What to buy for my library and other beginner questions...

General Real Estate Investing
1

Hello everyone. Introductions first–I’m a 30 y.o. Washington, DC native, currently residing in MD. I’ll be picking up my MSW (Social Work) in December and I’m extremely interested in real estate and owning my own business. My credit scores are ok (I’m working on improving them). They are 634, 658, and 669. I’m primarily interested in rehabs/flipping and possibly a few rental properties. I’ve been reading these forums and others extensively and I have gained much clarification on some confusing and have become much more confused on others. I also just purchased a book: Buying Real Estate without Cash or Credit. Lots of useful information, but it hasn’t given me the confidence to go out and purchase a property. So here are my burning questions:

I’m new to REI with mediocre credit scores but I want to purchase a single-family home in need of repairs to turn into a rental cash-flow property. What would you suggest as the best method to approach finding financing? **I’ve been looking at properties for sale in Baltimore (almost all of them listed by agents, some by investors, some by wholesalers). I’m interested in properties in the 50-100k range for now.

Because I’m new to REI would it be beneficial to me to start my foray into this business by making calls (from the local classifieds or FSBO advertisements) to find “motivated” sellers or might I be ok purchasing properties that are listed by agents or other investors if the numbers are right?

If I’m intersted in rehabbing in Baltimore, would it be in my best interest to cultivate relationships with and research trustworthy subcontractors in the area before I begin buying properties. My thoughts are that this might cut down on time since I won’t have to look for people to do the work after I’ve already secured the loan.

If I’m just beginning with very little on hand cash (approx. 10k) is rehabbing/flipping an appropriate way to generate more cash before investing in long-term rentals? Or is it feasible to invest in both rehabs and rentals at the same time?

I’ve read much about conventional loans vs. HML and I’m still confused. Do any of you know a conventional lender that would lend a newbie money? And what would I have to show them in order to secure the loan?

And finally, What the heck should I be reading? Going blindly into my local bookstore was NOT helpful!

I guess these are all the questions I have so far, I hope they aren’t too repetitive. You all tend to give really good answers so I thought I’d start here with my questions. Thanks.

Shania

2

Just a ton of great questions can let me break them down a little!!

I’m new to REI with mediocre credit scores but I want to purchase a single-family home in need of repairs to turn into a rental cash-flow property. What would you suggest as the best method to approach finding financing? **I’ve been looking at properties for sale in Baltimore (almost all of them listed by agents, some by investors, some by wholesalers). I’m interested in properties in the 50-100k range for now.

Your credit is not as low as you think there are a ton of lenders out there that will give you great loan programs check out www.moneyshark.com it will show you great lenders as well as www.lenderlab.com

as far as finding good deals I always would look at the investors and wholesalers first see what they have!

Because I’m new to REI would it be beneficial to me to start my foray into this business by making calls (from the local classifieds or FSBO advertisements) to find “motivated” sellers or might I be ok purchasing properties that are listed by agents or other investors if the numbers are right?

I really think that if the numbers are right buy it!! It really does not matter where it comes from as far as marketing to get creative and find some deals yourself is always a great option!

If I’m intersted in rehabbing in Baltimore, would it be in my best interest to cultivate relationships with and research trustworthy subcontractors in the area before I begin buying properties. My thoughts are that this might cut down on time since I won’t have to look for people to do the work after I’ve already secured the loan.

Great plan I use everyone for there own speciality ie. carpet, Paint, Tile… It may seem like it cost’s you more on the other hand the finish time is shorter.

If I’m just beginning with very little on hand cash (approx. 10k) is rehabbing/flipping an appropriate way to generate more cash before investing in long-term rentals? Or is it feasible to invest in both rehabs and rentals at the same time?

When I started I always used OPM (other peoples money) or as most call it HARD MONEY! I would never use my own cash! If you want to hold it long term get a great Loan officer that knows investment loans. The real key to this is to pay someone for what they are good at just make sure they are good at it! Network go to your R.E.I. meetings and see who is doing what and how long they have been doing it. There are always people there that will help.

I’ve read much about conventional loans vs. HML and I’m still confused. Do any of you know a conventional lender that would lend a newbie money? And what would I have to show them in order to secure the loan?

Sorry I think I got ahead of myself and already answered this!

And finally, What the heck should I be reading? Going blindly into my local bookstore was NOT helpful!

