Hi I’m new to the investing world and have been studying for about 1 month. Networking at local real estate clubs, and talking to as many people as i can about different areas of investing. I am married with 4 children and work a full time job. My wife is getting here RE license to help us get mls access. We have managed to save a nest egg of about 70,000 (which to me is not much with 4 kids). That’s what I’m going to use to invest with. Any way my plan is to become the best real estate investor i can be. What can i do to build my bank roll, i am very motivated and have a lot of free time during the day, i work at night and only require about 5 hours of sleep a day. I really want to be a buy and hold investor, but with the capitol that I’m starting with, it doesn’t seem like ill be able to be primarily buy and hold, and be able to build my bank roll as quickly as i want it to grow. What would you do if you were in my shoes? It seems like a lot or articles i read are about marketing your RE business with tons of cash at hand to make offers on multiple properties at once, i just don’t have a roll that big yet but really want to get to that level. I know the question is very general but any advice would be appreciated. Thnx for your time.
You have the right idea, build a bankroll first.
You have a capital that you can use to buy and flip properties (wholesale): basically short sales, REO and other distressed properties are good candidates for this scenario. You wouldn’t have to buy them per se: you write an option contract, use your funds as proof of funds with lenders who sell these properties, and then sell them at wholesale. You can do several properties at a time this way and never really use your money - only as proof of funds or to bring to closing before flipping (same day you get your money back.)
My suggestion though - find the cash buyers before the properties, so you know what properties to look for and you don’t end up with a property that you cannot flip.
You can build your cash reserve pretty quick this way and then you can buy and hold. :biggrin
Best advice anyone can offer you is to, first and foremost, hold onto your cash reserves. With a large family such as yours, that needs to be a priority. That said, buy and hold isn’t the path for you for reasons you already mentioned.
The best way for you to get going while still keeping your cash where it belongs, would be with either wholesaling deals or with lease options. I definitely prefer the latter. Despite what many will tell you, wholesaling can be very trying for a new investor. Getting a homeowner to agree to sell their house for a fraction of its worth is no easy path to riches for the new investor.
Lease options, on the other hand, don’t require such a drastic discount to put the deal together, making the likelihood much greater that the homeowner will accept your offer. And, again, all while keeping your cash in your hands.
Wow–$70,000 saved up and with 4 kids! I am impressed. You other newbies, listen up. If yucaipa can save up, you can save up.
You need to figure out what you LIKE doing, and probably only doing it is going to let you know. Maybe it’s renovating, maybe being a landlord and cashing those checks, maybe fixing and flipping, maybe something else. Time to get started.
Here is ONE plan, it is close to mine originally.
You have 4 kids. They are going to need an education. Why not buy a house, duplex, triplex-- whatever makes sense in your local area–with some of the $70,000. Tell your oldest child that that house is his/her college education. Get the kids and wife involved in the fix-up and the money. This can be a whole financial education for them.
You sit down and show them on paper: “Susy, we are gonna need $100,000 for your college!”
(I’ve got a kid studying architecture and that number is reality). “Let us let a house grow the money for Susy, and we will sell it when she goes to college. Or by then, the loan can be paid off and you, Susy, can use the rent for tuition.”
“Next, we are gonna find a house for Sam. We are gonna go for a big drive all around town and look for the best bargain house we can find. You kids have got to help us look, ok?”
You will educate them in real estate and in finance. Show them how to calculate interest. Show them how to hold a paintbrush. Show them how to clean a yard and plant flowers. Everything you do, you do as a team. That way you are not stealing daddy time from your kids to pursue real estate.
Then you all celebrate a hard day’s work and go to Dairy Queen for ice cream sundaes.
Keep it simple, keep it doable, keep your most important asset–your family–involved.
Good luck and let us know how it goes.
Wholesaling is a good way to get started, but it can be very time consuming when first starting out. I work a full time job as well, but my free time is during the night (usually between 8 and 11pm ) and I find it hard to return phone calls from sellers who call me. I ended up partnering with another investor who returns my phone calls for me and then we partner on any deal we get from it.
Like some of the other commenters said, figure out what you are most passionate about and do that. Also it’s very important to keep that cash reserve for your family. Trust me when I say you can do it with out using that money and that will also keep your family happy and feeling secure.
Best of luck to you!