Hi,
It started like a great thread in a great nation, then fizzled and ran out of steam! The autrosity of it all !!!!!
Ahhh, The seriousness of Wealth which is absolutely Obtainable!!!
GR
In my experience there’s a tipping point with creating wealth…
I’m going to start with our Boy Wonder…Hoosier…I truly believe this kid has what it takes…AND…He started with NOTHING so he’s a PERFECT example!!!
Here’s how this can work:
At first you just work and save…You’re making money in smaller increments and have limited resources so it takes TIME…I’ve seen people try to SKIP this step and most of them get WIPED OUT…They OVER LEVERAGE themselves and when ONE THING goes bad, it ALL falls apart.
I think what they missed out on was the LITTLE MISTAKES you LEARN from as your building up. When you’re small you WORRY a LOT…Worry is a good thing for a new guy…It keeps you from doing stupid sh*t. Sure, you’ll miss out on some deals because you’re worried, BUT…as you see those smaller margin deals go to other investors and watch THEIR outcomes…YOUR still LEARNING…That KNOWLEDGE will be there when you have more capital… and at that point, you won’t be passing those deals. You’ll be DOING THEM!!
In my experience there were a few MILESTONES.
The first is SAVING $30,000. This is a B@ll Breaker. I tell people this for a REASON…It takes TIME and EFFORT to save this amount of money…You LEARN THINGS from this exercise. Mainly…How LONG it takes to save 30 GRAND!!! When you break your b@lls and spend 2 or 3 YEARS putting that kind of cake together from NOTHING, you are much less likely to jump on board with some MORON and his CAN’T LOSE REAL ESTATE PROGRAM. More importantly it teaches you HOW TO SAVE…This is a SKILL 90% Americans NO LONGER HAVE…So to my way of thinking…Let’s teach THAT right out of the gate. As you’ll see, it will come in handy LATER!
His next step comes when he finds his first property…This is PART of his $100K milestone.
Maybe he finds a great deal and makes himself $25K on a home he buys for $35,000. Now the light goes off!!! He just made $25K in less time than it took him to save his first $5000!!!
This is when people really “SEE THE LIGHT” Once you can SEE it, you can go GET IT.
So he’s bought and sold a few properties, learned a LOT, and has now hit the $100K mark…Things get a LITTLE bit easier…He can do 2 deals at once and suddenly his BANKER starts calling him by name. He opens a small line of credit and starts using it and paying it down CONSISTENTLY…Because the more he does that…the more the bank will extend him. So now he’s easily OVER that $100K mark.
It starts coming faster now…He’s making it in $25,000 to $40,000+ chunks and doing multiple deals…He blows through the $250,000 mark faster than it took him to hit $50K in initial savings.
And THIS is where people SCREW IT UP…
They get their bank statement and see a QUARTER OF A MILLION DOLLARS IN CASH and then they start thinking about what they can BUY with that money…BOATS, NEW CARS, VACATION HOUSES, all the stupid sh*t that EATS MONEY…
But future MILLIONAIRES…
DON’T FALL FOR IT!!!
They LOVE the GAME too much to be sidetracked by SHINY OBJECTS.
The future MILLIONAIRES keep their heads down and BLOW THROUGH the $500,000 mark in record time.
Now the FUN really starts…They can start LOANING MONEY on deals they NEVER FOUND…They make beautiful returns with NO RISK on deals other people find but can’t FINANCE. Of coarse these future MILLIONAIRES can do MORE DEALS because of their $500K and their $200K line of credit. They can now do more deals and the DEALS are coming to THEM!!!
At that point the game changes…Before…It was FINDING the money…Now…You HAVE the money and the DEALS are FINDING YOU!!!
He can also now play the EXCHANGE GAME where he buys a property for say $35K that with minor rehab will appraise at $120K…He pays CASH for the property and rents it…THEN goes to the bank and pulls a HELOC on it for say $80K…What he has just done is EXCHANGE “his” $35K for the BANKS $80K along with a TENANT that pays him $900/month. He only uses the HELOC money for quick flip properties because he pays ZERO on that HELOC if he isn’t using it to make money with THE BANKS MONEY!!!
Let’s say he pulls out $50K to do a quick wholesale flip…He owns the property for one month, makes $30K profit on the property and makes ONE PAYMENT of $400 to the bank and pays the HELOC back down to zero after the close. He just made a $30,000 profit and it cost him maybe $200 (half the monthly payment) out of his pocket!!! THAT is a Beautiful thing!!!