Kind of reminds me of that televison commercial where the guy is asking the bagger at the grocery store questions about home loans! LOL There are a great number of awsome books out there. I personally have not read all of them. O.K. any of them so this I will leave to someone else

hope this helped!

         Robb
3

I can’t give any advice regarding actual investment techniques…I’m still in a research phase for the next few months.

However…regarding library suggestions here’s my 2 cents:

a) I think Mark Haas? mentioned something like this in another post…His recommendation was scan all of the postings on this site…and not just the recent ones…they go way back and they give some really good insights if you’re patient enough to spend your time with them.

b) I start a 3 ring binder whenever I tackle something complicated like this…(complete with paper tabs so that I can organize things more deliberately).

c) I’m a cheap bastard. I don’t buy books until it’s absolutely necessary. Use your public library. Chances are that the libraries in your county are all inter-linked electronically and once you clarify this with your local librarian…you can probably set things up so that you can order books online from the convenience of your home computer…by entering via the bar code # on the back of your library card. The info that’s prevalent with this free source, (public library), is more than enough to get you started.

d) Here’s a few that I’m working on now:

[/u]Real Estate Riches[u] by Dolf de Roos

[/u]Investing in Rental Properties[u] by Steve Berges

[/u]Building Wealth One House At A Time[u] by John Schaub

Like I said…take my suggestions with a grain of salt…because I haven’t taken the plunge yet…well, at least not in real estate.

-Mike
P.S. Real Estate Riches by Dolf de Roos is what really opened my eyes to the lucrative advantages of real estate

4

the only book you might want to buy as a beginner is “Building Wealth One House at a Time”

I thought it was a good overview of a lot of terminology and strategies that a newbie like us can actually use. But like the other poster said, the public library is a good place to start. check out what they have, then if you really think a book is great, go out and buy it.

but frankly, if you just print out the articles from this site and keep a 3 ring binder, you’ll have way way more valuable “real world” stuff than any one book would offer IMHO. I’m a book junkie, and spend way too much money on books. but you really don’t need to.

5

Shania,
There are plenty of books to choose from. Look to your left under Product catalog and click on REAL ESTATE BOOKS. But I really recommend one and it’s AWESOME, it’s TAKE A MENTOR TO LUNCH. It will be the best $28.00 you will ever spend. You can check it out at www.mentortolunch.com.
Also read every posting from reoconsultants, tedjr, cash, raj and keith. There are a ton of people on here with a ton of info. that are willing to help.
Good luck and I hope this helps.

John

6

Thanks so much for all the advice. I knew I’d started in the right place. Going back and printing articles from the site as well as the advice given by the seasoned vets should keep me reading for more than a few nights. Thanks Robb for taking a stab at each question, it was definitely helpful. I keep seeing projects that I know would make a good investment and I’m trying to avoid typical newbie mistakes. As for the rest of you who posted who are also new to this, please keep posting. I’d love to hear from my new found peer group.

Shania

7

Shania-
If your looking for a good, informative book. I was really impressed with"Are you dumb enough to be rich?" By: G. William Barnett. It may sound a little odd, but personally I have read more books than I though I ever could. They all seemed to say the same thing, but not ever enough information. This book broke down the whole process for me and the techniques have been very helpful for me.
Hope this helps.

8

In addition to some blank paper tabs for your 3 ring binder.

Invest in a set of “A-Z” tabs…which are about a $3.00 item at your local office supply store.

As your paper tab headers get more and more overwhelming…ie. “HELOC”, “Contracts”, etc. …you’ll have a simple means of methodically organizing your thoughts.

-Mike<+20 yrs in the printing field

9

Another nice, simplistic book that covers the many facets of leverage:

http://www.amazon.com/exec/obidos/tg/detail/-/0970579306/qid=1127912160/sr=8-1/ref=pd_bbs_1/103-0418535-9865431?v=glance&s=books&n=507846

This isn’t a technical book…so don’t expect mathematical wizardry.

It’s just a good book that hammers down how important leverage is…money leverage, time leverage, knowledge leverage.

-Mike

10

Hey,
After you have read everything from this site, try “The Millionaire Real Estate Investor”. Good book for the hows and more important the whys (the internal stuff) of rei.
Good luck with your endeavors - rei might couple well with your MSW.
Peace,
Richard

11

I would recommend “Magic Bullets in Real Estate.” It has excellent information, and the author even runs an online forum, where you can ask him questions. If you don’t mind an ebook you can even get it for free! :slight_smile: