Seeking Specific Guidence
Hi all,
I'm a complete beginner, new to all of this. I've read a couple of Rich Dad books and have shifted my perspective. Real Estate Riches was a bit over my head as I know nothing about RE investing. I've also started Robert Allen's book but given up because it 's a bit overwhelming. I know I want to learn but I feel confused as to where to start. I'm even considering becoming a real estate agent so I can learn more. What advice/suggestions does anyone have for someone pre-beginner, for someone who wants to learn but isnt so math/business savy? How do you know what to look for? How do you find out what states and cities are hot to invest in before all the seasoned inverstors get there? How do you get in with the seasoned investors to learn? What are the first steps one takes to getting started? There are so many books/publications out there, which are the good ones( a lot of them dont sound realistic for someone thats just starting out).
Also, I have great credit and alittle capial but no income. If this were you how would you get started?
Any and all information will be greatly appreciated. Thanks!
bella36
Slow down and breathe...to start out I would reccomend both of Russ Whitney's books. They are as motivating if not more than the RIch Dad series but they do have good content and brief discussions about multiple areas of REI. They are called Building Wealth and Millionaire Mentor, reccomend reading them in that order.
GL
Thanks Ray
I"m just really motivated! I'm curious how you started out? What were the first steps that you took(or any seasoned investor reading this) and did you have a background in business or ?. Whats the best way to start other then reading books? ANy thoughts on Robert Allen's writings?
Thanks again!
I like Robert Allen's books, I read my first real estate book 6-7 months ago and have now put together a few properties to make it interesting. Seriously do your due diligence and read and talk to people, call every FSBO you can and just get a feel for talking to people. As far as business background, I've worked in sales and technology but nothing in regards to real estate
Thanks again. How is the investing market in FL? Any areas you might suggest checking out? I was told to check out areas near Tampa, what do you think? Also a friend of mine bought in Merced, CA about a year ago and it has doubled in price but shes cash flow negative(although its made up on her taxes). Do you know of any places like that where one could invest for about a year and come out with that much profit? That would really help me to get more capital to put into another property. Thanks again!
You can get some idea of what areas are appreciating alot by searching the Metropolitan Statistical Area HPI (Housing Price Index) data. After you find the areas of appreciation that catch your attention, start calling Real Estate Agents (particularly those who deal with investors) and property management companies in those areas to determine what prices to expect, what rents to expect, how strong the rental market is, etc.
Run some rough proformas to see if the cash flow will support properties in these areas. This is key. If you find areas that cash flow and have good appreciation potential, then you may want to conduct a very well planned visit to the area to refine your information.
I would not recommend anything that Russ Whitney does. He is a complete crook and double talks in his first and second books.
Storrs Mansfield, CT is the very best location in the United States to invest in. For you that is. Don't worry about how Real Estate is doing in other parts of country. Concetrate on your own area where you live, become an expert in your own area. Your neighbors are a great source of leads to propertys if they know you are a serious buyer, so be a serious buyer. I have propertys with-in a mile of my home and also propertys about 45 minutes away from where I live. I know my own area much better, I know the good blocks, houses that had problems or ones that are a great value because I knew people that owned house and how they maintained home. So my advice is look for propertys as close to your residance as possible especially as a beginner.
Where can you find the Metropolitan Statistical Area HPI (Housing Price Index) data information? is this online?
I'm in Philly
Thanks
Isaiah
Quote:
On 2004-10-11 23:34, edmeyer wrote:
You can get some idea of what areas are appreciating alot by searching the Metropolitan Statistical Area HPI (Housing Price Index) data. After you find the areas of appreciation that catch your attention, start calling Real Estate Agents (particularly those who deal with investors) and property management companies in those areas to determine what prices to expect, what rents to expect, how strong the rental market is, etc.
Run some rough proformas to see if the cash flow will support properties in these areas. This is key. If you find areas that cash flow and have good appreciation potential, then you may want to conduct a very well planned visit to the area to refine your information.
I can't say that I'm seasoned. The exact opposite probably. But my best asset is people skills. The more I talked with people, the more was happenning around me. First of all, bella, with good score and some cash A LOT of doors are open for you, even without a job. Look up NO DOC loans and OWNER FINANCING, as well as private money.
