All Forum Posts by: Leland Barrow

You are entering a strong market with limited inventory, and a lot of buyers. Finding good deals is not going to be easy. Even some of the wholesale deals in Austin are sketch. You can do your own off market marketing, or you can look at smaller towns around Austin, or you can shop for decent wholesale deals. Just beware a lot of the wholesale deals in Austin are not for first time investors. Those properties may need a lot of work. You need to really analyze deals, bounce them off of other investors, and know what you are getting into. If you are a newer investor I would suggest looking at Killeen, Waco, or Temple. At least the school of hard knox in those areas will not break the bank. Austin is a bit more of the big leagues and requires more experience, knowledge, and a good network. Just my personal advice.

Welcome to BP. I am a resident bubble buster but it is out of love and kindness. First let me say that you can accomplish all of your goals, and fairly quickly. However, it will not be easy. 

Establish better credit; get your credit cleaned up. It is a fairly simple process it is just time consuming. Having good credit will mean paying less when using other people's money.

Save more: leveraging is fine but in your situation I would suggest buckling down on savings. There is only two issues if you are not saving fast enough. One, you lacking the self discipline or two you do not have a big enough shovel. Taking part time jobs can accelerate savings, saving in itself can help create that self discipline.

I see a lot of posts from people that are in a hurry because they feel that they are behind. Although life is a bit of a competition to see who is the best at helping others with their resources, it is not a race. You can make more with one great deal that you use a combination of creativity, blood, and sweat than many people can make in ten deals. The idea is to have all of the pieces in place so that when you see an opportunity you can jump on it. Having 20% down, decent credit, and a lot of smart people around you is the ingredients to baking this cake.

If you read the posts on here and get discouraged....don't! Everyone is different, there are millionaires on this site under 29 and there are millionaires that made their money in their fifties. Age and money have no bearing a person's level of success. Keeping score in true success is by how many people you have helped achieve their goals in life. What are your goals in REI? If it is too make money than success will be a long tough road. If it is to help change other people's lives for the better then success will tag along for the ride like a lost puppy.

Knowing why you truly want to invest in real estate, will help you more than finding a cheap lender.  Easy answers are usually the answers that get people into trouble. These are just my personal opinions and generalizations.  

I second the Dave Ramsey name drop. I have purchased his book The Total Money Makeover for several friends and family. Those that follow his advice usually end up doing very well. I can sum it up in a few simple steps that are tried and proven.

1. Budget, if you cannot master a household budget then how can you possibly manage a business budget. Budgeting also helps you improve self discipline and teaches you how to set and attain your goals.

2. Have no personal debt. Personal debt will hold you back. I know this can be accomplished because I have done it and continue to do it. I have seen several other families do it also.

3. If it is not an asset really think twice before spending money on it. The funny thing about food is in less than a day it turns to crap. Yet people will spend 30% of their household budget eating themselves to death. Food is just one example, electronics, clothes, and all of that other stuff is nonsense. I am a proud thrift store junkie by choice and lifestyle. My point is that a persons lifestyle determines how successful they will be at building wealth. The richest man I have known wore worn out jeans and drove a truck that had a broken A/C, and more rust than paint. He also paid cash for his kids to attend Ivy League schools. Lifestyle determines if you will build legacy wealth.

As for paying off a house before investing in real estate that is your choice. Paying it off is suggested but not required if you follow the program. As RK says in Rich Dad Poor Dad, a person is wealthy at the point their monthly passive cash flow equals their monthly expenses. You can attack that equation by increasing your passive cash flow or decreasing your household expenses. If you carry a $2,500 per month mortgage payment then you will need that same amount in passive cash flow to offset it. That could be 13 x $200 doors. That is a lot of doors, when you could just throw every extra dollar at paying off the house in a few years. My personal opinion is that you would have more success retiring at 45 if you have a paid off mortgage. 

If you have leveraged a lot of debt to increase your cash flow then you have assumed more risk. How can you be confident that the markets will not change and force you back into the work force? An older you that has aged out of being a high demand employee? If you have a paid off mortgage it does not matter what the market does. With no debt and no mortgage then money becomes monopoly money, you can go play the game worry free and focus on winning. 

Just my 2 cents.

I think the best first start is to use the search function and start doing research. There is a wealth of information on BP. Once you have educated yourself then you can write down a plan of action and ask for BP to review it. You can drill down and ask specific questions after that. 1. Research BP 2. Write a simple plan and ask for it to be reviewed 3. Drill down with specific questions With 1,2, and 3 done you will go from fool (your word) to amateur.

