FREE ADVICE FOR ALL NEW GUYS but ONLY 1 out of 100 will follow it!!

[fdjake]

I see these topics all the time here. 

NEW GUY NEEDS ADVICE!!  I have no money, bad credit, and want to start investing in real estate!!! PLEASE HELP ASAP!!

Here's some PRICELESS advice given to me 20 years ago by a REAL, self made, Real Estate MILLIONAIRE. 

This guy has a 6th grade education, he owns 12 Dunkin Donut Franchises (triple net leases EVERYONE to his "managers")  He also has at least 20 class A commercial buildings that are 98% triple net leased.

His advice to me when I first got started?????

"Kid....You got a job, that's good...KEEP IT!!!  Now I want you to save AT LEAST 10% of your gross earnings for 1 full year and then come back and see me. Until you can do that, we have nothing to talk about."

I now know this was a BRILLIANT tactic.  He completely left it up to ME to decide how SERIOUS I was about investing.  I KNEW there was NO WAY I could go back to this guy a year later with $500 in the bank and expect to be taken seriously.  I got a part time job (in addition to my full time job) and came back a year later with $15,000 in a statement savings account.  I put the bank book down in front of him and told him how I did it.

You could see the shear JOY in his eyes!!  He had found someone WILLING TO SACRIFIC to get ahead!!  He told me that out of 100 people who he had given that advice to... only 2 had ever followed it.

The key to the "1 year plan" is.......... DISCIPLINE!!!  With out that, YOUR SCREWED!!

Once he knew I had the DISCIPLINE, we started looking at houses together and he taught me..... What to buy, why to buy it, and what NOT to get involved with.  We did the first house together as partners.  He generously split the profits 50/50 with me and I took it from there after one more with him as a partner.

The lesson most people miss with this plan is by SAVING that money over a prolonged period of time you are developing HABITS that ALL successful investors have.  You MUST sacrifice NOW, for the bigger pay off LATER.  Making that weekly deposit is about as boring as it gets.  BUT............once those numbers start getting bigger and bigger a FIRE gets lit inside you.  All the hard work, all the discipline, the TIME, it now MEANS something to you.  That money doesn't represent THINGS, it represents YOU!!!  It's a HUGE confidence builder and I swear a chemical change takes place in your brain. YOU HAVE BECOME DISCIPLINED!!!!

You can do it......

BUT VERY FEW WILL!!!!!!

[Damivon]

As always I love to read your thoughts and couldn't agree more!!! It almost seems like people don't want any discipline in their lives but in a way this also creates investing opportunities (homeowners can put theirselves in big trouble by a lack of discipline) 

Please keep sharing!!!

Greetz, Raymond

[furnishedowner]

Terrific post, fdjake!

Could this become a permanent heading: New Real Estate Investors Must Read this before asking for advice?

 You are right, there are so many duplicate posts: "I have no money, no knowledge, and poor credit. Now tell me how to invest in Real Estate, oh, I also have no job but want to become a millionaire".

FurnishedOwner

[JaredfromIndiana]

Great post Jake!  Not only do people want to become a millionaire without working for it, they want it now!!!!  (I know I did when I started)...

This isn't a sprint, it's a marathon.

[propertymanager]

Discipline, huh?

C'mon FDJake, I don't think you've done enough guru studying yet to make a reckless claim like this.   I've heard many of the gurus speak and I have yet to hear one mention "discipline".  These guys wouldn't be gurus if they weren't experts in their field - would they?  So, the only thing I can conclude is that YOU ARE  WRONG!!! 

How do you square your dream squashing "hard work and discipline" theory with the gurus promise of instant riches without work? 

Please explain your take on the following ideas:

1. 'Think and grow rich!'  I read that if you simply believe that you will be rich, the cosmic karma forces will rain dollars down on you.  That doesn't sound like hard work and discipline to me.  Now, I'll have to admit that I don't know anyone that has gotten rich by just thinking, but that's probably because I'm not a big enough thinker to know these people.  I'm sure that there are thousands of rich "thinkers" out there.

2. 'The only trailer you need with mobile homes is the one to carry all the money to the bank!'  I got this in the mail from one of the "gurus".  I want to buy a couple of mobile homes, but I can't afford the extra one to carry all the money to the bank.  So, I went back to idea number one and I've been THINKING about receiving a money hauling mobile home in hopes that one will suddenly appear.  It hasn't worked yet, but I'm sure it will. 

I have another little question about this idea.  I've heard that moving mobile homes is very expensive.  Do you think that there would be a cheaper way to carry all my mobile home riches to the bank?  Couldn't I just carry it in a large wallet?  Is a trailer really needed to carry all that money to the bank?  I'm sure the guru is right, but I was hoping that you could help me with this problem. 

