Where did you get your money to start investment
Interior Decorator · Orlando, FL · Member since 2015 · 17 posts · 2 votes
Where did you get your money to start investment
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Professional Auctioneer · Baltimore, MD · Member since 2015 · 1k+ posts · 1k+ votes
10yFear of poverty ! I was raised by folks who got paid $7.00 a week for my room and board when I was 7 years old, I saw them work long and hard, he drove a coal truck and she saved and counted pennies in order to buy groceries. I guess fear of poverty was a driving force for me, I knew I didn't want to work that hard and long to earn a living.
Joined the Army in 1959, I was 16 years old. Discharged at age 20 and started reading about real estate. Found a mentor, or he found me, showed me how to make money in real estate by buying really cheap houses in Baltimore at public auction. Learned lots about painting, plumbing, electrical, tenant management and working with my hands while going to public auctions everyday. Couldn't afford to pay contractors, had to learn and do it myself. (don't do that kind of work anymore)
I spent most of my money in the 60's buying tapes (remember tapes) and taking seminars on how to invest in real estate and creative financing. I am glad my wife had a great job, she helped to support my passion for real estate, I believe without her help I would still be working at a job.
My money came from several resources;
#1 The seller, if the seller could not help me buy their property, I couldn't buy their property. Creative real estate was my number one asset for making deals; I had no choice, I had no money, no credit------ but I had a passion and a desire not to be poor.
#2 credit card advances and credit lines later helped me control houses. I didn't know that much about flipping houses, so I just kept them and grew my net worth and built my real estate portfolio. To me, it was like a game or score card, every time I'd get a property I would calculate my net-worth, I liked to watch it grow. And it did using cheap properties purchased at auction.
Fast forward the clock, now at 73 years old, I stopped counting the net-worth thing, too busy doing deals developing commercial properties and helping others as apprentices to do deals. The money now is so much easier to make and accumulate.
Now own my own real estate auction company ----- isn't it great how a goal and a passion for something will materialize if you stick with it.
Charles
61 Replies
- Investor · Juneau, AK · Member since 2015 · 980 posts · 741 votes10y
You know Christian, that is a good question I had forgot about.. After many years into the real estate game, cash or credit may not seem the obstacle they once were, so I have to "reach back in the files" to pull out an old memory (to quote Alan Jackson "Drive")......
I recall being very thrifty and a saver in my 20's (I had an insane dollar a day budget thing I did in the early 90's on canned beans, loaf a bread and raw carrots, which I would not recommend, unless you live in a mobile home on a construction site like I did at the time)... Then I got lucky to marry someone like minded (and I recall the Millionaire Next Door (great book) also found that having a good "defense" or saving money was a key, common theme of the high net worth accumulators of wealth in the US)...
Back to the question, I saved some money, but then I did not just bury it in the back yard (where you actually lose money due to inflation, or even put it in a savings account which also loses money relative to inflation), but I read Peter Lynch, Warren Buffett, John Bogle and put what little I saved (and we saved post marriage) into quality stocks and index funds... Then it grew. I got a more professional job and when it came time to get a bigger home, I just rented the one we had out and moved to the next one (and actually did that a few times)...
So savings, investment, and some income so you can save and invest that may be a first step... And it is a solid foundation for the future.
- Investor · Woodbridge, VA · Member since 2015 · 476 posts · 197 votes10y
My wife and I bought our first 2 homes OO so she got the first one $0 down with a first time home buyers credit and we bought out second $0 with a Va loan when I got out of the army. Now the first home is a rental and we are looking at buying our third with a down payment here in the next couple of months. The home we live in now will become a great Class A rental when we are done with it but for right now we are putting tile in the basement and preparing to house hack it.
I would echo @Michael Boyerand@Kevin Harrison. My first was OO and turned into an investment because I didn't want to bother with all the selling that had to go into it. Good thing...cash flows very well and is paid for.
