Happy Thanksgiving! Am I on track to have a better one in 2016??

Question

Hi All,A couple of weeks ago I had it in my head that I was going to break into real estate by wholesailing.I met someone from Biggerpockets and the jist of our conversations was as follows:BP Member: Why do you want to be a wholesailer?Me: so that I can make enough money to get into apartments and commercial real estate.BP Member: Why waste your time doing wholesailing when that isn't what you really want to do?Me: "light bulb goes on" damn you...After thinking about it, he was completely right, so here I am and hopefully someone at BP can shed some light on the below:I am at the point where if I don't take some action, and do it I am going to be that guy who is 50 who never did anything in real estate but is still looking for the first deal...I went on LoopNet and Redfin, started finding 5+ units for sale. I reached out to several of the listing brokers and said "I will make an offer provided I get to have a sit down with the seller"I have 3 of these meetings next week, and my goal is to get a multi family property with seller financing and as little money down as possible.Is this where you would start?What do I ask the sellers?What docs / paperwork do I ask to see?How do I structure this?What terms should I be prepared to offer?Is there anything I can do / say / ask to better setup for me to get a yes?thank you BP and sorry for the longevity of this post.Cheers and Happy thanksgiving,Rob

Joel Owens · Answer

Ron that kind of thing was more prevalent 3 to 5 years ago. Owners were tired of issues and willing to owner finance investment properties.Today anything that is a deal is getting tons of offers on it. If you get owner finance do not get a personal guarantee. You will end up dealing with a dog and working for free trapped in a mountain of debt you cannot get under from. The seller will watch you do countless work on the property only to take it away when you can't perform because you overpaid for the property when you got it.Owner financing is great IF the terms and price is right. 90% of the time it is not. If the seller has a listing broker you will need some money. If the seller is getting cash flow per month on a performing property they are generally looking for 10 to 20% down. They have to replace their cash flow plus pay for closing costs and the brokers commission at the sale ( owner finance ).You ask WHY would you do that when you could get bank financing? The reality is many investors might have come into some cash but they do not qualify for a conventional loan with the banks underwriting. An owner can look at cash down for security and possibly overlook the other problems to do a deal as they are not regulated by the feds and state like the banks are. The state you are located in might have a lengthy and expensive process to foreclose and get the property back if you do not perform. That versus a state where it costs very little and is a relatively quick process. That will factor into an owners decision whether to owner finance or not.Not trying to bust your bubble just keeping things real for where we are at in the cycle right now. If this property was not marketed for sale then maybe a better chance for you to get your terms. If multiple buyers the chances are weak of owner finance happening.If you have no money, no credit, no experience it will be very tough to get going. This is why some do wholesaling to build capital so they can have a jumping off platform. Same thing with getting a real estate license. Those sales can help build cash fast with big pops at a time.

Joel Owens · Answer

Go work for an investor in the same niche you are interested in. Learn the ropes and build up money and then ask them to partner with you on a deal to get you started.Make credit from okay to excellent and start paying off high interest cards. Only take on debt when it is to make you a higher return versus what you are taking on.Example: A property you bought correctly you get a mortgage on increases with value and each payment reduces your leftover balance.With a car the exact opposite is happening. You have a high payment and even with a zero interest loan you are paying into a declining asset. Just as you get the car paid off you have to pay a lot of money to keep it going or buy a new car and create a payment again. If you play within the systems rules it keeps people poor their whole life. You only take money when it's to your advantage and lend it out to make the return.

Rob Krach · Answer

@Joel Owens,I appreciate the comment.Without a license, not much money and okay credit how would you get started in multi family property investing?thanks,Rob

Rico S. · Answer

Im am with you. You are def ahead of me by setting those meetings but I too am trying to break in. Why do you want to start at 5 plus units? have you done any flips before?I am just asking and still trying to learn. I believe that we can still learn from anyone no matter the level of experience. It seems like you are in a position to close on a deal. What are you criterias? Have you considered a house hack? I know its random but I love to learn and discuss RE.Thank you, Rico @Rob Krach