Then…Add in a timely investment in a down and out car company like CHRYSLER in 1992 or FORD in 2007-08 and it just gets BIGGER and FASTER because there’s more OPPORTUNITY for your CAPITAL!!!
I’ll say this…
There are a MILLION WAYS to MAKE A MILLION…What I laid out here for you is just ONE WAY.
There are easier, faster, riskier ways…I didn’t have someone writing checks for me. What I MADE, I had to GENERATE. Most of this took place DECADES ago…But the GAME is STILL the SAME.
SAVE…and WHILE YOU SAVE, FIND THAT HOME RUN DEAL…You need a home run because you WILL make mistakes on your first deal…A HOME RUN let’s you make those mistakes and STILL make money…Do it ONE TIME…
And REPEAT as often as needed.
And don’t BLOW YOUR MONEY on STUPID SH*T…Sounds simple right??
It IS…For SOME people!! :beer
I’ve just laid out the BASICS…GOLD RIVER has many more irons in the fire than I do, and from what I’ve read he can teach ME a LOT!!!
I’d love to see what advice he would add to this!! :beer :beer
I cant even imagine doing deals making 20-40K at a time, multiple ones sometimes a month… seems ridiculous. Would be like a dream… you have no idea how bad I want that compared to what im doing now.
At work now… spending ALOT of my time for LESS than 35K a year. So my first goal in investing would to be …
1)Be able to use MY MONEY to make atleast 35K a year. Why? That way I can justify quitting this job. lol. Meaning = full time to REI time 
Hoosier,
The idea is to have multiple streams of income coming in. Quitting your day job would be a huge mistake. Rookie did not quit his day job at the Hedge Fund just because he is making truckloads of money lending as an HML, Jake did not quit his job as a Fireman(I think??) even though he is make money flipping houses.
The more streams you have coming in the quicker you will build your wealth. There is no quick way to get rich other than the lottery. Just keep working at what your doing. Go back to school part time to complete your RN and then the real money will start flowing in. My sister did exactly what you are doing and when she completed her RN she had a huge income boost. She makes $48 an hour doing home health care.
Get your butt down here to Dallas.
I agree with Chris…
DO NOT quit that day job.
Hi,
Before I start into my advice for making wealth obtainable (Making Big Money) I am going to quantitate this by saying I have made every mistake in the books with that said is Wealth Obtainable; absolutely but there are a few tried and true methods which must be followed.
When I was young and in High School I had this dream that one day I would become a millionaire, what I did not know is that day would really be some ways away, I wanted it, I could taste it, it was in my blood (Quite literally as I would later find out), but I had no idea how to obtain it, I knew my parents invested in real estate among other things but did not know how it was created or what the real value was!
My dad invested in all the usual things like stocks, bonds, commodities, options and futures, however he always did this in some controlled context as I knew he was really not invested to heavily in any one thing, I suspected there was more to come, but that would be in due time. My parents bought there first property before I was born, about a year after there marriage for $8k with $500 dollars down, it was a multi unit property, they lived in one unit while recieving rents for the others, as I remember there income was good enough to not only cover cost’s and expenses but provided some positive cash flow for there growing family.
By the time I became a teen ager my parents had not only kept that original investment but had managed to amass an additional five properties, but I knew they occasionally bought and resold something in the same year, but did not completely understand the idea of “Flipping Properties” yet. As I became older my parents helped me learn there perspective on gaining wealth, and what and when to invest. I also did not completely recognize that the development company they owned built and sold property, or how much money was there to make.
Now through the school of hard knocks and by making lots of mistakes I now have my own advice to pass on!
First as I got to the point of getting out of high school I had no idea what I wanted to do, or where I wanted to go so having a plan is paramount to your success!
Work while going to college was important, in fact I wish I had opted to except more overtime offers for extra hours, as I was soon to understand that I made much better money per hour, those extra overtime hours could have been of great benefit however I didn’t take advantage.
Now I got my first property in 1980 a seven unit beach area property in San Diego as a subject to from a owner who wanted out, I spent most of my free time for over a year doing most of the work myself, big mistake as I spent over a thousand hours during the time I owned it repairing and rehabing where I should have spent my time looking for other properties and paid someone to do the work.
Now building skills are important, my jobs during high school cooking burgers, washing cars and delivering papers did not lend it’s self to a skill, or even a back up skill although I can still barbeque a mean steak. But my time working for my dads development company during high school and working during college in construction, learned some fabulous skills that will go with me the rest of my life. But one of the things I learned at school was to start taking advantage of my employer and my earned income, I don’t mean steal or do something dishonest; I mean to take advantage of the financial benefits offered as part of my employment.
