100k in a year....motivation for others

[dmharp]

which investors out there made 100k their 1st year investing?

tell your story , how did you do it ?

what then was your focuse and goals for year #2?


if you could start over again would you do anything diffrent?

[DeeinAustin]

Seems like you'd get more response if you just asked investors for their success stories, some of which are already posted.

Not many investors immediately make $100k in their first year, but they grow their business to where they're profitable. Most times, your first year is getting your feet wet and doing small deals.

If the point of the post is to see who made $100k their first year, you may not get much response. If your post is to inspire other investors by hearing success stories from beginning investors and what they learned, that's a different approach.

[MarkieMark]

Hey, I will at least share my first flip experience with you.

Purchased town home for $41,000
Spent 6-weeks renovating property, doing a majority of the work.
Spent a total of $16,000 in repair costs
Sold and closed 8-weeks later
Total time spent from start to sale 14-weeks.
Sold for $87,500

You can figure the number out...
Do remove a 5% sale commission, a title policy of $650, and a home insurance policy for the buyer of $350.

Let me know what you come up with...

[Tien]

It wasn't all peach and roses for me when I started out.


Way back my first deal I lost about 14 000 which set me far far back.

I don't think you will find many investors pounding away 100 grand the first year unless
they are really talented.

The rest of us have to haul our way through all the blood and mud to get where we are
today.

[dmharp]

good point Dee.
yea i was trying to get others to share their investing stories to motivate myself and others

Mark congrads on you first flip and hopfully many more.
 
as for my story .

rehabbed 7 houses in the last 3 years . averaged about 20k profit per house . as well some other contracting work .
i wouldnt do anything difrent , i have learned so much in the past couple years working on these houses .
 now i am learning all i can about creative RE investing , i can not say enough about this web site , it has been so helpful in that process..    one thing i am wondering is , how is this houseing market goin to affect the investing business?  

[MarkieMark]

On the housing market, I think it depends on your location. For instance California, Florida, Las Vegas, Phoenix markets one should be cautious. These are a few markets I think will re-adjust down in price over the next 2-3 years.

As for Texas the DFW area I just feel one needs to estimate the repair costs carefully, allow for more time on the market, buy better, and plan on selling for less.

This is good for the buyers, purchasing a nicely renovated home with more equity.

Just my opinions.

[Bluemoon06]

First we need to get our definitions straight.  $100k investing your first year is not that hard and I would think is the norm.  My definition of investing is buying for gain.  That would be buying fixing up and renting.  I say that because after you have done it you have obtained an investment.  If you buy fix up and sell, that is a job.  It may be self employment but it is a job.  If you work for a corporation or work for yourself at the end of the day you are still an employee.  I have a job that pays more that $100k per year, what I want is investments that make me money without working.  I evaluated my living expenses and realized that as soon as my rental income passes my living expenses then I am working for the fun of it and as soon as the job is not fun anymore I can quit.  That being said, my first year I bought 3 houses.  2 were 3 bedroom 2 bath, 2 car garages.  One was a 4 bedroom 2 ½ bath and 2 car garage.  The first one was bought for $65k.  I fixed it up for $8k.  It had an after fix up appraisal of $125,000.  That means I made $52k on that house.   The second houses I bought for $99k and spend $6.5k to fix it up.  After fix up it appraised for $160k which means I made $54k on it.  The third one I paid $99k for it and spend $8k fixing it up and it apprised after fixing up at $140k.  That means I made $33k on it.  That was a total of $139,000. 

I think it is probably the norm because before I moved to Houston I had no idea what I was doing and I bought 2 duplexes and a single family house.  I bought the 2 duplexes for $70k and $77k and I paid $15k for the single family.  So when I moved to Houston I sold the duplexes for $100k one and $105k for the other and the single family house for $40k.  That means before I knew what I was doing I made $83k not counting the rental income.

The key is to figure out what you want to do and do it.

[Iron Range]

In a normal market you will be lucky to break even your first year. I would call it a success if you buy and don't distroy yourself during your first year. You might have been able to make 100K in the market we had a few years ago, but it is EXTREMELY uncommon to make 100k your first year. For the most part your lucky if you make it to your second year.

[bcampbell]

I've been investing for almost 2 years. My first 3 deals were not good and as Iron Range said, I'm lucky to still be around.

Deal 1 -- Bought 2/1 sfh for 40K put 16K into it. Renting it for $600/mo. Along with paying too much for this property, we put way too much into repairs. We're limping along with this one. FMV is 65K.

Deal 2 -- Bought a house going into foreclosure for 84K. Sold it back to the owner for 2K over my purchase price plus 1% more on my interest rate. I know now that this was insane on my part. The buyer only made 3 payments. After lots of time with attorney and going to court, the buyer (actually her mother) came through with a 10K payment (4 hours before we were going to move her stuff to the street). Although this was a nightmare we will make a little money (2K plus late fees, etc.) but was a huge learning experience. We plan to close next week.

Deal 3 -- Bought a 2/1 FSBO for 46,500 with seller financing at 7% and put 1k down. This rents for $525/mo. FMV is 55K.

Deal 4 -- Bought a trashed 3/1 REO for 30K and a 6.25 interest rate. Put 6K into repairs and rent it for $600. Bank loaned me 10K for repairs. Kept 4K that was left for reserve for future deals/maintenance. FMV is 55K.

Deal 5 --  Bought a trashed 3/1 FSBO for 15K at 8% interest. Plan to put 8K in repairs. I am currently working on this house and will rent for $550. FMV is 55K.

As you can see some of my deals were terrible, some bad, and a couple of ok deals. I've learned a lot. I have a good relationship with a small local bank and its vice president. The bank is willing to loan me 100% of the purchase price and repair costs at 8% for most deals if the total loan is less that 75% of the ARV.

Brian

[jparkx1]

Can someone give advice on how to develop a relationship with the vice president of a bank?  Seems like he's the one that gives the final okay to a loan. 

[Dave T]

Maybe, but the vice-president still has to answer to his superiors and to the bank regulators.  The loans made by the bank still have to conform to the bank's underwriting guidelines and survive an audit.

A personal relationship with a senior bank officer may help streamline the process but won't necessarily get you approved for a marginal loan.

[allagash]

Great post Brian....

I like the numbers on your deal #5.

Best of luck,

-Mike

[bcampbell]

I was introduced to the VP by a realtor who is also an investor. The investor grew up in this town, is a business owner, and had already established a relationship with this bank. I needed to get financing lined up for my first deal so he introduced me.

If you're passionate about rei and willing to work it will happen for you, but it's going to take time and hard work. That's the best advice anyone gave me. I wanted things to happen fast. I kept reading about people making big money on deals and wanted that to happen to me. I was so envious. I kept questioning myself -- what am I doing wrong? If I could just find that mentor or buy that course to get me going. My experience has been that things rarely happen fast and I'm certainly not finding great deals. My experience has been that it takes lots of time and hard work.

Brian