Your First Time...

[ElitePatrick]

Hello all,

 I am currently working full time, but real estate has been calling to me for about 2 years.  I've read about every book i could find (and amazon would recommend).  I feel like i have the overall knowledge, some detailed knowledge in certain areas, and I know where to find some good resources...

I consider myself a very motivated person, but I'm lacking the fortitude to take the first steps and really put myself out there as an active investor. 

rather than jumping in the deep end, and possibly getting in over my head, any suggestions on some "baby steps" i can take to get the ball rolling until i find my footing? 

how did you get started, what was your very first "i'm an investor" step?
what was your first deal like??

thanks for your advise,
Patrick in California

[alex79]

Hello ElitePatrick,

You first deal will always be so so, there is a lot of stuff out there that is not in the books. Don't count on making a lot of money of first deal. For that reason make sure that your first deal as small as possible. I hear that california is pricy, don't buy 0.5M properties. Buy something that you wouldn't mind giving away if required.

When you shop around, always keep in mind that second property that you are going to buy, you cant get rich off one building.

Alex79

[ElitePatrick]

thanks Alex,

I'm goin to be going after pre-forclosure short sales, and wholesaling as my exit strategy.  I'm ready to get started, what would you suggest be my first real step?  do i start collecting buyers first? 

thanks
Patrick

[alex79]

Hello ElitePatrick,

I can't advice you on wholesaling as I've never done it. I am a buyer, I buy cheap multifamily real estate and hold.

Good luck!

Alex79

[ChuckFromMichigan]

yeah find your buyers first.. your business is only as strong as your network of buyers that can get the properties you dont want for yourself for a small fee to you...

[furnishedowner]

Patrick,
You are working full time, so I recommend the first step is to go to a mortgage broker and get pre-qualified for a mortgage loan.  That broker will tell you how much house you could buy.  You can do that online, too.

Then post it here, and we will all give our opinion of step #2.

Furnishedowner

[KennyRushing]

ElitePatrick, there are three components needed to successfully do deal...buyers, sellers and lenders. starting out, you need to focus on building a buyers list first...especially in this market right now. Once you have your buyers and know exactly what area, price range, type of deal they're looking for in your area, THEN you go find the bargain deals...which in this market is super easy.

Start networking with other investors at your local court house foreclosure auctions. This is a great way to find CASH buyers for your deals. Why? Because investors that buy at auctions need to close on these houses quickly with cashiers check within 24-48hrs. So they either have cash or the means to get financing to close quickly. Tell them what you do and exchange contact info. Again, find out what their sweet spot is, then go find it, put the deal together and make money!

Of course, they're TONS of other creative ways to find buyers, but this is a start. Once you talk to enough investors and know what areas of town they like to invest in, what areas of your local market houses are selling fast in etc...you start targeting your marketing in that area to find the great deals and negotiate a killer deal.

Now go get started on that buyers list...Deal Maker : )

[Rob in Atlanta]

Good advice from Kenny!  I think it would be a mistake to start with auctions and foreclosures as you, as a beginner, will be competing with highly experienced and deep pocketed investors.  I also disagree with getting preapproved for an investor mortgage...they are not to reliable to close on an investor loan these days.

I would begin in one of a couple of areas as follows:

1.  Sandwich Lease Purchase or buy taking title 'Subject to' the existing financing.  This is an easy transaction that you can do and already know how from your studies.  You might want to advertise in an area of interest and price range with a lead ad something like:

4/2 + 2 car garage
Ownere Financing, No Banks Needed
coming soon, call xxx-xxxx

When you get responses, screen the callers and line up one who can prove they can pay and who have a down payment.  Then go negotiate a deal with a buyer in your pocket.  Get a deposit to commit the buyer.

2.  Create a note and sell it for profit.  You can do this with a mobile home, car, boat, truck, business equipment, etc.  Buy at a cash disount, resell with owner financing at full retail, sell note at 18% yield to an investor, walk away with profit. 

This is how I help my students that I mentor get into the business to obtain experience and make money.  Stick with small simple deals to get experience and start making money.

Hope this helps.

Rob
R.E. Investor/Mentor

[ReCoachDennis]

Hey Patrick,

I just posted this for another member, but I think it applies to you as well.

Enjoy!

Dennis here. I certainly wish you the best either way.

I've been at this for 25 years full time. I do have other side businesses, like mentoring real estate investors, but this is my bread and butter.

Here's my suggestion.

