Posted by Ruth P on September 02, 2000 at 14:17:26:
question…I know I must invest to get non-earned income, what can I be reading or doing to get the know how to by with little down? My aim is to buy SMALL bungalows in water-privileged areas which would be rentals. Please give me some guidance and I will be very appreciative. Thank you in advance.
Beginner…Getting started ; Finding a partner - Posted by Nichole B.
Posted by Nichole B. on September 01, 2000 at 15:50:39:
Hi all… I’m a new to REI (meaning, I’m reading and learning, but haven’t started yet) and have a couple of questions, but first, here is a brief description of my situation.
I’m a FT wife/mom (I’m also 7 mos. pregnant), my husband works in computer networking. We do scrape to get by, we have a mortgage and 2nd mortgage on our home, 3 credit cards (NOT maxxed out, but each has a balance of $1K-2k), and 2 school loans that we pay monthly on. There isn’t a car payment - that was wrapped into the 2nd mortgage with 3 other credit cards. I’m considering selling our newer car for an older one and paying off some more of our debt, but husband has to agree to that. We’ll also be cancelling some “luxury” expenses, such as satellite service just to cut down on monthly bills. Our credit isn’t spotless ( a couple of late payments), but its not that bad either.
I want to get involved in rental properties, and perhaps in rehabbing, but we don’t have cash (for a down payment) to get started (aside from our 401(k), which neither of us really want to touch for this purpose. I’m not confident that we’d be able to get a conventional mortgage, and I’m not sure that I want to try, as the more inquiries you have on your credit, the worse it looks.
I can really see potential for income in REI, but I really don’t know how to get started without cash. I’ve heard about contracts for deed, and flipping, but I’m afraid that I can really get taken advantage of since I’ve never been in REI before, especially in flipping (what if the buyer falls through - I’m stuck with a property)
Would it be in my best interest to get a contract for deed on my own, or to find a partner to provide the cash/credit (for at least the first couple of deals), while I do all the work (finding, closing, fixing, finding renters)? I could probably ask my dad to help out as a partner, but he’s out of state. Where else could I find a partner, how do I find a partner, and what is an appropriate split of profits between a “silent” partner and the one doing the work? 50/50? 40/60?
Re: Beginner…Getting started ; Finding a partner - Posted by Craig
Posted by Craig on September 02, 2000 at 10:18:09:
I don’t like to tell people how to make a decision. But I would definately sell the newer car and buy a less expensive “reliable” used car. I used to have 2 car payments and decided to get rid of them and pay cash for older cars that were in very good condition. I’m so glad I don’t have those car payments any more.
The cars were both purchased from retired folks and were well taken care of.
There are plenty of different ways to get started investing in RE. You should not need a partner for making purchases on Contract unless you’re going to need money for repairs.
One thing I encourage you to do is make an investment to educate yourself a little before you dive right in. Check out everything on this sight and consider investing in the courses offered by Bill Bronchick.
Good luck.
be frugal and you will get rich faster - Posted by thamel (WA)
Posted by thamel (WA) on September 01, 2000 at 21:23:19:
Nicole,
I will tell you what I know as I too, am a beginner in the REI world. There are lots of great people online, offline, locally and nationally that say the same thing: reduce your expenses and increase your assets.
The number one thing you have to do is get into the right frame of thinking. A number of great books on the subject can be had from your local library that teaches financial management, the first step to becoming wealthy. A number of books that come to mind are:
Rich Dad, Poor Dad
Richest Man in Babylon
Think and Grow Rich
There is a great number of books that can be had on the subject of negotiation and confidence:
The Art of Negotiation
Winning through Intimidation
How to Win Friends and Influence People
These are but a small sample of excellent books on the topics you will need to know to be successful.
To give you a personal experience, I had $450 in car payments (a depreciating toy), was paying rent (someone else’s mortgage), and ate at restaurants almost every day. I dropped the car and bought a $500 truck that only requires $30/mo liability insurance, rarely eat out, bargain shop for food, clothes and furniture. This allowed me to free up the little money I had and buy a home $30k less of FMV.
I have learned (and am still learning) to be frugal, to negotiate EVERYTHING and most of all, learn the RE ways so you can have the tools to make some real money instead of just making a living.
Getting started ; A Get Rich Slow Story - Posted by Michael
Posted by Michael on September 01, 2000 at 16:58:52:
Nichole,
I felt compelled to respond to your post because we were in a similar situation. We solved our own problem by buying and moving into a townhouse. This lowered our monthly housing expense by over $300. We leased our house out w/ $150 positive cashflow. This “extra” $450 per month enabled us to pay off our credit cards and our consolidation loan in just three years. With our now excellent credit and our cashflow (now $400)we were able to purchase a new larger home for our family and a 4plex AND rented the townhouse for more cashflow. I know three years sounds like a long time. Especially when you read and hear about the people who make $30k - $40k on a single deal. It was however a great learning experience and has sent us well on our way to becoming full-time REI’s with very little risk. If you would like a little more detail please feel free to e-mail me w/ your questions. I would be very happy to assist you in any way I can.
Good luck to you and your family,
Michael