A Newbie Hungry For Information
I sent a PM to good ol' John Locke tonight and have been swapping e-mails, but I figured I'd give an introduction to the rest of you and ask for some information at the same time.
To start, my name is Sean and I'm a rather young guy. I'm a recent college graduate, which puts me right at 22 years of age. I've never had any money to play around with due to being in school for ... well, for my entire life. Now, though, I finally have a wee bit of change to throw around (it would be a lot more if I didn't have 4 years of college debt to pay off!). I'm working as a nuclear engineer in Richmond, Virginia, but the only investing I've done so far is putting 6% of my salary into the company's 401(k), mostly because they match a bit of that. I figure it's a darn good investment, considering there's a guaranteed 50% return from my company!
But I'm looking for more. I'm looking for more money, for more freedom, and for more to life than cube farms! And so I started to research real estate investment, knowing full well that most millionaires have been born from the fat of the land ... that was for sale. So here I am, eager to soak in all that I can and eager to actually DO something.
So, now comes the point in the post where I get selfish and ask you to share a bit of experience with me. My questions are mostly limited to those who have actually put this Subject To stuff to work, because I'm interested in some hard facts and real experience.
1. How many of you went from working for someone else to doing this fulltime? If the average profit on a sale is around $25k, why do anything else?!
2. How many of you got into this at a young age and actually succeeded? This is one thing I'm worried about. At 22, I'm fairly young to be taken seriously in the business world -- and looking 17 doesn't help, I'm sure. So can anybody relate to this and/or offer any advice?
3. What the hell is the difference between John's full course and just the manual? I'm dying to know. 
4. How much money should I have saved up to start getting into this business?
5. How long, on average, are you usually stuck with a property before you resell it? (Assuming you don't rent it out, of course)
6. Finally, if you had to give just ONE piece of advice to a "newbie," what would it be? (Aside from "You have to actually get out there and do it!"
Anywho, ANY advice would be incredibly appreciated, even if you pick and choose questions to answer. I really appreciate you taking the time to read all this. Thanks!
Namaste,
~Sean
Sean,
I am a two year newbie myself, just turned 31, went from renting two years ago to buying twelve properties later. I am finding out several versions from several well to do investors and everyone seems to have their own niche. I just seems that you have to just go out their and do it. I consider my self aggressive... I see a boarded up home....I am on the cell phone calling my title co. and flipping a "u"turn. I hear try to rub elbows with those that I consider succesful...I mean if they really wanted to just say....Oh its a Monday and guess what I dont have to do jack %#@# today if I didnt want to in order to make the mortgage next month...to me that is peace of mind. I think you are doing the right thing...You are here on this site and starting to ask the questions...ask and you shall recieve..... their is some well seasoned investors on this site and I smile before I go to bed thanking god for having some non selfish, unbiast information providers out to share, bless them with good health. Without good health what the hell is all the money in the world realy going to help you with when you are on death bed...
take care
Welcome to the world of real estate. Remember age is just a number. I was the same way in the beginning. I am 23 and a Realtor in South Florida. When I first started I knew people would think I didn't know what I was doing, but I realized if they took the time to listen then they would realize other wise. I bought my first home at 20 (owner occupied). Now I am into flips mostly on new construction.
Sean,
Welcome! I'm 37 and in the getting started mode myself. It's was a long road trying to educate myself first. I spent about 18 months reading, researching, and posting on forums before I felt I had enough to actually get out there. I did pick up a few courses along the way. So, from one starting out newbie to another...
#1 I'm working for myself part-time because I have a job that pays the bills and have a family to feed. Don't count on average profit of sales. What if you do a bad deal that costs you 20K to unload? For most, cash flow is the name of the game. Having residual income that's there whether you go out and work that week or not. Indeed. Why do anything else?
#2 Don't worry about your age. If you know your stuff, can be genuinely honest and empathetic with motivated sellers, you'll do just fine. Your advice? Learn to be genuinely honest and empathetic with motivated sellers.
