Posted by Eric on November 29, 1998 at 18:17:22:
Mel,
I don’t have advice but am in about the same position you are in and I just wanted to say that I hope you get a response so I can learn something too. Also just wanted to wish you success!
How do I start? Getting $8,000 in 6 months - Posted by Melanie
Posted by Melanie on November 29, 1998 at 17:58:45:
Hello All,
I will be getting $8,000 in 6 months when me and my 3 brothers sell my moms house( she passed away). Anyway I have been reading artilces and all sorts of stuff on real estate. What I want is your opinion!!! What would you recommend I do with this money to start building my RE empire?
Your suggestions are greatly appreciated.
Melanie
Re: How do I start? Getting $8,000 in 6 months - Posted by Mr Donald
Posted by Mr Donald on December 01, 1998 at 16:59:17:
Since you’re north of the 48th, try Raymond Aaron’s Canadian Real Estate course as a primer on how to get started.
Surf over to http://www.aaron.com for more.
Re: How do I start? Getting $8,000 in 6 months - Posted by SCook85
Posted by SCook85 on November 30, 1998 at 17:45:59:
I think that Ed and Bud give you great advice. I wouldn’t wait the six months to get started. You can get started now. One of the keys to being successful is to put together a good team. You can’t pull off the deals by yourself. You need attorneys, realtors, mortgage brokers, etc… When you have your team in place you can feel confident about going into a deal knowing that your team can get the deal done.
SCook85
Re: How do I start? Getting $8,000 in 6 months - Posted by Ed Garcia
Posted by Ed Garcia on November 30, 1998 at 10:34:59:
Melanie:
You have been given some excellent advise.
My contribution to this information stream, is do it now.
Although the $8,000.00 could be helpful, it is insignificant in the scheme
of things.
Scott Britton gave you excellent advise when he told you to go educate
yourself. There is no doubt we can learn from others experiences,
however there is no experience like first hand.
I?m going to give you 5 tips on how to recognize and negotiate a deal,
to get you started.
We need to do what we call penciling out a deal. When doing that we ask
ourselves a battery of questions necessary in structuring a deal.
(1) How much do I want to make ?
So many times I hear someone act as if they are afraid of loosing a deal
because of the profit they put into it. Forget about it. I?d rather be sorry
about the deal I did not make, rather then the one I did.
The profit is what protects you in a deal. Don?t be afraid to make it.
When doing a deal I want to make at least 30%.
And believe me when I tell you, when I structure a deal with 30% in it,
I never get it. Some how the profit always dissipates, even after I thought
I figured it to the penny.
Would I do a deal with less profit? Yes but I would do it as a flip, lease
option, or as a leveraged deal with positive cash flow.
(2) Determine the Value of the Property.
The next step I must do is determine what the property is worth.
The obvious thing to do, is comp it. Don?t let the seller or real-estate
broker tell you what it is worth. Get the comps yourself.
(3) Deferred Maintenance.
Usually I figure my profit after taking off the deferred maintenance,
otherwise it distorts my profit. So it must be figured in the beginning to
determine your profit.
(4) Game Plan.
What do I want to do with the property ? Do I want to fix it and sell it ?
Do I want to keep it long term or short term ? When I buy a property,
I have a plan for it. And usually I buy it with that plan in mind.
(5) Financing.
How am I going to take my deal down ? Am I going to create a seller
carry back, and use a lender to give some money to the seller ?
Will the seller carry back the whole deal ?
Will I have to buy it with a combination of down payment and financing ?
Or will I pay cash and then refinance it later, getting all of my money
back. Will I do a lease option ? which will give me a leveraged deal.
Financing is of the most importance, regardless of what type you use,
because it will give you control of the deal as well as give you confidence
on how your going to take your deal down.
Melanie, These are just a few tips to give you some food for thought in
getting started. But don?t wait 6 months for your money,
START NOW???.
Ed Garcia
Re: How do I start? Getting $8,000 in 6 months - Posted by Rob FL
Posted by Rob FL on November 29, 1998 at 18:41:01:
Don’t count your chickens before they hatch. Your $8,000 (which is only on paper) could evaporate easily with closing costs, realtor commissions, repair costs, low appraisals, etc.
I would take Stacy’s advice and if possible do something with your mother’s house now, like refinance and buy out your brothers.
Best Wishes.
Re: How do I start? Getting $8,000 in 6 months - Posted by Stacy (AZ)
Posted by Stacy (AZ) on November 29, 1998 at 18:36:10:
I would look into keeping your mother’s house, for one. Are you interested in owning rentals? You could buy-out your 3 brothers’ equity with a new low interest loan and possibly have a positive cash-flow, provided you can get a decent discount from the FMV. You’d have to run the numbers. Another possibility is to ask your brothers to accept their equity in the form of a low interest note, which will allow you to pay them over time instead of buying them out immediately.
One thing you need to learn, though, is how to use other people’s money. Using your own cash for every purchase will eventually get you stuck (with no cash left).
You also need to learn the basics…some start with Carleton Sheets for the basics, which is fine. You can probably get the basic education you need to understand creative deals from library books and books from the bookstore. Then focus on an area of REI you like and order a course from here.
But my most sincere hope is that your first purchase is “Rich Dad, Poor Dad”. Amazon.com has it for about $15.
Get educated, then get going!
Stacy