Well let me de-lurk and use my first post here at BP to fuss. I really wish all the people here scolding her to get her financial house in order would find a more productive use of their time.
Maybe you all missed it. She IS trying to get her financial life in order by working extra hours to make more money. Isn’t that something we should encourage rather than dump all over?
You can start with no money. As Robert Kiyosaki himself said of people starting with no money, “That’s OK, you’re not supposed to use your money anyway.”
@Sheila Campbell
Ignore the nay sayers, you CAN get started with zero money down, ethically and morally. I know because I’ve done it and I made $140,000 my first year. (Disclosure: a large part of that was luck but I always say, “The harder I work, the luckier I get.”)
But let me back up.
Before I made a penny, I took 6 mos to learn the trade. If you’re watching TV you’re doing it wrong. Listen to a podcast or 50… or 150. BP has a fine podcast. Being a small businessman, I like the Invest Florida podcast. Even if you don’t invest in Florida, they are two commercial brokers and they are great. For the first (I dunno) 50 shows of theirs I listened to I learned at least one very cool thing from every show. There are tons of other good podcasts too. And listen to shows even if you aren’t interested in that asset class. I listened to all the Mobile Home investors. I learned a lot I could apply to Bricks and Sticks. Fast forward a few years and I’m negotiating a 40 unit apartment deal and when I ask the guy why he’s selling, it turns out he’s got dozens of MH parks and “hates apartments and just wants to get rid of it.” – My understanding his market gave me cred and he offered 6% owner financing without my asking. Repeat after me, “The harder I work the luckier I get.”
As you listen to podcasts you’ll hear a whole bunch of words you’ve never heard before. That’s why we have search engines. Don’t know what a Cap Rate is? Search it up. Your education is the most important thing you have. You’re entering a world with lots of zeros. You CAN make a $40,000 mistake. So let’s agree right now you should learn not how not to.
Oh, and read some books, “Rich Dad Poor Dad” is a great first step.
But at some point the “Death by podcast” era must end and action must begin or you just wasted 6 mos of your life. So let’s talk about your next steps….
But before we do, and while I’m annoying people, let’s me say one more thing. Real Estate “Investing” is a misnomer. We’re not investors, we’re dealers. In fact, real estate is a poor “investment” that’s why you use other people’s money.
(I’ll repeat) As Robert Kiyosaki himself said of investing with no money: “That’s OK, you’re not supposed to use your money anyway.”
Sheila, you’re not learning ‘investing’ you’re learning how to start and run a business. A business that buys and sells (and possibly rents) real estate. You wouldn’t open a restaurant if you couldn’t cook. You can’t run a real estate business unless you know real estate. ‘Nuff said.
OK so let’s start making money.
And here’s where your work begins. I’m not going to talk to you like a newbie. I’m going to talk to you like you’ve been studying at least 3 months. If you don’t follow everything I say, THAT’S GREAT. You now know what you don’t know.
The First Rule of Real Estate. You make money on the buy. PERIOD. If you buy it wrong you have very very few options. Which leads us to…
The Second Rule of Real Estate. There is one reason and only one reason a house does not sell. Price. If you price a house cheap enough you can sell it in minutes.
The key to starting with no money is getting your first deal. Then you have money. (and experience) As part of your education, you’ll learn how to buy houses $20,000 or more below market value. (no really we can all do it) Buy it low and sell at market value. - Notice I didn’t say "buy low sell high," because with a few exceptions that’s impossible. You buy low and sell at 100% of value.
You can start by wholesaling, which is assigning contracts to the final buyer. Or you can do a concurrent close.
Let me walk you thru my first deal.
I found a distressed seller thru a referral. (offered the guy $500 if I bought the house) The seller made good money but it was his deceased dad’s house and he lived 3 states away. (very common way to buy houses) He wanted it gone and didn’t want the hassle of selling it.
I communicated via email as he was out of the country. I had walked the unoccupied house several times and had a friend who was good at inspecting houses look at it with me. THEN I DEVELOPED A BUSINESS PLAN FOR THE HOUSE.
That’s the magic step that we all do but we few people describe it that way. In short I figured out how much a buyer would need to invest and what they could make.
The seller came back in the country on a Monday and told me he would sell it at my number. We set up an appointment for Wed to sign the deal. I IMMEDIATELY dropped this ad on Craigslist:
=== Legit Wholesale Deal for Legit Flipper (general Location) ===
This is a legit deal no B.S., I am driving 400 miles Wednesday to get a house under contract. It’s in –this area- walkable to a major employer. It needs about $10,000 in repairs just make it livable. And maybe $20,000 to make a make it rentable.
Here’s how I see the numbers:
Flip:
Buy it for $60,000 drop $30,000 into it. ARV is $110,00 easy and $120 if you get a bit of luck. Maybe a true ARV is $115. Bottom line you're making 20-$30,000 for a flip.
Buy and hold:
Buy for $60,000 drop $20K into it and rent for $900 to 1000. If you put put $30K into it you cold probably get $1100+ a month.
Personally, I think it’s a better flip but if you buy and hold it’s a decent deal.
Legit cash wholesale cash buyers only , this is not for sale to retail buyers.
-- end ad –
That day I got 2 calls. One guy was a joke the other legit. He asked for the address. I chuckled. I gave him everything I knew about the house except the exact address. He told me if the house was as described, he wanted it.
Wednesday morning I drove 200 miles, got the house under contract and started home. I called my buyer from the car, told him the address and set a 3pm appointment.
We walked the house, he agreed I described it fairly and told me he actually did rent to own. But my numbers helped in that space too. We had a handshake that I would not advertise it until the next day at noon. (I had already taken the ad down.)
At about 10:30am he called and said he looked at comps, my numbers were fair and he wanted the house.
So to review, I ‘bought’ it on Wednesday for $30,000 and sold it in less than 24 hours for $60,000.
Notice other than gas money to drive 400 miles I have not a penny out my pocket.
We did a double close or a concurrent close. You’ll have to learn that on your own but suffice it to say, I walked into the closing company with no money in my pocket and walked out with a check for well over $27,000.
It’s important to realize here, if I had the cash, it would be a nice rental. Or if I rehabbed it myself I coulda made $60,000. But I gave up the home run to make a VERY HEALTHY payday for about 10 hours of work total. Where else can you work 10 hours and make $30,000 with no money out of pocket?
I also could have retailed it and made more money. Or tied to squeeze an extra 10 grand out a rehabber. But I had a 60 day close and I didn’t have $30,000 in my pocket to buy it if I could not retail it in time. So, again, I traded money for speed of transaction. See second rule of real estate above. I left him a nice payday so I sold it in hours.
Now consider this: If you could –only- find ONE DEAL PER YEAR like this would $30,000 a year help you out? What if you could find two per year? Even including closing costs and referral fees, that’s $54,000 a year. Extra. Part Time.
Shelia, the above can change your life.
Now it’s up to you to DO IT!
