First deal ever...any advice?

[Jason Port]

OK, I recently got into the business...and when I say recently, I mean like 2 months ago. I haven't put a deal together yet but, I was wondering if any of you guys could tell me what you think the most important first step would be. I want to do rehab but, is this the easiest/ most profitable way to begin? I have a numerous amount of questions but, not so many answers.
How did all of you get your start? What steps should I take? I was actually having a few funding issues...great score around 760 but, the income to debt ratio is throwing me off. I'm having a business plan put together with a 5 year projection. I'm trying anything I can think of to get in a better situation as my family is counting on me. Any help would be GREATLY appreciated.
Another thought...should I maybe seek a lender/partner that I could offer 50% of my profit to just to get started? Thanks so much to anyone that responds.

Jason

[Jaremy Moritz]

Jason,

Welcome to BP. I am also new to the forum but I've done a bunch of wholesale and rehab deals since 2001.

I would suggest that you stick to wholesaling for the first year or so. And by wholesaling, I mean focusing entirely on finding deals and finding cash buyers to assign them to. Being new, focus on what will get you paid the fastest with the least amount of risk and the shortest learning curve. There is much to learn in this business.

I know from personal experience that you don't want to learn "on the job". I lost thousands and thousands of dollars my first few years by doing rehabs and not wholesaling. I had a few investors tell me not to rehab my deals but to wholesale them. I was opposed to wholesaling because I thought I was leaving so much money on the table. Boy, was I wrong.

One deal in particular, I had a cash offer $10K higher than my contract purchase price. I thought I could make $40K by doing the rehab and selling it retail. So I closed on it, rehabbed it, and didn't even come close to making what I could have made wholesaling it. I didn't analyze the deal correctly - the comps I used were good comps but I didn't adjust for the house across the street from mine (rental in an otherwise all owner-occupied neighborhood). Comps all sold within 60 DOM but my "so called" home run deal sat on the market for 15 months before I got it sold. After 6 price drops, 2 different realtors, and 4 contracts fell through, I made about $600 on the deal. I was partnered with family members because they had the cash and I had the "knowledge". My lack of experience cost me $9400 and a LOT of sleep. That was a tough one to get past. I made one mistake and it cost me a fortune. I had never even heard of "adjusting" value on a property.

Wholesaling is a low risk, high reward way for new and seasoned investors alike to make quick bunches of cash. Please take a minute and think of how much stress a situation like mine could cause you and your family. Learn from my mistakes and the mistakes of others. You can take the easy way or be like me and take the hard and expensive way. I hope you are smarter than I was. :)

Another benefit to wholesaling when you are new is that if you become friends with your buyers, you can learn from them on the deals that you sold them. I've had quite a few new investors spend time on my houses during the rehabs (the ones they sold me) learning what all goes in to it. Watching and learning for free is so much better than learning and losing money on your own deals. Many of the new investors I mentioned are still just wholesaling because it is so much easier and less stressful. Watch a bunch of your deals from start to finish, learn what worked and what didn't, and then decide whether or not rehabbing is right for you.

Whatever route you decide, I wish you the best of luck. Just thought I'd add my $.02 to this discussion. I would hate to see you struggle given your current situation.

Jaremy