Learning REI, Starting Small ?

Question

I am BRAND new to REI. I have yet to purchase anything.. I'm in the information acquisition phase. I just listened to Rich Dad Poor Dad. I have the sense to take the broader messages and not believe it as a blueprint for success in REI, etc. My question is, for those familiar with the read and understanding that it was written decades ago, what exactly was the author investing in where he would put down say... 5k and be able to get 30k back? Where is the rest of the funding coming from? I don't really understand these deals he was referencing. Piggybacking off of that, I was listening to a podcast recently (maybe a BP RE?) and a woman discussed putting a small amount down.. maybe 5k.. and then selling the land and profiting 10k off of it. These seem like low risk strategies, especially for newbs. I'm just curious to learn more about these types of opportunities (as opposed spending 100-300k on a first investment).. Any clarity would be appreciated.

Darcy Ernat · Answer

@Andrew PostellI don’t have a lack of funds. I never said that. As a matter of fact, I could buy multiple properties outright with cash if I wanted. I also never said this was the only thing I’ve read. Both the replies are reading way too much into my post. I just want my question answered.

Andrew Postell · Answer

@Darcy Ernat most of us face the same challenges when we begin - lack of funds and lack of knowledge. Now, these are personal critiques...when you are new, you don't know what you don't know. Often we are kind of stumbling around...but if you keep learning, you'll start to see how some of these things are possible (and how some are not possible). When addressing the lack of funds issue, we are usually trying one of the other "alternative" methods to acquiring real estate. Like "subject to" or "The BRRRR Method" or "house hacking" and etc. Can we get lucky and put $5k in and get $30k out? It is possible....but the reality of it is that investing in real estate is very hard and it is NOT a "get-rich-quick" scheme. If you stick with it, it will absolutely change your life. So, how many different strategies are out there? Lots. Lots and lots. Is it possible to continue to learn about some of these strategies? Also, yes. Often we get our best learning by networking with other investors in our markets on what they are doing. Your market might be different than my market. So, local usually helps us. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. Even facebook might have some good local groups for you. How can you get started in real estate with only a small amount of money? Buying a primary home is a great technique. Again, this is one of many but buying your own primary home allows you to have a realtor represent you. The contract has protections in place for you. So, when we go that route it helps make up for some of the knowledge that we may not have in the beginning of our career. We get the lowest out of pocket transaction and the best interest rate too. You only have to live in it for 12 months, and then you can move out and rent it. My first property was a $50,000 home that I house hacked. My first BRRRR was a $7,000 home. Those worked for me. Something out there might work for you as well. Get connected locally, keep learning, and save that money. Hope all of this makes sense.

Darcy Ernat · Answer

Thanks for your time. I specifically stated that I understood it was not a blueprint and did not say that I was planning to follow any particular advice given in the book. Unfortunately you did not even begin to answer my question. I’m not looking for someone to tell me what to do or not to do. I would simply like for someone to help fill the knowledge gap as it pertains to my question above.

Greg Scott · Answer

Many real estate investors got kicked off by reading Robert Kiyoaki's Rich Dad Poor Dad. It is an exceptional book. It's strength is simplifying concepts about personal finance, but it does not provide a step-by-step process for buying real estate. Perhaps that is a good thing because the concepts written about 26 years ago are still relevant today. Meanwhile, the techniques and legal landscape surrounding real estate have changed significantly.Are there deals out there where you can put $5K down and make many multiples of that? Yes, but there is way more to the story than that. Often times you may need to spend a lot of time and/or money to find that deal, so in the scheme of things, they may not be "low risk" for a newbie.You may want to spend some time investigating the many different ways you can invest in real estate before jumping in.