How Big Are Your Pockets?

Question

Mine aren't that big and I'm still trying to repair my credit, but I have my real estate license, some experience with construction and a small amount of cash saved so I'm looking to break into the investment world. Sometimes I wonder if I should be patient, save a little more and work on my credit, or do something now because there is no better time and get creative! I want to turn distressed properties into cash flowing property and do some flips to build some capital but I'm not sure I'm at a point in my career where I can afford to get started. I work a full time job making custom cabinetry to make ends meet and do real estate sales after hours and on the weekends for a nice bonus here and there but I want to take it to the next level sooner than later.

I want to get to a point where I can afford to loose the job and just focus on creating cash flow through real estate investing.

But the question is this: save and repair, or act and get creative? What type of approach would you take? Thanks in advance to those who offer their wisdom!

I want to get to a point where I can afford to loose the job and just focus on creating cash flow through real estate investing.

But the question is this: save and repair, or act and get creative? What type of approach would you take?  Thanks in advance to those who offer their wisdom!

Zach Liu · Answer

You have a license so I would say it opens up a lot of opportunities for you.

Using your license with an investor mindset. Find good opportunities for investor clients as for yourselves. If you can find good deals, other good things will just follow. You become a better investor, have bigger pockets, and acquire rich networking all at the same time. You may even find some people that will become your partners too.

That's the best way I can think of if I were in your situation.

Good luck.

Account Closed · Answer

"Aact and get creative" your words, not mine! Nobody ever got rich by just talking about it. Just buy really really cheap and start small. but the point is to start. Hope that helps.

Shamus Quirk · Answer

Can someone please tell me how to tag someone in a post?  Apparently its not like facebook where you can just type @andsomeonesname.  thanks :)

Shamus Quirk · Answer

@Mindy Jensen  Thanks for the tip on BRRR.  I heard this mentioned on the podcast.  I'm going to have to look into it more.

My credit score is like 593 or something.  I have been working to get it up.  I never believed in credit cards but I just recently got one to build some credit.  It's been working, but I never knew more available credit can be harmful.  I pay off the balance religiously every month.  Are you saying that could be counter productive?  I do use it frequently, I just always make sure I pay it off sooner than later.

I do come from some sort of construction background.  I have never been a carpenter per say, but a custom cabinet and furniture maker for a few years.  For instance I wouldn't know how to frame out a house or put on a new roof (although I'm still very handy and could figure it out or mimic what I see) but I could build you the most beautiful custom cabinetry that you would find in $1mil plus houses.  It's been mostly high end fine wood working, so a little different from general construction.  Something I have considered getting into to learn a bit, but I'm always more interested in putting the deal together than I am working a construction job.

I think my strategy at this point is going to be looking for deals, and trying to decipher what I could do with it ie. wholesale it, flip it, or BRRR.  I have some friends I would be interested to ask if they would consider a partnership (they would be the money, I would be the deal guy), but I want to get some experience before I do approach them so I can say "Here, Look, I can do this!" but I think I will need some of my own capital to get started.  I have some money saved for investing and right now I am trying to focus on sales with my RE license.  Since I work a full time job right now, sales are just really nice bonus checks that I am able to squirrel away entirely for when the right deal comes up.  I will do some more looking into BRRR though.  I like the idea of creating monthly cashflow but I think I would need to flip a few to gain some capital before I can afford to hold.  But maybe I am mistaking.

I actually have a lead on a potential deal.  A lady in town just had her boy friend pass and she is considering a fresh start and getting rid of the house as it is too much for her alone now.  I was thinking about asking if she would be interested in owner financing, then doing some repairs myself, renting it out, and refinancing it in a year or two and pay her off.  I think that must be similar to what the BRRR strategy is.  I'm a little hazy with the logistics of owner financing and I'm also wondering how I could bring some value to the transaction.  She wants out, but is that going to be motivation enough for her to owner finance?  How else could I bring value to her?  I considered a down payment to her so she could have some cash right off the bat to help her find an apartment and get settled in somewhere else.

Mindy Jensen · Answer

You don't say what sort of credit score you have. Are we talking 600's or 300's? Is there anything you can do to repair it that wouldn't take a long time? Say go through your report and make sure all information is correct. Cancel credit cards you don't use. Having more 'available' credit can lower your score.

Once you have done the things to quickly or easily help repair your credit, I would say look for deals. With a license, you have access to lots of information. I am not sure what your market looks like, or what your strategy is, but from what you said, it looks like you could have a construction background.

@Brandon Turner just wrote a post about BRRR investing. Buy, Repair, Rent, Refinance. This could be a great way for you to accomplish both of your objectives. You can buy a lower cost property, repair it and start the cash flowing. Pull some equity out of it, then start over. Check out the post, and good luck.

Rob Randle · Answer

Act now.

Jump into the deep end with RE and surround yourself with people who are successful.

100% in one thing is better than 50% in two things because it doesn't give you the opportunity to mentally slip.

How Big Are Your Pockets?

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