#3 Don't know. I have enough material right now. Eventually I want to get the full blown course, but it will only be a distraction from where I'm at at this given moment.
#4 If you're buying sub-to, you should have cash reserves. You're guaranteeing that you will pay your seller's mortgage (PITI) every month. Don't you dare miss a payment. Otherwise, learn to use other people's money (OPM) for leverage. There are literally tons of lenders out there willing to fund any deal with good numbers. It's all about the numbers.
#5 This is totally dependent on your local market. If you're selling retail and there aren't any "uglies" and the property is priced right, it will take on average what your local market dictates. Spend some time at open houses in your area and talk it up with the showing agent. They love to answer those kinds of questions.
#6 Get your education first. If you have no experience with real property, take the real estate principles course that all new agents must take. You don't have to get your license, but the course will do you good and give you a proper foundation (law, contracts, financing, title, etc.). If you want to get through it fast, just go to your library and see if they have a late edition text book you can check out. Don't just learn what to do, learn what not to do as well. Set some goals. After you have a knowledge base to work from, create a written plan and get out there.
Hello!
Sean, welcome to Freedom!
#6. My one piece of advice is this: GET THAT $ OUT OF THAT 401K AND PUT IT INTO REI (Richmond? I'll be in Roanoke, VA Sept. 1, '04)!
#5. The market that I'm in currently sells a home in eight hours to three months.
#4. See #6. If you can save 5k, then I'd say five k. Why? Well, usually I have to hold a property for three months. Holding costs are nice to have at hand, but I've done deals where I have none.
Also, I've bought property conventionally "as is." I've had to invest between 5 & 10k at time to bring the place up to code, but I flip'em and make that back two to three times!
#3. I don't know.
#2. I started at 39, but I've been told that I can sell ice cubes to eskimos. How does a guy sell well? Just be nice, take your time with that person (remember how attentive you've been on first dates? That's what I mean).
Know how to be taken seriously? Be honest and sell yourself. I do that by taking my time with the seller. I get to know everything I can about them & the property without appearing to do so. I've had many 15 min. conversations before I've even mentioned the price.
#1. I'm leaving my job September 1st.
Sean, you're bright. You wouldn't be a nuclear engineer with out having to have used your brain pan.
Remember all that Calc? REI is just like that... You find the answer to the seller's problem, then you sell it to them through your presence & a calm tone.
I've been in and out of a family business or my own business most of my life, I have a Spanish Lit. degree, I've gone through pre med, and I'm currently a network engineer. I can pretty much build a person in my garage if I had to. Know what? I made more money in 9 mos. last year than my salary at work was paying me! And, were I to calculate the time I invested to earn that money, I'd say it would be about 100 hours -I'm still learning.
I encourage you to keep working if you like it, but if you can make twice your salary in 300 hours/year of work... Well, you do the math :-D .
I encourage you to keep goin' in REI, Sean.
Thanks,
OTW
Thank you, everyone, for all your comments! I'm realy excited about this whole thing, and I'm glad I have something to occupy my freetime now. I went out to Borders and made use of my 10% off coupon by buying three books on real estate investment. I figure they'll help me get my feet wet before I jump into the shallow end and buy a course.
I realize that paying off debt is extremely important, but a few months down the line I'll be much closer to having a manageable debt, and I'd like to start getting into the investing on a small scale.
I think as soon as I'm comfortable enough with where I'm heading with this whole thing, I'll start trying to save up some cash by not being so aggressive with paying off debt. Currently, I'm chugging along and will pay off over five years worth of college debt in around a year or so, totalling about $14,000. Not working for four years really adds up.
Or is this unwise? Should I focus all my attention on getting out of debt first? Or slow down and try my hand at an investment or two along the way?
Also, what books would you guys and gals suggest? Today I picked up, "The Beginner's Guide to Real Estate Investing," "Millionaire Real Estate Mentor," and "Rich Dad, Poor Dad."