I saved for the next two and am doing so for the next (4th). I didn't buy anything this year and it's all about finding the right one rather than keeping a running number, "oh I bought one per month or one per year". I found several this year but the numbers didn't work for me that would make me feel comfortable doing the deal. Also, I find that it takes time to put in place those things that will assist with future purchasing. I recently closed on a HELOC (home equity line of credit) that is waiting for me to use. That took 1.5 to 2 months to complete and it was seamless. I found a great local bank to work with.
Save, save, save as much as you can and work on your credit. You may also want to buy your own primary first that you can then turn into a rental all the while still saving and looking for another property.
- 10yJohn PowellPro MemberReal Estate Agent · Kennesaw, GA · Member since 2015 · 308 posts · 153 votes
So I don't have to reach too far back for how I got started. I bought my first house at retail on a VA loan with nothing down. 5 years later after getting completely out of debt (except the house) we found ourselves saving over $1000/mo and figured we could do something better with the money. We drove past an ugly foreclosure in our neighborhood everyday for almost. We finally bought that house at 50% of ARV did about 30K of work. We did this with a construction loan from a local bank (no money down but we had about 13K in savings and 40K in retirement as assets, good credit and a W-2 job) We got a conventional loan to take out the construction loan out, again with no money down due to the loan being about 68% LTV. About 6 months later I went back and took out a HELOC to buy an additional property. They gave me a 55K HELOC I added this to my own savings about 20K and bought two fixer uppers. One is now fully renovated and rented the other is a live in flip with a partner. I'm now looking into refinancing the rental so I can go do it again. It was a slow start but now it is moving at a quicker pace.
Wife and I just purchased our first home, so its back to saving for my goal to break into long term REI. We've been putting away about $3,000 a month the last 5 months (also paying down some student loans). I want a minimum of $10k for surprises and emergencies on the property and I'll likely need 25% to put down so we're gonna look for deals under $150k hopefully within the next year. When we bought our home we were approved for $550k but went with a home that was $400k so I assume we could get the bank to lend us another $100k for this first rental property. With rates as low as they are I think this is probably our best option.
My youngest brother is actually going to be going away to school about an hour away and thinking about living on campus. I've considered getting a place near that school, letting him live there free and picking up some roomates. He can be my live in property manager and keep everyone in line.. and he knows if he slacks off his a$$ is OUT!
- Interior Decorator · Orlando, FL · Member since 2015 · 17 posts · 2 votes10y
Originally posted by @Daria B.:
I would echo @Michael Boyerand@Kevin Harrison. My first was OO and turned into an investment because I didn't want to bother with all the selling that had to go into it. Good thing...cash flows very well and is paid for.
I saved for the next two and am doing so for the next (4th). I didn't buy anything this year and it's all about finding the right one rather than keeping a running number, "oh I bought one per month or one per year". I found several this year but the numbers didn't work for me that would make me feel comfortable doing the deal. Also, I find that it takes time to put in place those things that will assist with future purchasing. I recently closed on a HELOC (home equity line of credit) that is waiting for me to use. That took 1.5 to 2 months to complete and it was seamless. I found a great local bank to work with.
Save, save, save as much as you can and work on your credit. You may also want to buy your own primary first that you can then turn into a rental all the while still saving and looking for another property.
Congrats on all your progress thusfar here in Florida as we are fairly close! Thanks for the good tips that I will keep in mind, I agree with you also I have now officially set saving goals. My plan right now is to keep learning and start networking, as I save so I will have something just in case I need to invest some money..
- Investor · Saint Paul, MN · Member since 2015 · 663 posts · 512 votes10yI started a handy man business along with my full time job, plus we had some investments do quite well on mutual funds so we were able to put 25% DP on a duplex in a great neighborhood and we cash flow $700 a month on that property. Hard work and saving money is the only way I know.
- Rental Property Investor · North Little Rock, AR · Member since 2014 · 148 posts · 43 votes10yChristian Benitez I used my self-directed 401K to purchase my first REI for 12.5K.
