Am I headed in the right direction???

Question

Over the past few months i've spent a long amount of time pouring over blogs, forums and books related to real estate investing. In as much, i've come to the conclusion that real-estate investing is probably one of the most solid investing methods to date, and now I have a problem. Well, I wouldn't honestly call it a problem but I need some much needed direction and guidance. I would like to get into real-estate with-in a couple of months-almost a 5 month timeframe here, and I figured the best way to get my feet wet would be to obtain a real-estate liscense. ?

Right now, I really don't have much capital and my debt to income ratio is horrible-which would make applying for and obtaining home loans next to impossible. That is... unless I could win the lotto and could show the bank $100,000 in my account, which probably won't happen either. On the otherhand, I figured that that lisencse would enable me to work directly with the proffesionals, and understand the buisness alittle more. At this point, I feel the best way for me to get anywhere would be in selling homes first and taking commission from the sale as a real estate agent.

What are your thoughts? Do you think this is the best way for a person to get started in real-estate? If you do, what advice could you give to help a young person like myself-or others? More importantly, what were your experiences like? What types of obstacles did you face, and how did you overcome them? I'd like to hear your wisdom, so that I myself can be succesful, and avoid any major pitfalls in the future!

Holly Baldwin · Answer

I completely agree with @Robert Leonard.  I am currently in the process of getting my license right now, but it is costing me about $2500 by the time I am done....and that doesn't include the monthly fees (MLS, etc.) that I will be paying once I am licensed as well as the member dues to the national and local Realtor associations that I will pay yearly.

The difference between me and you right now is that I have excellent credit, I have a low debt to income ratio, I know where every penny goes in my monthly budget and I have cash reserves.  If I didn't have all that,  there is no way I would have gone for a RE license just yet.

You have got to get your own finances in order before you do anything with RE.  Otherwise, you will get burned and will just give up.  Trust me, I've done that already.  Don't make my same mistake!

So, create a monthly budget and get your expenses lower than your income.  Here is a tool from Dave Ramsey to help:

http://www.daveramsey.com/mobile/gzbudget/

Start paying off your debt and start saving.

Build up an emergency fund for yourself (6 to 8months livings expenses)

Then build up a fund for RE cash reserves.  You are going to need it! (I spent $4,000 in repairs on my rental last year for an unexpected repair....it just happens and you need extra $ for that kind of stuff!)

While you get your own finances set right, you can continue to learn and learn and learn.

Then I would say, "Yes, getting your license can provide many benefits in your RE investing, although it isn't totally necessary to be successful."

Wishing you the best year ever!

Carlos Pringle · Answer

Hey everyone, I appreciate your input and foresight! There are alot of good valid points to your responses and I appreciate it. I also appreciate you all taking the time to read my post. Your responses have been encouraging and informative!

I think the pieces to the puzzle will start to come together, once I get some prior things worked out. Robert and Holly, I definitely agree with you 100%. I've taken the steps to understand and get a hold of my finances. 90% of the debt I have is racked up in student loans. It is managable, but it will definitely make getting loans at this point very hard.

Steven, I really like your advice. I don't know why I hadn't thought of that before, but it definitely makes alot of good sense. I think thats something I'll think about before I head back home.

Ron, I think you really hit on what I was thinking. I know there would be a cost to getting my real-estate liscense, but I also felt that that would allow me to simply get into selling homes as the middle man. Although I wouldn't own the home, I could at least learn the buisness with my risk already defined. I am in the military, but I'm from Kansas. However, i'll definitely check for these benefits in my area of operations.

Thank you all for your input and your time, because it has helped a ton! I would still like to leave the disscussion open, because as they say, there is always something more to learn! So if your reading this forum, please feel free to add your input on the subject!

Thank you!

Account Closed · Answer

Carlos

Do you like to sell?  The purpose of a real estate license is to sell real estate and earn commissions.  It is not an easy job but it is a lot easier than putting on roofs on houses.  Many times, in Florida, I will be sitting at a red light watching people mop down hot tar on a roof in July. I ask myself,"Why don't they climb down off of that roof and come to real estate school?".

Every one needs cash flow.  Most people like a job that pays a salary.  You show up at eight and you leave at five.  You get a check every Friday afternoon.  You can be sure that whatever you are doing to earn that check is more lucrative to the guy that is paying you.  If that were not true, you would not have that job.  Whether you are good or mediocre or fabulous, you get the same check as every one else, the same check you got last week.

When you sell real estate, you go to work when you want to and you quit working when you want to.  If you want to coach little league from 4 P.M. to 6 P.M. , you don't need anyone's permission.  If you want to start working at six in the morning, go ahead.  If you to work from noon to nine, it is up to you.

Selling is a skill.  Selling real estate is a skill.  It is a learnable skill.  Once you learn how to sell real estate, you can always earn an extraordinary income.  You will never ever know what unemployment feels like.

You will find more bargains as a real estate agent than you can possibly buy.  Opportunities fall on your head.  You go out to see a forsalebyowner in hopes of getting a listing.  The house is worth $100,000.  The seller is asking for $65,000. You buy it.  You meet Bozo the clown.  He want to offer $200,000 on your $300,000 listing that is a good buy at $300,000.  You reluctantly make the offer to the seller.  He says he won't take $200,000 but he will take $205,000.  Bozo says he will pass.  Good decision Bozo.  You buy that one.

Does this kind of stuff happen?  It happens all the time if you are out there selling real estate .  What if Bozo didn't pass?  You earn a commission.  That is why you were there in the first place.

Get your real estate license and learn to be an extraordinary Realtor.  It is a great career.

PS  That looks like a military uniform in your profile picture.  In Florida, recently discharged veterans do NOT have to pay the $105 fee to the DBPR for a license. Check that out in your state.

Steven Stokes · Answer

I am going to kind of disagree with what is being said here

If I were you I wouldn't even consider getting a real estate license because having a real estate license doesn't make getting real estate deal any easier, it will cost you money and your liability goes way up compared to being a regular investor.

You don't need to learn anything more! So many people have paralyzes of analyzes. You will learn so much more by doing rather than you will ever learn by reading alone. While there is a lot of great advice, help and encouragement on this site and in books, and courses; nothing will replace what you learn on the street.

By getting out there, you learn your weaknesses, your strengths and what you really need to work on in your life in the real world!

What I think your next step should be is to get together with an experienced investor, tell them you will do all the leg work for them for free!

That way you learn the ropes, get experience, get to network, put some successful deals under your belt and you risk very little.

You should be working on your credit and debt to income, and you should always be learning more but you should be doing all of these things in addition to building your real estate career, not instead of building your real estate career.

Work hard on all tracks of your life and you will succeed, not just some tracks.

I hope this helps and good luck :)

Robert Leonard · Answer

@Carlos Pringle there are a lot of ways to skin a cat.  The same applies to REI!  Your options are limited when you have bad credit, so I would tackle that problem and get a handle on it before jumping into investing.  Doing so would only add to your financial obligations and it is best to keep your debt manageable and have cash reserves for the unexpected.

There are ways to buy properties and get started without good credit, but I would recommend you spend some time learning and working on your personal finances before you start working on becoming a creative investor. Once you have things in a manageable state, you can accelerate your debt pay down with your RE investments.

About the RE license, while it is a good thing to have, it costs a bit of money to get it and maintain it.  Find out what it costs to get a license in your state?  Usually there's a pre-licensing course, a state and national test and continuing education requirements for every year.  All of which come with fees.  In your financial situation, I would recommend you put that money toward your debt and keep this idea as a long term goal and not your first priority.

Am I headed in the right direction???

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