My employer offered a 401k program, initially it sat there untouched as I set it up, initially funded it and left it be, I was putting a few bucks a month in until I learned that the match made by my employer was free money, I had to learn to live on less to get more, when I changed my contributions to the maximum match, I earned an extra couple of grand a year. It was like getting a raise because all I had to do is save money and I was getting that employer contribution for free, then someone told me to set up an IRA and contribute the maximum to that account because although it was saving more, the future benefits outweighed the immediate pain on my budget, and although I was in school and had to pay for books, tuition and living expenses I was building a foundation for my future.
The next thing I learned was that I had to have a personal reserve of cash, if I lost my job or had an accident where I couldn’t work I would be desimated as there was nothing to fall back on, I had to build a personal savings and needed about a years worth of cost’s and expenses, this savings account was contributed to for years before I had a sufficient amount of money, but it taught me about saving money, the value of a dollar and how long it actually took to earn and save.
I will ad to this as I can over the next few days!
Hoosier,
It’s REAL man…It took me a LONG time to be able to CONSISTENTLY get returns like that. The KEY to it is your ability to find properties that ARE NOT LISTED. These are properties that someone had left to them by “Crazy Aunt Rita, the one with 22 CATS” They are properties owned by HOARDERS, They are DRUG ADDICTS that get left a property. OUT OF STATE Heirs that get left a DISASTER and don;t know where to start.
THINK…
WHO comes into CONTACT with these people???
Antique dealers and Estate buyers (people sell the CONTENTS of a house FIRST!!!)
OIL DELIVERY DRIVERS
P O S T A L W O R K E R S!!!
UPS Drivers
Cut these guys in on the DEAL and the DEALS will COME!!!
I’ve paid UPS drivers $5000 for making a PHONE CALL…Then you just PYRAMID IT!!! You tell them if anyone he works with CALLS HIM with a deal and then he calls ME with it, He can give HIS guy $2500 and keep the other $2500 for himself…EXPLAIN to them that the BEAUTY of doing that is it’s $2500 he would have NEVER received because he would have never KNOWN about a property OUTSIDE his delivery zone!!! Then have him ADD UP all the delivery zones and DRIVERS he works with!!!
As soon as he makes ONE PAYMENT to that guy he works with…The word will spread like WILDFIRE and the CALLS will start pouring in.
Make sure you EDUCATE these people…I tell them that “If it has a realtors sign on it, I’m not interested.” Tell them WHY…Explain that the property is FULLY PRICED if a realtor has it…The properties YOU WANT can’t be fully priced or on the market.
It’s a NUMBERS GAME AND IT TAKES A LOT OF TIME TO GET THIS SET UP…Some people you talk to will IMMEDIATELY “get it” Others won’t have a CLUE…But if YOU talk to a DOZEN PEOPLE every single DAY…AND EXPLAIN TO THEM HOW THIS WORKS…YOU WILL FIND THE WINNERS!!!
This is a GRIND at first…You need DISCIPLINE!!
Wait…
There’s that WORD again…D I S C I P L I N E
Oh yea!!! You LEARNED that from SAVING $30,000 in order to start this!!! TALKING to 12 people everyday is a CAKE WALK compared to saving $30K in $100 increments.
See…There’s a METHOD to the MADNESS here…Just like your UPS drivers…Some people can SEE IT, Some CAN’T…I can’t make you SEE IT…Or DO IT…Only YOU can!!
Once I get to the point where I can make as much in REI as I can on my day job… think about it. Lets say im finally able to make ATLEAST 35K a year in REI…
Why would I still spend like 25% (40 hours a week) of my life working at my current job making just 35K a year, when I can use that 25% (40 hours a week) doing more REI? I dont think about it as me being lazy, I think about it as… using my limited time the best as possible :rolleyes :cool
Having a day job sucks, especially when you only work with middle-upper aged woman that think im interested in hearing about their personal screwed up life. lolz
Hoosier,
35K a year is not going to support the lifestyle you want to live especially once you start having kids. That is less than 3k per month. If your not happy in your chosen field of work then find something else.
I love what i do so it does not seem like work. You just need to find something that you love to do and “just do it!”
Im at work right now… really SLOWWWW and im bored… so sorry for a bit of a rant…
Chris, me doing home health care would probably be a really good gig for me, IDK why im not doing that right now.
As I speak, I work in a crappy prison giving meds to murders/child molesters… full of icky diseases like HIV and Hep C. eeeek :banghead
when I could be driving around on my own, meeting people, handing out business cards to new people i meet and such while doing home health care. This would be big time benefitial in terms of finding that HOME RUN DEAL! :beer .
I just need a slightly better car if im doing to be driving like that. (my current job is soooo close)… and im not in the mood to spend money on a car right now… lol. :flush
Hoosier,
My wife had been a nurse for 25 years; started with a RN nursing cert at $23K/year, continued school and got a BSN, continued school and got a MSN, continued school and got a DNP. She is now making $90K+/year and is in high demand. She could work in just about any nursing field she wants. Nurses with MSNs are in getting near the same salary since hospitals need MSN nurses to achieve “magnet status”.
I don’t disagree with your drive for REI to provide you with an income that would allow you to quit your day job. Once you achieve that REI income and have the skills, knowledge, and enough capitol to continue running the REI as a secure BUSINESS, I say go for it. But don’t kid yourself, it could take 10 years or more to reach that point. In the meantime, I suggest continue your education to increase your salary to help finance the REI as well as provide a decent living.
I had many of the same dreams you do at your age. It took me until I was 47 to reach the point I could “retire” . I wish I had started earlier in REI.
My final words of advice, and they are worth at least what you paid for them: Don’t overpay for your properties! REI is both an investment and a business. The properties must actually make money or they will eat you alive.
It’s always nice to have some steady income. A lot of REI methods can produce income, but there will be good runs as well as dry spells. That’s why there are plenty of Realtors working regular jobs now. Not saying you’re looking to be a Realtor, but they don’t have steady income either if they’re solely depending on selling houses.
I know the grass really looks greener on the other side for you right now, but REI of any flavor will still have its frustrations. I always thought those idiots on tv with their flipping deadlines were stupid because they were always under incredible stress trying to get done on time. I keep telling myself I’m going to complete projects on my own time line, but it never fails that someone wants to put down a deposit on a place while I’m working on it. So then I get my deadline.
I can’t wait to hear of you buying your first place. Just don’t get a little success and ditch the job just yet. You’re in a high demand field.
I agree 100% with Justin…
The first thing you’re going to learn is that properties come to you in GROUPS…I would LOVE to have a nice, even, steady stream of properties that show up just as the last one closes.
THAT NEVER HAPPENS!!!
Look at my # of postings…That activity is a real window onto what’s going on…I’ll go MONTHS without posting a single WORD here because I have 5 houses going at once… Then, I’ll post here a lot more…like now for example…I currently have 3 properties in sales agreements to BUY…ALL of them have title issues that my attorney is clearing…So I sit here WAITING…I’m not sitting here doing NOTHING…I make offers on property, talk to my bird dogs and basically WORK…But I’m not making MONEY flipping houses now because everything I HAD, is SOLD!
What you need to look for is a nursing job that allows you some flexibility with your schedule while providing HEALTH CARE BENEFITS. With a nursing job like that, you could move your time around based on the crazy world or real estate investing where you go from ZERO to 200mph on any given day.
Jake
You make a great point. I call that peaks and valleys. Sometimes I sit in my office thinking “I’m never going to get another loan” and then all of the sudden I get more loans then I can handle. I realized that happens because I spend so much time closing deals that I don’t spend time prospecting for new business so I end up having a cycle that goes like this. Good month, bad month, good month, bad month. The secret is figuring out how to balance your time.
Here’s a window into my world the past few months:
We bought one property back in Feb. We didn’t really have any aspirations of buying/rehabbing any more. A few months ago, one of our tenants moved after giving the proper notice. That house just needed a little freshening up…painted a couple rooms, put up new shower walls in the bathroom, etc. Right after she moved out, another tenant abandoned a different house. His wife took the kids and left & he took it out on our house. A few busted doors, few holes in the wall, completely trashed appliances, literally a couple truckloads of clothes/toys/junk left behind, etc. Right after that, the tenant from the house right across the street from the trashed house mailed the keys to us. So there’s another house that needs a full paint inside. Right after we got the keys, we got notice another tenant was moving out. Even though this tenant did things the right way, that house also needed fully painted and a few other things. So we’ve basically been going full throttle for the past few months just getting houses we already owned back to rentable condition. I’ve got 3 move ins on Friday. I have about 2-3 hours of work left on one of the houses and can’t wait to have a break. Hopefully things will slow down. Things can be pretty quiet for weeks at a time and then crap like this happens.
I hear people talk about a job as if it is the cancer or something. A job is not a bad thing in itself it is why you work that makes a job bad. If you work for money alone, to paraphrase the Hal Holbrook character Lou Mannheim in the movie Wall Street, it will make you do things you don’t want to do. If you have a job that makes you change the oil in a truck and you have no desire to change oil in trucks that is no different than a woman having relations with a guy she is not attracted to just because he gave her $20. You have to do a job that you would do even if they didn’t pay you for it. The thing is that inertia is real and not just in physics. (Inertia: bodies in motion tend to stay in motion bodies at rest tend to stay at rest) Do you ever notice that the most successful people you know are always doing a lot of things? They are working, and investing and on boards of charities, and hosting parties, and going to ball games? Have you also noticed that you never find people that are sitting around having fun all day long that are really successful? That is because this inertia is proportional to the mass. In our case the amount of time you spend doing things is proportional to the amount of successfulness and personnel satisfaction you have. If you quit your job and stop working you will end up a bum. You have to do something and real estate my friend does not keep you busy enough to enable you to become and remain a viable contributing member to humanity. You have to do something. You can preach, teach or work as an accountant but you have to do something. You have to have a reason to get up in the morning a job is just as good a reason as any other.
Ill work forever, probably until the day I die. Something about me makes me think i’de never be happy not making ANY money.
Working for somebody else though? I have no interest in that. Thats why im wanting to get into REI for myself. So… when I say that when REI gets to the point that I can make as much as im making now (working for somebody else) ill quit my day job, and do REI full time, im not quite sure what the uproar is. lol
The whole point of REI is having a lifestyle change that you want right?
Making money, not having to take orders from anybody except yourself is whats its about!
If I did what I “wanted to do for fun.”… I would be growing medical marijuana in Northern Michigan living on one of those crystal clear lakes with a nice little boat.
Hoosier, here is my position, if it helps you any man. I thought a lot like you when I only had a job that I felt was dead end. I still have that job and am not quitting anytime soon!
I still have my job(airline pilot). I work so little though, I ended up owing them money last paycheck! I work about 6 or 7 days a month. But why quit? I use to think I would quit just as soon as I didn’t need the job. I feel very differently now that I am actually in that position. I"m loving life! I don’t need them, they need me though! I use this to my advantage. They know this by now I’m, sure. For about a year now, when I get my schedule, I keep the trips on it that look fun. The rest are either picked up by other pilots needing some spare $$$, dropped by my company, or I simply call in sick. I spent last Saturday night in Quebec City, Canada. Never been there before so I kept the trip on my line. It was an easy flight from philly up there, and I had fun on their dime while up there! I also still have my health benefits, travel for free when I want to, and most importantly, a back up if things go south with RE.
I don’t care if my next deal scores me a million, I am not quitting anytime soon.
I feel you Hoosier. I’m in a similar boat as you. I’m a bit older though at 27, but with that, a little further along in my investing. I have 3 properties, that I rent out and cashflow about 1,300/mo. There is a good 95k equity in these homes. I bought all of them through probate. I make about 44k a year managing apartment complex’s and commercial properties for my boss. It can be a huge headache of a job and make’s me want to quit as soon as I can.
Here’s the big difference between you and I. I GOT A WIFE! :bobble She makes 40k a year and she pays ALL the bills. Every penny of my income and our rental income goes directly into our bank account. So it is easy for us to save 10k within 3 months or so. Now I’m not braggin or anything, but this is opening the doors for us and it is allowing us the “possibility” to really start seeing things take off. We have 40k cash. I got married a year and a half ago and we probably only had 5k total then…
Before I was married, everything seemed to take centuries to get anywhere. Well since marriage we are coming across opportunities. Putting an all cash offer on a house for 12k that this lady inherited from her brother after he passed (probate). And she just wants to get rid of it. We will gladly have to put another 10k cash into it. We are goin to put granite countertops, all new flooring, all new appliances, etc. Great thing is, FMV for the area is around 73k. From here, we have options. either refinance out all of our cash at about 35k and even make a little from that and have a great cashflowing property or we just go ahead and sell it and rack in a quick 30-40k or so. It’s exciting!
Point is, my wife LOVES real estate just like I do. Find a girl like that and it can really accelerate your investing.
Good Luck.
great post…MC
keep that money churning…
-Mike