- Investor · Bronx, NY · Member since 2014 · 66 posts · 25 votes10y
Christian I took a loan of 5k out of my 401k for the down payment on my primary, 6% seller consession so the closing cost will be rolled in the loan with 4% interest rate. As soon as I close on my primary I will purchase a duplex for $90k with 20% down, I will borrow the down payment plus closing from my personal bank and get the other 80% on a 30 year fixed loan so that is like a perfect example of no money out of pocket. Thanks to the BP rental property calculator I know i will cash flow and i will cash flow even more when the 20% i borrowed get paid off. Hope this help and I recommend reading Brandon book on the no low money down its a perfect book for your question.And another thing I suggest is try to square away your credit because it makes your life a little easier when you have good credit, think about you can get what ever you want with good credit
I saved up money from my job. We put 12k down on our first O.O. Duplex. We also had some other cash in savings.(Emergency fund) Wife and I are both frugal. Hardly made any money (-30k a year) and still managed to save almost 20k in the first year and a half of marriage.
However it was easy for us cuz we had NO personal debt. I paid my way through collage and we never took on any other debt.
Now after owning a few properties we have been snowballing faster and faster.
- Investor · Cincinnati, OH · Member since 2015 · 21 posts · 6 votes10y
Christian, that is a question I think many people wonder. How do you get the ball rolling? I bought a condo about 6 years ago as a primary residence. I bought it at the right price. I updated the place and sold it for a 20K profit this year. That allowed me to dodge being punished by capital gains tax and walk away with a nice amount to play with. By the end of this year, I will have bought three properties (1 primary, 2 investment properties). However, I have had an unusual amount of success with people not saying NO to seller / creative financing. I haven't closed one due to various reasons, but still. Just make sure you/ your agent/ seller/ seller's agent know(s) what that means. Surprisingly, many selling agents around here have no idea and just assume their seller is not interested. Another interesting observation is that the more expensive the property, the more people seem to be open to it. Best of luck to you!
- Professional Auctioneer · Baltimore, MD · Member since 2015 · 1k+ posts · 1k+ votes10y
Fear of poverty ! I was raised by folks who got paid $7.00 a week for my room and board when I was 7 years old, I saw them work long and hard, he drove a coal truck and she saved and counted pennies in order to buy groceries. I guess fear of poverty was a driving force for me, I knew I didn't want to work that hard and long to earn a living.
Joined the Army in 1959, I was 16 years old. Discharged at age 20 and started reading about real estate. Found a mentor, or he found me, showed me how to make money in real estate by buying really cheap houses in Baltimore at public auction. Learned lots about painting, plumbing, electrical, tenant management and working with my hands while going to public auctions everyday. Couldn't afford to pay contractors, had to learn and do it myself. (don't do that kind of work anymore)
I spent most of my money in the 60's buying tapes (remember tapes) and taking seminars on how to invest in real estate and creative financing. I am glad my wife had a great job, she helped to support my passion for real estate, I believe without her help I would still be working at a job.
My money came from several resources;
#1 The seller, if the seller could not help me buy their property, I couldn't buy their property. Creative real estate was my number one asset for making deals; I had no choice, I had no money, no credit------ but I had a passion and a desire not to be poor.
#2 credit card advances and credit lines later helped me control houses. I didn't know that much about flipping houses, so I just kept them and grew my net worth and built my real estate portfolio. To me, it was like a game or score card, every time I'd get a property I would calculate my net-worth, I liked to watch it grow. And it did using cheap properties purchased at auction.
Fast forward the clock, now at 73 years old, I stopped counting the net-worth thing, too busy doing deals developing commercial properties and helping others as apprentices to do deals. The money now is so much easier to make and accumulate.
Now own my own real estate auction company ----- isn't it great how a goal and a passion for something will materialize if you stick with it.
