which comes first, financing or the investment?

Question

I just started investing in R/E on my own, I have almost no capital to work with so far, but I am networking a lot and depending on "OPM"

I have been talking to so many people, that I already have a couple of leads on deals and some numbers of motivated sellers to call back.

I got most of this info over the last couple of days and the motivated sellers just this morning.. 
I was supposed to call them back this afternoon, but I hesitated because I didn't want to talk to them without having the financing ready in case there was a great deal, but needed cash right away.

I will need to call them tomorrow either way, but I was just wondering what to do in the coming days.. should I be looking for the deal first and look for a way of financing later? or just look for the financing/partners/investors first and work on finding deals after?

I am trying to work as efficient as possible as I set some pretty tough goals for myself, I would really appreciate your feedback !

Thanks for taking your time to read this, have a great day !

J H · Answer

and if someone's that weak-mineded to let someone else(let alone on the internet) discourage them with mere words - don't you think they should keep their day job???

just a thought ...

Josh Gibbons · Answer

Yes, I'm 24 and buy and sell cars for myself....I don't work at a dealership.  What does that have to do with anything?  Just because it doesn't say "full-time real estate investor with a huge bankroll" doesn't mean anything my friend.

I'm not suggesting it can't be done, as I'm sure it can....but if you are basically coming on here to ask how to get it started, and wanna make 50k in 2 months with $0.00, its a very lofty goal and many of the other "guru's" here will agree with me.  If you pull it off great!  But I highly doubt it'll happen.

As for setting goals, I think setting realistic goals, and not just a monetary number out of the blue, is a much better way to do it....but to each his own.  What works for you works for you...what works for me is all I care about ;)  I'm not putting down your goals.....I think its great to have goals.  I just think realistically.......

Either way, I gave you options to make it to your goals.  Trying to do one big deal that'll net you 50k, as your first deal, with no money, could sink you before you even make it out of the port.  Word gets around, and you don't want it to be bad.  Get your feet wet first.....save some money, or birddog/wholesale....

And don't worry, I don't get mad over stuff people say on the internet haha

Good luck

Jon Holdman · Answer

Nobody is saying your goal of making $50K by February can't be achieved.  Germancarfan actually told you exactly what to do to make $50K wholesaling - big deals or a bunch of them.  I gave you some actual numbers.

I don't see any sarcasm in any of the comments.  I do see skepticism of your goal of doing wholesale deals for $25K.   That's a reflection of the reality of wholesaling, and not of your ability or your goals.

Jon

Jay Dacam · Answer

You all just made me realize how strong you will get hit back when you say something negative,

Thanks for the advice , I really appreciate it,

I edited my first response, as I feel most of the replies I got were due to the fact that I incorrectly formulated my post ( note: I'm not a native english speaker so sometimes the intent of the message is a bit different than is seems) I assure you all that I greatly appreciate all feedback , both negative and positive and I am not trying to offend anyone not even the least bit.

I am very open minded, and would like anyone to share their opinion, but I felt that there was some sarcasm in that message and I replied without carefuly analyzing what I was saying. I appologize for that.

However I do stand by one thing I said and that is that you should never tell someone that something someone else believes in cannot be acheived, because you then have the power to destroy all the hope and probably the chances of that person ever getting there.

Words are powerful, so we should choose them carefuly, I am hoping I didn't offend anyone, if I did, I apologize...

And thanks again for the feedback, I will be taking all your advice to reannalyze my plans.. the goal stands!.

Wish you all a great day!

Jay Dacam · Answer

Germancarfan,

It says in your profile that you are a 24yr old and you are in car sales..

How come you are suggesting that it cannot be done.

What qualifies you to say so?.. I would like to know before I take the negative sentiment in your message seriously!

I do not want you to be mad after reading this, all I'm saying is never put down someone else's goals!

"anything one can conceive and believe, one can acheive!"

- Napoleon Hill

Read "TAGR" and we'll chat again after.

I will however take your advice on focussing on large properties, so thanks, Have a great day and all the best with your investing,

you too can do it if you truly believe you can!

Jon Holdman · Answer

Hey now, be nice.  Many people here, including me, have a day job, and do REI part time.  If you start saying "how come you are giving me advice" you'll put an end to getting any.

Germancarfan is giving you very valid advice.  On a typical wholesale deal, where the value was around $100K-150K, you might make $5K as the wholesaler.  So, if you're wanting $25K per deal, you're going to have to be doing it with higher value properties, finding screaming deals, or doing a lot of them.  On a 200K house, 25K is 12.5%.  To give the margins your buyer needs, you're going to have to be getting the house at 50% of its repaired value, less whatever its going to take to make the repairs.  Not easy to find those kind of deals.

If you're talking to individual motivated sellers, you shouldn't need money or proof of funds (pre-approval letter, bank statements, whatever.)  You'll just get a purchase contract, then assign that to your end buyer.

If you're talking to a bank, say for REOs, then they are going to want proof of funds, as well as earnest money.  So, you'll have to have the cash and proof.  So, get the proof or avoid deals like these.

Really, you have to be doing a whole bunch of things in parallel in this business.  In your case, looking for deals, looking for buyers, and sorting out the money piece.  You mention hard money lenders are hard to find there.  That may make it difficult to do wholesaling, because the end buyers often need to use hard money to buy the properties from you.  So, that's something else you'll have to figure out.

Jon

Josh Gibbons · Answer

I'm also confused about what you want to do....if you want to wholesale, and make 25k, you better start looking into high value properties with a helluva margin in them.  Either that, or start finding a bunch of deals and making 5k each....

Thats a very lofty goal, so good luck.  Esp with no cash to start with.  I hope you get there!

J H · Answer

for one dude, this is an internet forum.... nobody here is getting PAID to offer any of their HARD EARNED experience and advice.

Also, it is the internet - remember that.  Buyer [of advice] Beware.

Further, nobody has any kind of obligation & warranty on their advice and answers.

And - it's a lot better to get your ideas & goals shot down on a forum than it is in the Real World ... where things count.

Good luck & hope things work out for you

2Much

Brendan O'Brien · Answer

...how much people are going to be able to help you, because of your location.  I know a lot about this stuff but I'd hate to lead you into a risky or illegal move because I just don't know what works where you live.

I do know that $50,000 in two months, starting with $0, is going to be very difficult.  It might make you willing to take risks that you really shouldn't.  "Pigs get fat, hogs get slaughtered."

Jay Dacam · Answer

Thanks for the reply,

Well first of all , when it comes to investing I believe in warren buffets rules
rule # 1 never lose money
rule # 2 never break rule #1

And I'm not planning on creating great risks for investors either, I want to be sure that whatever deals I create will be beneficial to all parties involved..

having said that , I'm very interested in hearing what you have to say, can you give me more information , or can I contact you  ?