approach…slow and steady in the beginning…
Do you have any books you would recommend?
aak5454 makes a good point. I hope you did not read into my reply that you should quit your day job and jump in. I have also been doing this since about 1997. I had consistently made about the same amount of money with buying, selling and rehab work as I did working 40 hours a week in accounting. However, I never KNEW where the next deal was coming from. This is the scarey part about switching from salary to this type of income flow.
The timing was mostly luck. I had a plan to purchase $1,000,000 in real estate at about 20% below market. I could control that part of the deal. I would lease the properties for something close to the payments I would have to make. Then I was hoping to see the market price increase by about 5% in one year. As a realtor, I can save quite a bit on exit costs. Therefore, at the end of the year, I was hoping to cash in on $250,000.
I know it sounds like such a simple plan that it is almost stupid. But due to the timing, and given the market conditions, it worked. I bought one for $250,000 that I leased back to the seller until their kids finished the school year and sold for a $60,000 profit.
My point is this, I could not have done this while working a full-time job. There was a tremendous amount of work involved in the deal, sale, etc. I had a plan and went for it. But you can’t get hurt starting slowly to see if this is for you.
Luke, if you like this approach, you will get a lot out of this book.
It’s good information, for just a few bucks, from someone who knows what he is doing.
And he is from Florida too! (Sarasota)
Thank you I will check it out
My wife called it menopause. Oh, change IN life. Sorry.
Life is the easiest thing to change… Here is the key to life IF YOU DO WHAT YOU HAVE DONE YOU WILL GET WHAT YOU GOT!!!
If you do not like what you are doing change it. Do it at your own pace if you want to leave your job and can support yourself LEAVE! I am now 30 with 5 kids married for 3 years to my last wife she is not my first but will be the last. She is great l would not be here without her! Lets work my life backwards from now to then Now I own Rentals 82 of them that I have bought in the past 10 years. And have a nice cash flow enough to live on. Where did I come from Moved out of my house young real young! like pre 16 Dropped out of high school! Went to a local community college… Went to work as a loan officer here in Colorado where I met a great HML (hard money lender) whom passed away 6 months after I started. Of course he owned the house that I lived in His son who I could not get along with got everything including my house so I got evicted. And was homeless on the streets in Denver for 6 months. I had way to much pride I never would turn to family I would shower in my friends hose while he was at work. I will have you know that I NEVER held a sign or asked for help. With winter coming I needed real shelter as the tent next to the river was getting cold FAST… So I did what any other homeless person would do! Swallowed my pride rebuilt my credit in 30 days and bought a house well 5 houses! (Rebuilding credit is another topic) I had a uncle that added me to all his credit cards and if anyone knows what that does after 30 days it will show on your credit! So I had 4 open lines that were paid on time for 8 years now at 20 to show you had great credit for 8 years or age 12 that is pretty good!! LOL I got an average of 22k back on all properties at closing so that was 110k cash!! FROM HOMELESS TO 110k cash in 45 day’s any way I do not want to give you all the boring details! I bought a 1 bed one bath condo and owned it free and clear and cash flowed the rest! Went to work at a major Colorado based business where I learned that corporate America was truly based on incompetence! So after 4 and a half years I got called into a meeting where the Vice president and the manager wanted my thoughts! So the Vice President asked me “Robb if you ran this office what would be the first thing that you would do” So I told him the truth I would fire your manager because he is totally incompetent” whom was sitting right next to me and he said “what would be the second thing you would do?” I told him “That to is simple I would fire you because you are trying to run this place and you do not even realize your manager is incompetent what does that say about you?” I got told that I was on a 3 day suspension due to attitude I told him to add the 4 weeks of vacation time and 28 comp days and I would see him in 2 months where I was told I needed 72 hours notice to take vacation time so that was not possible he loved it when I walked out and asked how many hours were in 3 days!
What the point of that was if I can do this anyone can it is really only as hard as you make it!!
As far as I am concerned it comes down to having the right team
United we stand divided we fall! Let’s make today the best of them all!! AND GIVE THEM HE**!!!