Charles
- Agriculture - Blackberry Farm Manager · Wilmington, NC · Member since 2015 · 4 posts · 0 votes10y
@Christian Benitez. I have always been fanscinated by real estate since I was a teenager. I am now 29. I own my primary resident and one rental. My primary I did a terrible analysis (trusted the Realtor) than I did on my rental.
Looking back I should have been more patient when looking for my primary but it was a learning curve and still is. First and foremost you gotta have the "drive" and then you got have great analysis to know for sure you will positive cash flow. Both my properties I will have positive cash flow but I should have offered less on my primary, even though the Realtor said it was a good deal. I am not greedy. I paid too much for my primary compared to the other properties around me. When you use a Realtor ask them this one specific question, how did the others sell in the same area? Don't fall for the cosmetics excuses because you can fancify the property yourself when you're in it. Cosmetics in my opinion sell the property faster, not increase the price necessarily on lower end property unless it is a total rehab. I know that is arguementive depending on the area and condition of the home and buyer's pay for convenience for a property that is set up compared to one that needs TLC.
However; you're an investor! You're buying a property NOW, if the numbers from your analysis are good, regardless of what the Realtor says you're offering too low....still offer it! Realtors work off of commission and will get mad when you offer low and say it will back fire so make sure your response is "but they are getting an offer now."
With that to the side, I recommend getting yourself set up for real estate first by improving your credit, cut debt if you have any, do odd end jobs or get a second job to save, be creative about work too such as put yourself up on Craigslist to put up lights for people for Christmas so they don't have to. Someone will have the money and be glad to pay for convenience!! As you're doing that research loans such as FHA or Conventional 97 and learn the pros and cons of all to see what will work best for you and your situation. Learn how to use number analysis and understand it well, know the local market rent rates also what areas are in good school districts, growing, and such. If you see a property listed that looks like a good deal pursue it hard because cheap property in my area sells quick so you gotta have your A-game on!
Also if you have family make sure you still have time for them because hunting down properties is time consuming and can be addicting! Lol
Originally posted by @Account Closed:
Fear of poverty ! I was raised by folks who got paid $7.00 a week for my room and board when I was 7 years old, I saw them work long and hard, he drove a coal truck and she saved and counted pennies in order to buy groceries. I guess fear of poverty was a driving force for me, I knew I didn't want to work that hard and long to earn a living.
Joined the Army in 1959, I was 16 years old. Discharged at age 20 and started reading about real estate. Found a mentor, or he found me, showed me how to make money in real estate by buying really cheap houses in Baltimore at public auction. Learned lots about painting, plumbing, electrical, tenant management and working with my hands while going to public auctions everyday. Couldn't afford to pay contractors, had to learn and do it myself. (don't do that kind of work anymore)
I spent most of my money in the 60's buying tapes (remember tapes) and taking seminars on how to invest in real estate and creative financing. I am glad my wife had a great job, she helped to support my passion for real estate, I believe without her help I would still be working at a job.
My money came from several resources;
#1 The seller, if the seller could not help me buy their property, I couldn't buy their property. Creative real estate was my number one asset for making deals; I had no choice, I had no money, no credit------ but I had a passion and a desire not to be poor.
#2 credit card advances and credit lines later helped me control houses. I didn't know that much about flipping houses, so I just kept them and grew my net worth and built my real estate portfolio. To me, it was like a game or score card, every time I'd get a property I would calculate my net-worth, I liked to watch it grow. And it did using cheap properties purchased at auction.
Fast forward the clock, now at 73 years old, I stopped counting the net-worth thing, too busy doing deals developing commercial properties and helping others as apprentices to do deals. The money now is so much easier to make and accumulate.
Now own my own real estate auction company ----- isn't it great how a goal and a passion for something will materialize if you stick with it.
Charles
Thanks for sharing Charles you have a great work ethic. Do you have a clone where I live :). Seriously, it's great reading stories of others who made it how you did. Lots of hard work and learning on your own makes for more of an appreciation when others have to do that work. And you are a step ahead because you know what they have to do because you have done it yourself. Congrats on your life long success.