#1 figure out what it takes to replace your current income and write out for yourself how that could be done:

example: wholesale 1 house a month for $4k each.
Obtain on rental cashflowing $300/month

etc.
#2 definitely get yourself educated and connected.

Dabbling in real estate investing is not the same is investing in real estate. YOu have to take the punches that come with it.

#3 Get a mentor and start doing deals.
I definitely recommend wholesaling for starters as you maximize your profits while limiting risk.

#4 Take that year and see if you can match your current income with your real estate investing portfolio.

That's the proof right there.

I've got a power point presentation on my website you can have that shows you all the steps you need to take to invest quickly, profitably, and wisely. Just fill out the Contact form and it's yours!

I also have links to your local real estate clubs.

Dennis

[Summit]

ElitePatrick,

     Just wondering why you are thinking to Short Sale and Wholesale. Honestly I can give you the number to a Transaction funder to fund double closings and about 200+ Hard money lenders. Then you make the money instead of an Investor. Trust me I get way more complex then that its just for someone that is starting out why not make the money... I have been full timer for 16 years. And have done over 9,000 short sales honestly probably over 10,000. (We negotiatie 300-500 per month)

If you get the NOD list you are competing against every investor in the area. Call my lead provider he will get you people that are 60-90 days late on the mortgage and that will put you 90-120 days ahead of anyone else. Then you have to market to them correctly. Its really that easy don't make it harder then what it is.

[JR McGee]

The real estate business like any other business has its up and downs.  You perhaps might struggle a bit once you first enter the field and cannot expect to make a large profit on your first sale.  It is all about becoming comfortable in the field you desire to work in and gaining as much experience as possible so that possible customers/partners can view these skills first hand.  Another word of advice is never put all of your marbles in one basket.  Diversify as much as you can to eliminate all of the major risks that arise in your real estate career.  Good luck.

JR McGee

[Bluemoon06]

You always hear that you can get into real estate with no cash and no credit.  That is what gets people into trouble when they try to do real estate.  In reality you can’t do real estate with no cash or credit.  You can do some things in the real estate field with no cash and no credit but that is like if you want to play basketball but you are only 5’5” tall.  You can be a referee or coach or even water boy.  But when you think of basketball you think about hitting 3 point shots and dunking or even playmaking.  But what you think of when you talk about being in real estate you need cash and credit.  There are people that sell the idea that you can do real estate without cash and credit because there are so many more people without cash and credit so they can sell more books and so you hear everybody talking about it.

That being said if you get preapproved with a mortgage broker and get a traditional mortgage for your first property the bank is going to force you to do some things.  They are going to force a credit score, debt to income, house value to purchase price and cash reserves.  You know what all those things do?  They take out of the equation the things that cause you to get in over your head and get in trouble. 

[MichaelQuarles]

Bluemoon06

Is it okay if I disagree.

You dont need either your own cash or credit to buy houses... I have done that over 200 times in a single year... I have yet to apply for a loan to buy a house and have purchased more than most people would ever think of buying..

I think that stating that you cant do something on either side of the road is wrong when clearly I have which means others can...  Certainly its easier to buy if you use your credit and have buckets of cash however once you learn how to buy without them you will...

As investors we should never invest our personal resources when we can negotiate deals without them... Except on a few exceptions... Although I love Sub2 investing, if my only objective were to buy one rental then why learn how to buy 200... GO use youre credit and cash... However the word "Investing" implies multiple investments...

Now dont get mad cus I disagree

Have a great week

Michael

[Bluemoon06]

Bluemoon06

Is it okay if I disagree.

You dont need either your own cash or credit to buy houses... I have done that over 200 times in a single year... I have yet to apply for a loan to buy a house and have purchased more than most people would ever think of buying..

I think that stating that you cant do something on either side of the road is wrong when clearly I have which means others can...  Certainly its easier to buy if you use your credit and have buckets of cash however once you learn how to buy without them you will...

As investors we should never invest our personal resources when we can negotiate deals without them... Except on a few exceptions... Although I love Sub2 investing, if my only objective were to buy one rental then why learn how to buy 200... GO use youre credit and cash... However the word "Investing" implies multiple investments...

Now dont get mad cus I disagree

Have a great week

Michael

I never get upset when someone disagrees with me (especailly somone in Bakerfield) you don't get into trouble doing what you do because you know how to do it.  If you don't know, the banks will help keep you from doing something that will get you into trouble.

By the way I eat at the Woolgrowers whenever I am in town there.

[MichaelQuarles]

Woolgrowers is fun... For a hillbilly town we sure have a lot of Basque Restaurants