Young Newbie looking for Advice

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Young Newbie looking for Advice

Jeremy Mangen
Member since 2010 · 3 posts · 0 votes

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.

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Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y

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.

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  • S X
    Center Moriches, NY · Member since 2008 · 7 posts · 0 votes
    16y

    Thanks' for posting this, i pretty much had all the same questions, so anyone answering his questions will be helping myself too. (not trying to hijack you're thread)

    Thank You

    0Reply
  • Jeremy Mangen
    OP
    Member since 2010 · 3 posts · 0 votes
    16y

    Lol hopefully people will reply. I've had answers on other forums though. If you want I could PM you the links.

    0Reply
  • S X
    Center Moriches, NY · Member since 2008 · 7 posts · 0 votes
    16y
    Originally posted by Jeremy Mangen:
    Lol hopefully people will reply. I've had answers on other forums though. If you want I could PM you the links.
    I would be more the happy to get those links from you

    Thank You

    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    16y

    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.

    3Reply
  • Jeremy Mangen
    OP
    Member since 2010 · 3 posts · 0 votes
    16y

    First off thanks for your advice Jon. It agree with every bit of it.

    I agree that investing requires money but you can use OPM. Though that's a very silly thing to do with rental properties for the exact reasons you mentioned. Now from my understanding (which is limited and I may have misunderstood something) you can invest in real estate through lease options and other ways that do not require so much money or risk. These are what I would want to do. Not to mention birddogging/wholesaling. Er, also known as scouting/dealing. Though it may not be as easy as some people make it out, I'm not lazy, and could care less about the difficulty. I have a goal and I will accomplish it.

    As far as the spend less then you make, being thrifty/frugal, I'm already good at that and getting better. For instance, I keep my daily food budget at work down to less then 3 dollars. It would be very easy to spend 6+ a day on food, but it keep it under 3. I will not own cable, though I will own a TV for educational dvds and the occasional movie night with my future wife. Btw though, I told my fiance that advice you gave me on TV, and she got a kick out of it. She whole heartedly agrees cause she hates TV lol. I do not own video games, I will not own very many dvds (if any) all of the cash I spend goes to books (buying used books, on amazon or at used book stores) on real estate investing. I can buy 3 or 4 good books on 30 bucks. Plus I budget, I track my expenses and income, I see what I'm spending my money on, save receipts, the whole shebang. I enjoy making a game out of saving, find new and better ways to be frugal.

    I also am not in debt, I am however going to get a lease on a car, because unfortanutly I need transportation to make money, and I don't have nearly enough money to buy a car outright. It would take me more time then I have to save up that kind of money too. Put I do plan on paying off the car early. I also plan on getting credit cards only for the sake of increasing my credit score (buy a candy bar, pay it off that day, repeat next month) so retail debt won't be happening.

    I've read richest man in babylon several times. Amazing book. Lent it out to a friend though.. never got it back :( Silly me. So I'm going to have to buy a new one. I've read many other books like it, Robert Kiyosakis books, John Maxwell's, other money books/leadership/selling/business/ yea... thel ist goes on and on. I'm a very avid reader and I fully plan on utilizing this site and others like it to gain a knowledge of REI.

    I also do plan on doing REI for 2 reasons, 1. I really do love real estate and 2. I need money fast and lots of it. Money is a tool, and I need that tool in order to reach my other dreams. I don't want money for the sake of money. I want it for the sake of my dreams (which are focused on helping other people) and I'd rather use a massive digging machine then a little shovel as a tool ya know? In the same sense I'd rather have 1 million dollars to finance my dreams then 1,000. And I'm very business minded, I love sales, all the appropriate skills needed for real estate I have or can acquire.

    I also do not plan on making 1mil in 6 years. I do not want that in my bank account for the tax man to rip apart. I want 1 mil in assets in 6 years. So I don't need to save 10k a month, but if I spend 10k as a downpayment on a 100k house then I'm 1/10th of the way to my goal. Of course this has to produce cashflow and be a good investment and the such, but if I can find a process that works and repeat it then I can deffinitly reach my goal in less than 6 years.

    See, I've read not just guru's stories but stories of avarage every day people who made it to a million dollars in net worth in less then 5 years, and if they can do it, why can't I? I see no reason why I couldn't if I work hard and work smart.

    My current plan (and I'd like your thoughts on this) is to 1. Become a wholesaler/birddog or 2. Become an RE agent and start saving money, establishing contacts, and learning the ropes until I feel I have the means to invest in real estate. In the meanwhile, after I get married I plan on getting a good investment property to live in, (worst house best neighborhood, motivated seller, discounted, needs work, etc, etc) and fixing it up till it has a bit of equity in it. Then I plan on borrowing against that equity so I can invest in other properties. I also plan on working two jobs, not just the first one that I mentioned but also another one, like a sales job. Do you have any thoughts on this plan?

    Thank you for your advice Jon and especially for your time :)

    Jeremy

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