- Professional Auctioneer · Baltimore, MD · Member since 2015 · 1k+ posts · 1k+ votes10y
Thanks for sharing Charles you have a great work ethic. Do you have a clone where I live :). Seriously, it's great reading stories of others who made it how you did. Lots of hard work and learning on your own makes for more of an appreciation when others have to do that work. And you are a step ahead because you know what they have to do because you have done it yourself. Congrats on your life long success.
Thanks for the kind words....
Well, yes, I am glad you asked that question, in fact with the most recent development that made medical history, I am honored to say YES, I did go through, even at age 73, the not so painful process of cloning.
When I started in this business, the most exciting electronic device I purchased when they came popular is a pager, I had to use pay phones and actually mail letters, look up property owners in person at the court house, go to the copy center, and drop off film at the local photo-mat and wait a week to get my pictures. Wow, how things have changed.
Today, with everything at your finger tips, doing deals in this wonderful electronic society is easier, quicker and more profitable.
So the cloning comes in with the great tools we have - flight, text, fax, cell phones, computers, hired help, the internet and credit cards.
So with the help of all these great devices.......cloning is now possible.
I am your clone, at your disposal, how can I serve you?
Charles
- Wholesaler · Culver City, CA · Member since 2015 · 185 posts · 56 votes10y
Originally posted by @Kevin Harrison:
My wife and I bought our first 2 homes OO so she got the first one $0 down with a first time home buyers credit and we bought out second $0 with a Va loan when I got out of the army. Now the first home is a rental and we are looking at buying our third with a down payment here in the next couple of months. The home we live in now will become a great Class A rental when we are done with it but for right now we are putting tile in the basement and preparing to house hack it.
Newbie here. Lots of acronyms being thrown around. What does "OO" mean? Thanks man!
- Rental Property Investor · Columbus, OH · Member since 2015 · 344 posts · 258 votes10y
@Andy Cross, OO means owner-occupant, I believe!
@Christian Benitez, financing is something I'm thinking about heavily, as I'm trying to keep my up front capital as low as possible. One route I'm considering is an FHA 203k loan, which essentially allows you to roll rehab costs into the total mortgage, while still keeping down payment low (3.5%). There are some guidelines with this program so definitely take a more in-depth look. Just thought I'd throw it out there!
- When I decided I wanted to buy rental property back in 2002 I knew I needed to save some cash for a down payment. I made a difficult decision at 26 years old to move back in with my parents to save up. In one year with I was able to save about $30k and in March 2003 bought my first single family rental with 5% down. I stayed at my parents for another year and did not move out until I had acquired 4 rentals all acquired with 5% down. I continued to buy properties as for the next several years but I always had roommates helping covering the mortgage on the house I lived in so I could continue to save down payment money. Fast forward to today and I still own them all. I enjoy nice cash flow and equity. I still buy rentals but fewer and farther in between as I like to pay cash or use equity loans. The take away is to make sacrifices in order to get the first couple deals...it may take time and be uncomfortable...but it's worth it.
- Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes10y
First few properties I put 20% down cash. Conventional loans. I was literally high on the whole process of owning rentals. I wanted many more from day one.
After loan #4 I was hung up. Went directly to a portfolio lender and created a relationship. Deposited money in the bank, started visiting with them, sending the see's candy and created financials of my existing properties and what my goals were. During this period wife and I had good DAY JOBS, we were stable and had a few other assets like invest accounts that we used for the required reserves. The bank gave me a line of credit to buy, rehab and then refinance small homes with them into individual portfolio loans.... I accumulated around 10 portfolio loans with them in a period of 3 years....and then they cut me off. I jump to a another lender accumulated more loans and also accumulated seller carry loans and then pooled in a bunch of properties into a commercial loan...
In a nutshell these are my personal thoughts...
Everyday we need to turn rocks over looking for deals and banks. When 10 doors close we need to kick open another 50. We need to master overcoming objection and realize that banks and seller and buyer and people are crazy and confusing.