3. 'THE BIG SECRET'.  All of those gurus that I've heard speak, talk of the "SECRET" to real estate riches.  I'm sure that this is the "secret" that provides instant riches without work AND CERTAINLY WITHOUT DISCIPLINE.  The only problem is that I know a few people who have gotten to the super duper, inner circle, golden platinum, friends for life level of guru membership and they still haven't gotten "THE SECRET".   Some of these people have spent tens of thousands of dollars on their guru stuff.  How much do you have to spend to get the "SECRET", or is that a secret too?

4. 'THE LESS YOU DO, THE MORE YOU MAKE'.  This is my favorite guru theory and my personal goal - become a trillionaire by watching reruns of Hogan's Heroes.  I only have one little question about this:  I have several dozen tenants who don't do a single thing (except drink beer), and not one of them is rich.  Do you think this would really work?

Hard work and discipline - I'll have to think about that!

Good Post as usual FDJake!

Mike (THINKING about discipline)

[dr_white]

Damn straight, Jake. Damn straight.

Now, I hope you are telling a bloody true story, because I added this one to my personal motivational collection.

 Dean

[fdjake]

Not only is this story 100% TRUE,  I have given this advice to at least 200 people over a 20 year period and the 1-2% rule is STILL right on the money.

Mike said it best......People want it NOW!!  They don't want to WORK for it!!

This business is a marathon, not a sprint.  You need capital, and a LOT of it if you want to make a LOT of money.  Building strong savings habits is the single best advice I can give anyone who asks.  With cash comes OPPORTUNITY!!!

It's boring....it's not flashy......but.....

IT WORKS!!!!!

[furnishedowner]

fdjake,

Where are all the new guys?  I thought they would be answering you by now, saying "I get it! Thank you, I get it!"

I really enjoy the posts of people struggling and starting out with nothing. We can all relate.

Come on, you newbies...we want to hear that you:
opened a savings account
took a second job
took a first job
moved to a cheaper house
sold the Hummer
cut up your credit cards

Tell us how you are putting yourself on the path to financial freedom.

Furnishedowner

[Roger J]

They're all really pissed right now.  Best way to get them to listen to it is to charge 697.99 for it.  I believe that is the going rate on most guru courses right now.

Raj

[ashtaz82]

Thanks for the advice for a newb!!

It seems like maybe I'm half way there, already cut up 99% of credit cards and eliminated alot of debt, and started the savings account!!

Yes, I do have a job-but being enlisted military doesn't pay the greatest monitarily!! 

Right now I'm just reading all the free information that I can get and becoming more knowledgeable about real estate!  Being young (25) and ignorant to the situation-I thought buy and sale was about it-boy was I wrong.  But the wife wants to emerge into the real estate scene and so do I, we just want to build wealth over time.

Any other free advice would be great!!

P.S.  We are in San Antonio and will be moving to Florida at the end of the year!!

Matt

[Damivon]

I'm really taking the advice (in fact I figured this out before the post  ). So far this is what I'm doing:
I'm saving 15% of my gross income to get things going in RE (I really like this to be 20% but I don't want to be the family Scrooge though  ).
I'm not in the best market (Netherlands with rent control & a lot of other stuff) but I try to wait for a (relative to the market) good deal. This year (first year) so far 4 deals done (3 on the buy side, 1 sold).
My strategy is to buy 2-3 long term cash flowing rentals a year and become RE self supporting in 7-10 years.

Greetz, Ray

[Tien]

Only 10%?????

[Damivon]

 no 15% gross earnings but I would like it to be 20%

[Tien]

I was joking in general.

I put a lot more than 10%.



It's whatever is left after spending on bare bone essentials.

[hhiinvesting]

After reading RichDad/PoorDad......I finally found the switch I had been looking for.  I knew that it would take a lot of studying and sacrifice because good things usually don't fall from the sky....you have to work and sweat for them.

I proceeded to get my RE license to learn the in's and out's of the industry while working nights at a nice restaurant.  All the while I would read as many books and forums as possible.  When the restaurant was slow, I would concentrate more on being a Realtor.  Then the perfect storm happened.  The RE market dropped like a lead balloon, the restaurant I worked at downsized because of new mgmt, and my bank account suffered because of it.

Knowing that I was not going to give up....I got a job as a golf caddie working 3-4 mornings, got another restaurant job 5 nights a week and worked on gaining as much info on RE Investing as possible all the while trying to secure buyers and sellers as a Realtor.  I read books, went to seminars, got rid of any social life I had, and cut back to the absolute bare essentials to live/survive.

Then came winter....No Golfers.....No Tourists at the restaurant.....No Buyer clients as a Realtor.  But i'm still not giving up.

As I'm writing this, i'm caddying a few days and still struggling to pay my bills with the restaurant job.  I may not have the 10% saved up but I've been learning techniques the require very little money.  I am ABSOLUTELY DETERMINED to make this work and I am confident in my abilities to work myself out of this hole and succeed as a RE Investor!  My sacrifices will pay off in the end.