Getting started - Posted by Calvin

import · January 14, 2003, 5:50pm

Posted by Zack on January 15, 2003 at 21:24:17:

Here’s an email I received regarding this post and my response, I thought this might be helpful to someone.

To: zack@bozacrealty.com
Subject: Your post

Hi Zack,

Okay, how do you do it?

I’ve been trying to pick up some real estate here with little or no money down, and I can’t seem to get the knack. Or the luck, or the–what?

I believe it can be done . . . would you be willing to share details about the deals you’ve done with no money out of pocket? Lots of ivestors are willing to share their wisdom with beginners, and they say “just pay attention,” or “find you a motivated seller,” but those are just platitudes, and not really helpful.

So–how’d you do it?

Get a partner with money. Do you know someone with money in their IRA? They are probably not getting a good return on it right now, why not help them to get a great return and have it secured by real estate. I currently own two houses I bought this way, our deal is this I find the properties, put them under contract, get the repairs done, market and sell them and then I get half the profit minus 6% interest. It’s a win-win situation; my partner gets a good return on his money for very little work and I get to make a good profit for nothing more than time and effort. Between these two properties I have 80000 equity of which I will get a little less than half. Considering I have no money invested that’s a pretty good return on investment as a matter of fact my yield is infinite. The trick is to make sure you borrow enough money, have your partner pay for the house and closing costs and escrow the money for repairs, insurance, marketing, and miscellaneous expenses. I also have another house I am purchasing with no money(I just met with seller about an hour ago and he accepted our offer) The deal I have with my partner is that I do all the work and he puts up the money, when the property starts to cash flow he will get all of his money back plus a little more and everything over and above that we will split 50/50. The property should bring in about 200 bucks a month positive cash flow, plus the house backs up to the interstate and we will lease some land to a billboard company which should bring in another 1500-2000 per month. Again this is win-win situation, we both bring value to the deal therefore we both profit and it didn’t cost me anything. Probably not the answer you were expecting, but I hope it helps.

Good Luck,
Zack Kram
www.BozacRealty.com
Off: 678-432-8448
Cell: 770-262-9360
Fax: 678-432-0017

import · January 14, 2003, 5:50pm

Getting started - Posted by Calvin

Posted by Calvin on January 14, 2003 at 18:50:09:

My parents are giving me 1000 bucks to help me get my rei career started. My wife thinks I should put it towards marketing. But I want to do a deals first then ivest in marketing. could someone help me with my dilema?

import · January 16, 2003, 9:11am

Re: Getting started - Posted by Wes (DFW-TX)

Posted by Wes (DFW-TX) on January 16, 2003 at 10:11:24:

Hi Calvin,

I would look into “Wholesaling/Flipping”. Do as much research as you can find on this and other REI web sites on this subject (read all related “How to” articles, perform searches on both terms on message boards, etc.).

All you need is $100-$200 of earnest money (which you’ll get back at closing), get the property using a standard RE purchase contract in your area, and assign it (using an assignment agreement) to another investor. The other investor purchases the property at closing and you receive your “assignment fee”.

Happy Investing!

Wes (DFW-TX)

import · January 15, 2003, 5:24am

Re: Getting started - Posted by Tom (WA)

Posted by Tom (WA) on January 15, 2003 at 06:24:04:

Use it to get an education in REI. Several courses will save you way more than $1000 in mistakes.

import · January 14, 2003, 9:07pm

Re: Getting started - Posted by Sean

Posted by Sean on January 14, 2003 at 22:07:46:

Where are you operating out of? $1000 is more than enough to secure a deal in my area, with the help of Hard Money Lenders. I would not spend on marketing until you honestly know what you can realistically do. Getting sellers to call you, but then having no way to act on their calls is money down the drain.

I would spend $20 to get some business cards made, and perhaps the membership fee for a real estate club in your area if you find one that is good. But I would not spend .01 cent beyond that on anything other than securing a property (hand money, option money, or inspections/appraisals).

Instead of spending your capital frivolously, get out in the marketplace, look at houses, talk to realtors, talk to other investors, talk to lenders/banks/mortgage brokers. Get to know your market, and what works in it and what you personally are realistically going to be able to do in it. Start putting in offers, that make good financial sense… even if you get turned down, you learn more about your marketplace. Lets face it what good is having everyone calling you, if you have no money or resources to actually buy the property?

$1k is more than enough to put down some hand money and get an appraisal done… this is the only expense you have if you find an HML willing to work with you and have good enough credit to warrant the route. It is also enough to put down on option considerations for a lease option.

Don’t be fooled into thinking NO MONEY DOWN means you don’t have to have ANY money… while there are occassionally deals like that out there, more often than not you will need to have at least some capital.

Believe me, through all these actions your name will get out there, give em all a business card, tell em what you’re trying to do, looking for, etc. I think putting some ad in a newspaper “we buy houses” is a waste of time and money until you are comfortable and know exactly what you are doing. Especially when you consider in most publications, there are 4 or 5 other ads just like it running 7 days a week.

Save that 1k for your first deal! After you do that, you will have lots more capital to play with.

Best of luck to you.

import · January 14, 2003, 7:41pm

Re: Getting started - Posted by Zack

Posted by Zack on January 14, 2003 at 20:41:55:

I agree with you, 1000 is not alot, but it’s enough to cover insurance and closing costs or to buy a mobile home with. Marketing will not do a whole lot of good if you don’t have the money to make the deals happen after you get them.

import · January 14, 2003, 10:12pm

Re: Getting started - Posted by Jeb

Posted by Jeb on January 14, 2003 at 23:12:01:

That’s not much money, especially when you consider all the unexpected expenses involved with this business. Why not get a better paying job first and then get into real estate.

import · January 14, 2003, 10:24pm

Re: Getting started - Posted by Zack

Posted by Zack on January 14, 2003 at 23:24:51:

No that’s not much, but it’s more than I spent on the last two houses I bought combined and I’m going to sign a contract on one tomorrow that I will not have to pay for. As a matter of fact I have not and will not spend a penny on any of these houses except for my gas to and from them, and a cup of coffee I’m going to buy the seller tomorrow for selling me his house so cheap.