<<I am now 30 with 5 kids married for 3 years to my last wife she is not my first but will be the last.>>
Well, now we know what Robb does in his spare time (when he’s not at lunch…)
LAL, I’m also in a simular position as yourself, I have been working in the IT field since 1984 surviving several lay-offs from the RCA/GE days and now working in the commercial sector. After finally being laid off and out of work for 16 months. I am 44 years old, married with a 17 year old daughter and fortunately I had enough sense to always save for rainy days, if not I would have been the one getting foreclosed on. So after going through everything I did I vowed to never let that happen again and this is why I chose to start my own business and I’ve always had a passion for real estate. My plan is to continue working for the next 2 years, hopefully less and then to phase out of the corporate world working for someone else. Since I started working towards my own business I realized how burned out in the IT field that I am, I can just about bring myself to put in my 40 hours per week, but when I’m working on my own stuff I put in close to the same amount of time learning and don’t even realize how many hours I’ve spent. Good luck.
Gparcels, that is exactly how I feel…when I was cutting grass and now when I am working on my on-line business most of the time it doesn’t even feel like work because I enjoy it so much… I would look at how I’m doing things and work on ways of doing it better, fast more profitable …when I am here at work (like now) all I can think about is getting the heck out of here…
I think the biggest thing keeping me here is Health Insurance and a steady paycheck. I have a wife and 2 young kids to support…I have not looked into the cost but right now I have great coverage through work and it only cost me $120 a month. If I were single, I wouldn’t even give it a 2nd thought.
Now that I am 100% debit free, I am working on getting about 20K set aside for emergencies and finishing off my kids college funds. By the 1st of the year, if not sooner I should have a good chunk set aside for my 1st REI. OH and 1 other major obstical…the wife…let’s just say the couple of times I have mention doing this she has not been real receptive…anybody else experience the same.
Forgot to mention, my wife also went through the same type of situation, so she is also looking forward to this business working, and my attitude is failure is not an option ;D
That is great … however, my problem is my wife is use to the lifestyle we live …we haven’t had an argument about money (#1 cause of divorce) in over 4 years…she knows I hate my job and she is sympathetic but she worries about Benefits, losing my shorts, going broke and I don’t know how to get her to overcome her fears …well she did say if I get 100k in savings I can do what I want but that is at least 18-24 months away…she was also fine with doing REI in all cash…I am a huge perponent of cash…(see www.DaveRamsey.com) but I think this is a little different
Do a couple of wholesale deals in your spare time.
Give your wife all of the cash, and tell her that there is a lot more
where that came from, if you had more time to do real estate.
She will get on board fast. (Ask me how I know this. ;))
WOW, everyone has great stories.
My husband hated his job (auto mechanic). In late 1995-early 96 we bought apartment buildings on other peoples money. In 99 my husband retired! Here we are 6 1/2 years later and we are making more money than ever not to mention our net worth is over 3,000,000. This is all due to our real estate investing.
We started out by going to the library and getting every book we could. That was all it took for us to start investing.
Your wife should read some of these posts if she hasn’t already. I think it may help her relize people are becoming millionaires through real estate. I also have a couple blogs on the subject if you would like to read those. One tells of our investing, another on creative financing, and one on landlord stories.
I know you like to pay cash for everything but there really is nothing like leverage not to mention the tax benifits. Make your money work for you or make other peoples money work for you like we did.
You have a great story and I too believe in many streams of income, good for you.
i’m a engineer too. i’ve been slowly learning about real estate and building my portfolio. first 24 months i bought 1 house. next 12 months
i bought 3. next 8 months i’ve bought 3, booked 8 more. over the next 4 months i’ll be closing of 3 of the 8 and another 4 that i’m partnering with my friends.
I hope I didn’t set my goals too high…I am shooting for 20 properties in the first two years.
Seems like a lot of property for two years but if you want it bad enough and you’re a doer, you will have your 20 properties
Just wanted to thank everyone for the replies, advice and honest opinions