Not to derail a thread, that is not my attention. I am just addressing other comments. I am open to partnering with the right out of state investor(s) in the San Antonio, Austin, and even Houston area. I manage and provide support capital. Out of state provides primary capital. Strategic decisions are made together, implementation, I handle. Quality not quantity 60-175k purchase price. Only looking for a few deals this year. As for the OPs original question I would setup keyword updates. The Houston people on BP are very active and throw out market updates from time to time.

The term creative financing gets peoples hopes up that anything can be done. Technically that may be true but in the real world there is cost benefit analysis. Buying a property for appreciation is speculation. Very intelligent people make a lot of money at speculation and very intelligent people lose a lot of money at speculation. Speculating is not being a savvy investor. Savvy investors "buy" right. All great deals are at the time of purchase not the sell. I would suggest not speculating. If it is not a "great" deal then why are you trying so hard to leverage it? There are always deals and there is always great deals. You just have to polish a few rocks before you find a diamond. The best thing you can do is save money. Know your market, if the average house is 100k then get hell bent on saving that 20k. Deliver pizza if you have to. This will help you budget and help you develop self discipline. After you buy your first investment then save 20k again. The brrrr method is fine in a perfect market, for every other market its SBR. Save Buy Repeat. Usually the hardest road is the best road, shortcuts, and trespassing is how people get in trouble.

That would probably be a LOC not a HELOC. You may find it easier to go with whoever is in first position. If you own it outright then try a local bank. You may have to make a lot of phone calls before you find the right lender. A cash out refinance can be another option.

You need to find a wholesale deal first. Some say to find buyers first, but it is one of those "if you build it they will come" deals. Once you have a good deal that is not taking advantage of anyone, then you post it on craigslist and BP with your Pro membership capabilities. You will quickly get a list a buyers from which you can put together an email list. You can research your buyers to find out who is legit and who will quit through LinkedIn, Facebook, BP etc. Once you have a quality buyers list now you can pour money into marketing and find more deals that are ethical and shop them to your buyers. If you are talking about emails from other wholesalers as the "sellers" email then you need to crawl craigslist, BP etc for wholesalers and email them. They are the ones with the houses in warzones. The pictures are low quality because they are afraid to get out of the car. The houses have bars on the window and their craigslist add looks like a ten year old went crazy with happy math. 159k ARV for only 65k and 5k in rehab costs...that kind of stuff. Their is no such thing as an email list for home sellers that entertain wholesalers. That is why you market to them using yellow letters. If that answered your question then please forward my Guru fees...lol.

All it would take is one non profit that focuses on recouping home seller losses and the wholesaling system would collapse. These large players that use wholesalers with assignable contracts should be careful. Regulatory agencies will have no pity for what can easily be spun as predatory practices. Contracts that are entered into illegally or even with the perception of being illegal can be unwound or given compensation in court. The companies with the most risk are the bigger REI. Wholesalers do not have much in assets but the rehabber may. The problem with wholesaling is that it may not be a mutually beneficial transaction. Separating poor or ignorant people from large sums of equity or capital because of ignorance is hardly ethical. An ethical buyer runs the numbers based on the market and gives their best offer based on having enough meat on the bone to be profitable. Wholesalers on the other hand are looking to maximize on a persons ignorance to get as big of a discount as possible and acting as quasi broker. The sheer volume of wholesaling being done is going to attract regulation. Defending business practices in court that are discriminatory and predatory from design, marketing, and through assigning is not something I would want to do. But hey...to each their own. Most ethical REI know the difference between a REO property or educated owner and those that are uneducated. Sooner or later someone will go to jail and someone else will be paying a judgement on a house they sold four years ago. They will also blame the system for over regulating....

I am also a Dave Ramsey advocate. Paying debt while trying to build wealth is difficult. Deliver pizza, eat rice and beans, and throw every dollar at the student loans. I live a debt free life except for business debt and I would not do it any differently. The most important part is not just learning how to budget but mastering budgeting. You could knock out the student loans in 1-2 years if you FOCUS on them. Why pay all of that interest and waste 3-4 years of that income. After those are done then go nuts on saving for a down payment on a property. House hacking is a great start. You could be in your early thirties with no debt except business debt and really saving for business opportunities. By 40 you could have 1000 properties. Personal debt is bad, business debt is fine if used wisely. While building your portfolio find a primary residence and pay it off. A wise man said that wealth starts when passive income equals monthly expenses. Attacking that simple equation from both sides leads to quicker success. A lot of advice will be to borrow, borrow, borrow...that is dangerous advice.