Namaste,
~Sean
Sean, i am also young, twenty years young to be exact. i have been researching sub2 for the past year now and im going to use it as a stepping stone to get into real estate developing/building. I personally fell that age should have nothing to do with it, im a confident individual and i fell that confidence including knowing everything you can about this subject will only take you upward. i have just started my LLC and started advertising. ive yet to do a deal, but i fell that it will only be a short period of time before it happens. The best book i have read was "How to make big money investing in forclosures" by David Finkel and Peter Conti, i suggest you pick up a copy at your local borders.
p.s. i jumped the gun a bit and quite my dayjob a little early. its easy to get cought up in the excitment of real estate. I would suggest you keep your job until you are fully comfortable with real estate investing.
like someone earlier said 5 grand is a good number to start off with. I wouldnt worry so much about debt right now, because if you plan on buying subject2 you wont have to qualify for a loan and once you cash out your house/houses you will be able to pay off your debt in full.
hope this helps Sean. sorry for the long message Jeb.
oh yeah, i suggest becoming a member of your local REI group. you will be able to learn alot from already experienced investors at these meetings. click on the groups link on top of this page.[ Edited by lukabrasi on Date 07/12/2004 ]
Thanks for the response! And I agree that age shouldn't matter, but unfortunately, the world is not an ideal world. Age does matter, and that's a fact of life. I certainly wouldn't want a 15 year old to handle my defense if I were up for 20 to life even if he or she did know all there was to know. An impression matters, and unfortunately, being youthful can give an impression of ignorance and inability -- even if it isn't true.
And yeah, I am definitely not quitting my day job anytime soon. I'm making quite a nice living for being only 22, so I'm not going to flippantly give the Fates the finger. I'm very blessed, and I'm hesitant to do anything to risk the job security I managed to luck my way into. The way I plan on approaching REI is to do it on a very limited basis at first. I figure this will give me an idea of what it's like while not sacrificing the guaranteed check every few weeks. Wishful thinking isn't going to pay off my car, unfortunately.
I will most definitely look into that book and into a local group. Thank you very much for the suggestions and for your opinions! Every bit helps.
Namaste,
~Sean
sean, i am also a young investor. I am 19 years old and i am on my way to doing my first deal. If i were you i would quit the job and leave yourself with no other option but to succeed in REI. thats the biggest incentive, I HAVE TO. and either way you will make more money in REI than you will at your day job if you put you mind to it. Im sorry if i am so blunt but i am not a big fan of jobs. JOB stand for Just Over Broke. good luck
While I understand -- and envy -- your zeal, I cannot afford to quit my job at the moment. I make a very good sum of money, even more than the average for my level of education and experience in this industry, and I'm not willing to risk it this early in the game.
I'd much rather learn the game before jumping into it and putting my entire life on the line. If I didn't have college debt to pay down, my opinion might be a little different, though. Besides, the old addage that "You need money to make money" certainly has some merit. Hell, I wouldn't even be online right now if it weren't for my job. I wouldn't be able to buy books or even drive to the bookstore, either!
I think my job is interesting and it pays me fairly well. I figure going there four and a half days a week is a small price to pay to have peace of mind while I learn the finer points of REI. But again, this is just my opinion and by no means am I saying it's the best path -- just the best path for me at the moment. I would love nothing more than to be able to walk away from "traditional jobs" altogether, but right now it simply isn't feasible.
Thank you for your encouragement! Good luck, and let me know how your deals work out.
Namaste,
~Sean
1. How many of you went from working for someone else to doing this fulltime? If the average profit on a sale is around $25k, why do anything else?! Still starting out, but the drive is there.
I only have the manual, but the course will walk someone who has no experience in REI to be able to do SUB-TO's.
Don't get stuck in Information overload, I did and its cost me a years time that I will never get back. Learn a subject and TRY it, win or lose you will be ahead of 95% of those who THINK they are up to REI.
2. How many of you got into this at a young age and actually succeeded? 36 here, but have confidence in yourself and your REI and age won't matter
3. What the hell is the difference between John's full course and just the manual? I'm dying to know.
4. How much money should I have saved up to start getting into this business? I know there are ways of doing "no money" deals, but you need to make sure you have enough for marketing, holding, recording, lawyers..etc. This isn't much compared to "normal" real estate, but its still there.
