Step By Step Instructions For A Newbie (AZ)
Hello investors,
I'm Eric, a 20 year old student (among other things) looking to get into the real estate investing game. I don't know much, but I am extremely motivated to learn as much as possible so I can start making some major bucks.
Right now I've got about $5k cash, perfect credit, and some business experience. I just want to confirm my beliefs on the basic steps to successful real estate investing.
1. Locate the property. Do you locate the property yourself or do you use a birddog or real estate agent? If you find the deals yourself, how do you do it?
2. Analyze property. Check out the property and calculate how much money you can make after everything is all said and done.
3. Buy property.
4. Fix up property. Is this always necessary or are there some deals where you can just buy and sell with no work. How many of you do the work yourself? I've become pretty handy with a wrench (owning an old unreliable BMW will do that to ya) over the past few years, but I'm not sure what I could handle when it comes to fixing up homes.
5. Sell property. Do you all use real estate agents or do you list "for sale by owner."
I would love it if an investor from my area would take me under his wing and show me the ropes as all I have is the basic idea.
Oh boy. Well I'm going to do you a favor here and reply to your post. Don't take this the wrong way, but your question is far too open ended, and you have answered all of your own questions yourself. This would be the equivalent of me asking "How do I make money?" There are so many answers to this question. That being said, there is no set template for a real estate deal. Any and everything can happen and you have laid out some of those scenarios in your very own post. I'll respond to each of your numbers.
1. Locate the property - yes. Locate the propery. Do this any way you can. It doesn't matter if it was a bird dog, realtor, little bird on your shoulder, etc. Some people would look at this first step and say no, look for a motivated seller. That's what I would do.
2. Analyze the property - yep. I'm sure there are alot of unseen costs that you haven't thought of. Make sure you figure in holding costs, closing costs, fix up costs, marketing, etc.
3. Buy property. Not necessarily. Some deals might easier to wholesale than to complete yourself.
4. Fix up property. Also - not always necessary. Some people don't like rehabs while others love them. Case by case basis.
5. Sell property. Eventually. Are you going to sell on L/O, after rehabbing, sub2?
You've got the basic concepts down which is great and you're young and you've got alot of time. I think that is great. Continue educating yourself and set goals. With regards to an investor taking you under his wing and showing you the ropes you can always try. My only comment would be that it's gonna be have to worth their time. What can you offer in return for their time and training you? Best of luck to you.
Ryan J. Schnabel
Lots of answers to these questions as mentioned above. Need to narrow your focus and sharpen your skills, and need a specific direction. Click my profile, and read my articles addressing this situation. If you then have any specific questions, post them for help from others on specifics, or PM me if I don't respond immed. Sorry, been busy.
Good luck,
You can do it young man
Shawn(OH)
Eric,
What part of AZ are you in? Might I suggest becoming a birddog for a bit while you learn the biz. This will put some cash in your pocket, $5,000 is not enough to start investing. That much may, if you are lucky, be enough for fix-up. Then you can make money while you LEARN. The object is to take as much risk out of the equation as possible. Once you have $10,000 - $15,000 in your account, you can get a hard money loan to leverage your money a bit. If you want to learn a little about the market here in AZ let me know. You can send me a private message.
Biggervinnie
I couldn't disagree more with regards to 5k not being enough to get started. However, I'd like to qualify that by stating that 5K on a property that needs rehab is not enough to do the rehab yourself. There are plenty of ways to acquire and/or control real estate and make $$ from it that you can do with 5k. Look into Subject 2 investing, and learn about lease options, Wrap around mortgages / Contract for deed etc. Don't jump in without getting some education first. This site, and an hour or two each evening for a couple of weeks will allow you to develop some idea of what some of your options might be, give you some direction, and allow you to focus your efforts and develop a well thought out plan. Then follow your plan, It will work if you do.
As stated earlier, Bird-dogging is always an excellent way to learn, and get a feel for what you want to do without much risk which presents an opportunity to make some $$ while you learn.
Good Luck,
Jeff
[ Edited by jeff12002 on Date 02/24/2004 ]
Lukas:
You are on the right track! You are also getting some great advice. You should concentrate on wholesaling to make some capital. This is what I would recommend:
#1- Get your real-estate license. This is
a good education. You will learn how to
run comps, have MLS access, be able to network with other agents having access to properties before they are listed. The best part is you get to list houses for your friends and family. This is a good way to generate some extra money!
#2- Purchase Ron Legrands cash flow module from this site. Go to "shop" and
then "consignment". These 3 courses use to retail for $12k. You can buy all 3
for a couple hundred bucks. Listen to the wholesale retail one twice and take notes.
#3-Buy John Lockes "subject to" book.
You will run into people who have loans in place and you need to learn how to
negotiate to take over existing financing.
#4-Join your local REI Club and network,
network, network. That is the key! We
all learn from eachother.
#5-Log onto this site for an hour a day and read, read, read. Education is the
key young man!
If you do all of the above, you will have a good foundation. Like I said. I would start off wholesaling to other investors. By this I mean you find properties at 60-65% of market value and sell to other investors for 65-69% of market value.
When you get good on that you can expand and learn how to Retail, Lease Option and you will be on your way.
If you wanted to be a Dentist, you would go to school wouldn't you? Well guess what? Most investors I know make twice as much as Dentist!
Best Riches,
Jeffrey Adam
_________________
"The only place success comes before work
is in the dictionary."
[ Edited by JeffreyAdam on Date 02/24/2004 ][ Edited by JeffreyAdam on Date 02/24/2004 ]
Thank you all for your advice. I do have a lot to learn, but I also have time. I'm very busy with school, work, and my business, but I will definitely start to do the suggest research, start bird-dogging, and make time for a REI club.
BiggerVinnie:
PM sent.