Young Newbie looking for Advice

[Jeremy Mangen]

Let me give you a little back ground first.

I'm 19, a cashier at walmart, moved out on my own a few months ago, I'm getting married in the summer of 2010, and I have virtually no cash saved up (though I am working on it).

I am not cut out for the normal work force, my dreams are too big and I know there's too much opportunity to sit (or stand) around all day working to make someone else alot of money while I make minimum wage.

I don't know how, but somehow I got interested in Real Estate. Maybe it's because both my parents are Real Estate Appraisers and the people I'm currently renting a room from are too. Idk, but I just bought Dolf De Roos book "Real Estate Riches" and fell in love with real estate and have been hard core reading about it ever since. This all happened about a month ago. So I'm very new to it. But at least I know what REO's are, what the MLS is, and a few other things I picked up from my parents.

Basically what I'm looking for is your advice on what you'd do if you were in my situation and were desperate to become financially free through real estate investing.

I'm checking out as much as I can on this forum and other sites (btw, any sites you can recommend relating to real estate investing would be greatly appreciated) and reading as many books as I can. But I've got to do something. What should I do? What would you do if you were in my situation?

My current plan was to become a Realtor and learn as much as I could about the market here in the Twin Cities (in Minnesota) and then after learning a considerable amount about real estate while making commissions off of it I'd start investing (becasue I'd also be raising the capital to start investing.)

I was thinking about whether or not I should get a mentor, would you if you were in my position? And if so, how would you go about finding a mentor?

Long and short of it is, I'm desperate, I don't make much money at all, but I am willing to try almost anything to gain financial freedom. At this point, if all I can do is start down the right path, I'd like advice on which path would be best (think, "What would I do in his position?").

My goals are simple but big, be a millionaire by 25 and/or a multimillionaire by 30. That's a million dollars in net worth with a substantial monthly cashflow (5,000+).

Any advice is greatly appreciated.

Again, what should I do in my current position? What would you do in my position?

Should I seek out a mentor? If yes, how would I find one?

And do you have any advice on my current plan of becoming a Realtor and learning/saving up till I can invest? Do you like it? Do you have better ideas?

Thank you very much for your time and advice.

[Jon Holdman]

Investing in real estate is a means to an end. You say your goal is to be a millionaire by 25. That's in six years.

How you achieve that goal is simple but difficult. In one sentence you accomplish this goal by spending less than you make. That's it.

Investing requires money. You invest your money and it makes a return. Pure real estate investing means buying income producing properties. Rental houses, office building, strip centers, etc. From your description - no cash and minimal income - you're not in a position to do this. Even if you could get into a rent house for no money down (difficult, but not impossible), you MUST have cash reserves. I had a furnace break last month. $320. I had a tenant bug out in December. So, I have bills for carpet cleaning, cleaners, painters, and two months of payments without any income from that property. I'm not unlucky, this is just part of the business.

You can invest in real estate business like developing, fix and flips, making loans, etc. These take money, too. Very difficult to do any of these things with no cash of your own.

What you may be wanting to do is some sort of real estate job. Wholesaling if often held out by gurus like Dolf as a quick way to make some cash. It is possible to do that, but its not nearly as easy as the gurus make it out to be. Its essentially the same as being a real estate agent. You can certainly do that, too.

I'm dead serious about the spend less than you make thing. If you make $10 and hour, spend only $9 and save that last buck. Don't do what most people do and spend $11, putting that extra dollar on a credit card. It doesn't matter if you make $10 an hour or $100, if you save some of your money, you'll build up that next egg you want.

If you have $1 million, you can easily get 3% from a bank just for CDs. That's $30,000 a year or $2500 (pretax) a month. Half your income goal. But you can do much better. I make 14% doing hard money loans. That's $140,000 a year or $11,667 a month, double your goal.

So, how do you accumulate $1 million in six years? You need to save about $10,193 a month for six years at a 10% rate of return. Saving the $10K a month is hard, getting that 10% return is harder.

So, then the question is how to generate $10K a month to save. Bust your hump. You need to do something to generate more income. Rental properties aren't the answer. You need a bunch, probably 100 good ones, to generate that kind of income. And you need them tomorrow. Not going to happen. Why tomorrow? Because $1 saved tomorrow with a 10% return is worth $1.82 six years from now. $1 saved six years from now is worth $1. So, you have to get started with that savings soon to get the power of compound interest. There's a recurring theme here, and if you take nothing else from this tome, take away the "spend less than you make" lesson. If you don't, don't feel too bad because my 19 and 22 year old children haven't learned that either. But if you don't learn that lesson, forget about your $1 million goal.

So, is a real estate JOB a good way for you to make $10K a month? Maybe. I doubt it, but its possible. I can guarantee you that wasting $1000 on a course from some guru is NOT going to help getting to that goal. Spending 100 hours reading every post here might. Getting 10 real estate investing books from your local library and reading all 10 might, too. If you aren't willing to read those 10 books, forget all about this route and do something else.

Evaluate your skills. RE is interesting, but its only one route. Maybe your skills are in web design. Or singing. Or something else. Find your interest. Find out what you can do with that interest. Then, bust your hump toward making that work. Do you watch TV? Cancel your cable and sell your TV. Get a second job. Go to school and learn new skills. Being a cashier at Wal Mart is NOT going to make you rich. You MUST get some more skills, whether real estate or something else, to make you more valuable.

If you're determined to try real estate, and that probably means wholesaling or bird dogging (not sure what that means? You can find out right here. Start reading.) With no cash to do an advertising campaign (seen those "we buy houses" signs where you live? they aren't free) you need to go down to your courthouse or get online. You need to figure out how to find notices of default. You need to find the list and start knocking on doors or calling. You need to find some investors who will buy your deals. You need to learn what makes a good deal (apparently the most difficult part, based on the wholesale "deals" that landed in my inbox today.)

I recommend the book "The Richest Man in Babalyon". Its an oldie but a goodie. If you have any debt at all, I recommend "Total Money Makeover". I recommend getting a second job, whether that's real estate or something else. I recommend getting rid of your TV and never ever eating out or going to a bar or club or whatever. Focus on your goal. Bust your hump to getting to that goal.