We need a good sounding board, team of people, solid spouse and strong mind to get through the accumulation mode of buy properties and controlling property. When we don't we will fail.
Real estate debt is this special power. Yeah sounds little out there but lets study it. We study it, understand it, respect it and learn what players have done with it. If we don't we will always be a spectator.
Owning property is much more interesting than flipping.
Keep the momentum.
Frank - Lender · Fort Lauderdale, FL · Member since 2015 · 117 posts · 22 votes10y
Hello @Christian Benitez We are a HM lender that have been working with newbies fund their Real Estate Deals for over 25 years. I'm gonna message you with my contact information.
- Investor · Austin, TX · Member since 2013 · 443 posts · 174 votes10y
Unfortunately you need at least some money to get involved in buying real estate. If you have plenty of time and no money you can knock on doors and wholesale a deal or find a motivated seller to get creative. In my opinion this is possible but hard because of the learning curve.
Personally I already had a good source of income from my job so I decided just to work hard and save money. Once you have a portion or money saved you can buy a multifamily property and house hack cutting down your expenses even more. Once you live there a year you will have enough saved for a new owner occupied multi. Rinse and repeat a few years until you have a few multis and then use that cashflow to buy even more.
Getting rich is not an overnight thing but it is very easy in america to get rich over 5 years with patience, hard work and diligence.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes10y
Became an agent in real estate business 12 years ago and a principal broker and owner today.
The income from transactions helps to have cash to do further deals. If you are in a job that makes 36,000 a year and you barely get by etc. then growing money is very tough versus a profession making hundreds of thousands a year or more.
Sales professions are some of the highest income earners in the world but not everyone is good at it. For those that are the sky is the limit!
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Real estate agent made enough money to actually save money to I could be an investor. and buying BAy ARea OO homes from 1975 to 2001 sure did not hurt LOL.
- Investor · Oak Park, IL · Member since 2014 · 316 posts · 150 votes10y
Back in 1985 when I was single I sold my coin collection for the $7000 down I needed for a small $52,000 2-unit in Chicago's Wicker Park, through a realtor. I amassed the small coin collection in part by finding silver dimes and quarters still in circulation when I was a kid. I even parted with a 1921 silver dollar worth about $10 my grandmother had given me. It had some sentimental value, but I looked it as giving Grandma a little chance to be part of my success. It was a pretty good deal, but not great at the time. It lead to me buying the house next door from the neighbor for $38,000 and a similar one 3 doors down for $67,000 on an assumable loan. I needed to save every dollar from my job, buying only basic essentials to buy the first property.
- Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes10y
@Christian Benitez this is a good question that gets overlooked. I started off with doing something called "covered puts and calls" in the stock market. Prior to the dotcom bust, I worked for a large tech company, not a dotcom company, but one that actually made silicon chips. I was eligible for an employee stock purchase plan and bought as much as I could. The key to the stock market is to know the market of the companies you invest in and also know the company that you invest in. Being a low level marketing guy, I knew both sides of the equation for the specific company I was working at and the market we competed in. So I implemented the covered put and call strategy, only on this one company, and made money while the market went up AND down. My goal at the time was to build a large enough "war chest" so I could get into real estate and be effective. It was very dangerous to put all of my eggs in one basket. However, I felt that I had a deep understanding of the market, the competitors, the products and the company I was invested in to make the right decisions. With this strategy the velocity at which you make or potentially loose money is much higher then most other strategies. But being in a "covered" position gave me some protection. I knew I needed rapid accumulation of cash to get to my next level of my personal plan; investing in real estate. It was a "go big or go home" type of play for me that lasted a few years. I would not recommend it to somebody that is considering this strategy in passing. A deep and specific knowledge of the market and players is required. I knew ALL of the players in this space: where they made their products, their core customers, their technologies, etc, so I could make very well informed decisions.
From that point, I was like many people on BP and did several OO purchases and finally got into long term buy and hold properties.
I wish you the best of luck!
-Arlen
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