You could also ask: Do you know anyone who does? How are they doing? Is there any way that you could put me in touch with them? (people who don't invest may still know those who do, but careful when you take their advice) Best and most knowledgeable investors are mortgage brokers. They not only know investment, but they know how to creatively structure a deal. I deal Start your conversation with "I need a creative loan" and use words like "passive income" or "Net ROI" or "this aspect of the deal makes/doesn't make sense". If they don't catch on that you're an investor - you're wasting your time. Investors use a very special language. While all words in it are english, and most of them are common to anyone, the order in whch they are used and the aspects on which investors chose to focus are very different from regular home buyers/sellers or speculative "investors" who want to make a one time profit. Most investors know loan programs BEFORE they call brokers. And then they only get updated information or actually proceed on a loan. If people don't understand where you are coming from and how you think, they WILL waste your time. But once you have found those who know what you know, but they may not be favorably located, or their time does not allow them to start looking for fixer-uppers or rentals, then you can offer your services at a flat fee or % of gross. Flat fee is also called "assignment". You structure a deal, but someone else gets it. It's an art in itself to do that correctly. People will want to know you have done your feduciary responsibility before they hand over their good name on a platter to you. Have digital pictures of properties, all your numbers and comps ready to fax/email, and KNOW ahead of time what you want out of the deal. Make them aware that what you need is knowledge. Make them understand that you're not just hiring yourself as their property manager, but rather want to become their bird dog for the investment knowledge they posess.
A SFH in that area was selling for 65-70k, and rented for $600-650/mo. So I would have barely broke even, if that.
These are three things I did that got me started:
#1 Start in your own area! Don't go to another city, unless it is an absolute mess in your back yard (like LA). Drive around and look into newspapers. What are the rents, what are the sales prices? Ask a realtor that knows your area well to drive you around. Ask several... Select a few properties that you might be interested in (hypothetically even) and ask your realtor to do a "comp" for you. This will give you a good idea of how they establish a Fair Market Value (FMV). As you spend time in their car, don't talk family and kids, but rather ask them if they invest. Ask them if they sold houses or bought houses for other investors in the past. Be interested in numbers, experiences, and any info that might relate to you. If you hear that info, ask more questions about that. ALWAYS DIG DEEPER.
#2 Looking at a property does not oblige you to buying it. Even signing a contract can be something that doesn't necessarily oblige you if you property use SUBJECT TO clauses. Also called Weasel Clauses. But you definitely need to start walking in, talking, negotiating, and meanwhile running your numbers. Become very fluent in what property taxes are in which area, what are maintenance needs of each property, homeowner's insurance? did they pay water/utils/gas/cable or do the tenants? What are the averages? Ask to see existing contracts and verifiable payment history, if any tenants occupy property. etc etc etc etc. Use all of that to run your numbers on every property until you become fluent (ProForma-nator on this sime in MyTCI -> My Tools is the best thing in the world aside from positive cashflow)
#3 Use partners for your first deals, or be a bird dog. Let someone else do your deal for you or at least supervise you. While a lot of people can succeed in getting their deal on their own, I actually found a good one that turned out to be a nasty ordeal. If I hadn't relied on a partner to guide me through the deal, I'd be stuck with an unrentable property, old utility bill, old prop. taxes, a tenant in need of eviction, and structural repairs. I still own that house now, but MY way. I sure was glad that someone took my hand and guided me. Don't be afraid to play "dumb" and let someone guide you in an actual deal, not just on a forum. Like Kiyosaki preached in Rich Dad - don't be a "do-it-yourself"er.
Side note: As for how to find these angel investors... that's the question of a century. Articles on this site talk about private money, but that usually relates to seasoned investors in need for more money to invest. I advise ONLY working with Agents, Brokers, Advisors, and other professionals who invest themselves. When I get a realtor who is eager to show me property - do you invest? No? Why? Hmm... I see... NEXT.
Still here?!!! What are you waiting for... GO! GO! Get out there and start looking at properties! And don't be scared of those higher price-tag multiplexes. You'll find that 2,3,4,6,8, and some times 10 and 12-plexes will carry a much lower "per unit" price while renting at about the same amount. The formula that I found worked in MY case is 100 rent per every 10,000 of unit cost to break even or make tiny profit. So a duplex at a total cost of 60k would need to bring at least 600/mo. that's $300/unit. Factoring vacancies, if I get $350/unit I am already doing good. My first property was a 59k duplex that required 2k in repairs, and rented for 550 on each side. I did pretty well. And later it appraised at 94780 with an 85k likely re-sale value to boot, which made me VERY happy.
Regards,
-Greg
Thanks so much Greg! Now that was a packed full message!
sarah