After the learning, studying, and research I'm now ready

[Leon L.]

Hello BP,

After months of watching videos and building a good educational foundation I just got a loan for $25k from my 401K, and I'm ready to take action.  I must admit, i am nervous as all get out.  I have always been known to be the cautious, frugal type amongst my friends, so this is a big step.  I know this is the right thing to do, and as I read in Rich Dad Poor Dad, I am going to acquire assets and not liabilities.  I'm going to have my money work for me instead of the other way around.  

I have a good understanding and knowledge of Wholesaling, Flipping, and Renting. I'm going to be investing in the suburbs of Detroit, Mi., and maybe in Detroit if the right deal presents itself. There are a lot of different ways i can start and i know it all depends on what i want from REI. Long term I want i want to rent houses and build up a large portfolio of houses so that i can transition from my 9-5 in a few years. This is the very beginning for me and i finally stepped up to the plate. I have a real estate agent sending me daily reports, in which i see some good potential deals. There is also a tax deed sale auction coming up that i was interested in, but with me being new i am a little nervous purchasing in this arena to start with. I would hate to purchase a tax deed and find out that there are back taxes, or its inhabitable, and other unknowns that will eat up my start up money. (I know there is a risk in any decision i make)

For the new or experienced investors, what would you do if you had 25k at 3.25% interest for 5 years (60 months) for your first purchase in REI?

Thank you very much!  

Leon

[Jeff Soloway]

Hi Leon,

I am a new investor in Macomb county and have been wholesaling for the last 6 months. Like most REI savvy people will tell you, wholesaling is a lot of work, and will, more than likely, be somewhat overwhelming to someone that has a 9-5 already. I'd recommend wholesaling only if you're willing to spend some money on marketing ($500 minimum/mo) and commit 10 or more hours a week to the business. A Buy and Hold strategy in one of the many low-income suburbs of Detroit, can provide great cash-flow. I personally focus on wholesaling houses that investors can be into for less than $30,000 and rent for $850+/mo in safe neighborhoods. In short, I would say that your commitment level should determine what strategy(ies) you decide to implement.

- Jeff