5. How long, on average, are you usually stuck with a property before you resell it? (Assuming you don't rent it out, of course) Depends on market, you got some great advice on this one...research.
6. Finally, if you had to give just ONE piece of advice to a "newbie," what would it be? (Aside from "You have to actually get out there and do it!"
*second piece of advice, If you looking into Sub-To, you can't go wrong with $Cash$'s manual/course. He will personally help you, I've found very few authors/guru's to give you their phone number.
Quote:I only have the manual, but the course will walk someone who has no experience in REI to be able to do SUB-TO's.
What has the manual done for you? Could you go from zero to sale with it?
Quote:This isn't much compared to "normal" real estate, but its still there.
Sure, but what would you say this amount is? $2000? $3000?
Quote:Depends on market, you got some great advice on this one...research.
Sure, but I was asking the investors here how long they hold onto it. What's the average holding time in your areas?
Thanks for all the help! It's looking more and more like I'll be investing in John's course eventually. But dropping almost $700 all at once with no guarantees is a bit too much right this second. Maybe after I finish the books I just bought.
Sure, but what would you say this amount is? $2000? $3000?
Sean, how much money you want to save is up to you. diffrent deals call for diffrent amounts of money. it also depends on how long it takes for you to sell in your market. are you going to sell to a conventional buyer or are you going to lease option? each method is diffrent and you will have to have enough money in case you cant get rid of the house emmediatly. if you want to sell conventionally to get some quick cash then it might take longer then selling on a lease option. this will require you to have enough money for holding costs (monthly mortage payment) also like what was stated above advertising is not cheap, as well as lawyer fees, setting up an LLC, etc. To find out how long houses in your area stay on the market ask a local realtor.
as for your other question about how long do people keep the houses they take over subject2. I have yet to do a deal but i know that John Lock only keeps houses for 2 years then cashes out. it all depends on how you want to sell the house.
Hope this helps Sean, Jeb.
N and I:
To answer: "What has the manual done for you? Could you go from zero to sale with it? " and "What's the difference between the manual and the course?"
Actually you could go from zero to a sale with nothing: just ask John Locke and other "veteran" investors here who had none of this info when they started. As John has said, "Hell, the Internet didn't even exist when I started..."
However, with the manual (which I bought), you definitely have the building blocks to start on the sub2 path. The course includes the manual and more: John has said with the manual there will be a "learning curve" for getting started whereas with the course, it's more of a "fast track" process to getting out of the blocks. Both include his cell number and email for one-on-one help whenever you need it, which is worth the money in and of itself.
You asked about holding times: I don't think there is a stock answer: it's going to depend (as others have said) on your market, to which I would add it also depends on your investment strategy going in.
My "one piece of advice" would be to not make your first deal your last, by which I mean don't rush into a deal just to do a deal.
Some other advice:
Treat this as a business, learn as much as you can, do your homework, don't get emotionally involved in any single property, and, above all: have an exit strategy BEFORE you sign for any property.
Good luck,
Andy
What has the manual done for you? Could you go from zero to sale with it?
It has got me marketing my business, has given me a step by step path to success, knowledge of what forms I needs, confidence to talk to sellers, ability to see the problem the sellers face not just trying to GET their house. Its all about solving problems.
Can I go from zero.....ABSOLUTLY
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Sure, but what would you say this amount is? $2000? $3000?
This will vary, and it really hard to put in numbers. But a few to think about?
Mailings.
U-Haul Money.
Filing.
Transfer Taxes.
Advertising.
Basic Lawyer fees. (review docs and such)
Monthly payments until you sell it. Which hopefully when done right is quick.
etc...
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Sure, but I was asking the investors here how long they hold onto it. What's the average holding time in your areas?
Around here, subs of Chicago, things are moving fairly quick 1-2 months via realtor. Sub-To way I would guess a lot less.
Best of Luck to you, you have the drive and you will make it. Keep us informed of your deals.
Thanks again for all your help and encouragement!