Posted by Millie I. on June 30, 1999 at 24:13:13:
Dirk,
You don’t need to be printing anything out. If anyone knows what he is doing, you do. Thanks for the reply anyway. I hope the wedding plans are going smoothly.
Smile,
Millie I.
Real Estate Investment Advice…Please help. - Posted by sean
Posted by sean on June 28, 1999 at 10:26:30:
I have completed the Carleton Sheets program and I also have a degree in Finance. I am looking to begin my Real Estate investing career, but I am getting mixed signals from this website. Some people think you should buy and hold, others say buy and flip or l/o. Knowing that doing Real Estate investing incorrectly could forever destroy my credit rating I am at a crossroads. I would love to begin doing investments, but I feel shaky to say the least. I will say that I have a positive attitude and think this market (Delaware County) Pennsylvania is a goldmine. I would like to speak to someone who is currently successful in or around this area or could lead me to someone who is. I have the motivation to run with this. I just don’t want to run in the wrong direction and lose my shirt.
Even though I could structure “no money down” deals, I don’t want to hang myself on a hook or use investor’s monies and not be able to provide a return. Please Help.
Investing is more than Real Estate… - Posted by Matthew Chan
Posted by Matthew Chan on June 29, 1999 at 24:32:58:
I may be a bit presumptuous in responding to your message since my RE experience is limited but I am an expert in making investments in oneself. There are a couple of statements you made that make me think you have other challenges other than the Real Estate issues.
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You stated you “don’t want to run in the wrong direction and lose my shirt”. I don’t think anything in life is going to go 100% smoothly. You may even lose money and time. You have to be prepared to take some minor losses in money & time to ultimately win and get ahead, in my opinion. The important thing is you learn, then apply it to the next deal/opportunity.
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You mention you don’t want to “hang” yourself. By your post, you seem to have a great deal of fear. Be careful so that it doesn’t paralyze you. You want to be cautious and prudent but not to the point where you need justification and proof beyond shadow of a doubt to take action. I have a friend who thinks like you and just lets the years go by while he watches me swoop in and out of jobs/opportunities/projects. Yeah, I’ve lost money, been embarassed, disappointed, etc. But because of all those learned experiences, I have lots of time and the ability to work when I feel like it and still lead an “average” lifestyle, overall. Be aware, but don’t be stagnant.
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YOu want someone to “talk to” in your area. It may be tough to get detailed information because you might be considered competition. I don’t mean to discourage you from finding successful people but don’t depend on it to start learning and trying things on your own. Real Estate is EVERYWHERE. The opportunities and conditions may be different. It is your job to learn and figure it out.
I believe that investing in YOURSELF is superior to investing only in Real Estate. Real Estate is only a vehicle which you will be driving…
Re: Real Estate Investment Advice…Please help. - Posted by Eduardo (OR)
Posted by Eduardo (OR) on June 28, 1999 at 23:48:23:
Sean–
Facts: You have a degree in finance, but you don’t know how to start investing in real estate. You feel “shaky” (scared). You don’t want to lose your shirt.
Welcome to the real world. My advice to you is threefold (applies to most other “wannabe” investors).
- Go out and look at a hundred little single-family houses in relatively good areas. Make a dozen low-ball offers (if they accept, great; if they don’t accept, shrug your shoulders and go on to the next one). Add cash to your offer (downpayment). End up buying one rental house. Keep it at least a couple of years. Live with tenant, repairs, taxes, etc. THIS IS HOW YOU LEARN!
- Do not try to get rich quick on zero experience. I do not agree with those who would advise flipping, no money down or lease-options for your very first investment. Wait until you decide if you like real estate after your first deal or two are under your belt. Too easy to make mistakes if you’re in a hurry. Just ease into it. What’s the hurry?
- Continue to study real estate investing by reading books, going to seminars, sending for courses (good ones sold here). BUT, don’t study to the exclusion of looking at properties and talking to sellers, that’s how you find out if real estate is for you–BY DOING IT.
Hope this helps. --Eduardo
Re: Make money using your best assets - Posted by Millie I.
Posted by Millie I. on June 28, 1999 at 23:31:13:
Sean,
Whether you hold or flip has to do solely with what your background is, and what your talents lie. Don’t decide base on what other investors do. Decide base on what you think is the most convenient way in your enviroment to make most money putting out least money and effort. Your degree is in Finance. Take advantage of it to help you make sound money decisions. If the numbers work, and there is a profit, do it. Just make sure the spread is large enough that if you miscalculated somewhere, you will still come ahead with a decent profit.
No mater what anybody says, there are advantages and disadvantages in both holding and flipping. Whether you win or lose has to do with ‘How the number works’. Most successful investors have done landlording, renovation, flipping, etc. If you do it right, there is money to be made doing both.
I have done landlording for 10 years in mult-units, then rehabbed SFR for 3 years, now I am doing lease-option and possible notes to sell my SFR to the tenants. I renovated/remodelled 11 houses this year, and I am still a landlord for my multi’s and SFRs. What you decide to do has to do with what fits you best, not what others tell you is best for them.
Landlording involves a lot of commom sense; skills in management, bookeeping, sales (rental), and extensive customer services; knowledge of city codes and legal requirements; some lawsuit preparation and court experience; lots of carpentry, plumbing, electrical, painting, and general property maintenance skills. You could, however, just buy a large building, and have a property management company handle it for you. Otherwise, handle the management and rentals yourself, and hire a good maintenance man.
The advantage of ‘holding’ is that as you accumulated several rental properties,(assuming that they are managed well with positive cashflows ), the money keeps coming monthly even if you are on vacation, or laid off. You will most probably have to pay some down payment and have a mortgage, and the equity build-up will stay with the property till a future date when you decide to sell the property for a larger profit.
Flipping, on the other hand, is a short term investment. You buy a property below market value, and sell it within a few weeks/months, rehabbed or prehab, for a quicker but much smaller profit. Rehabbed houses may bring you anything between $5K to $75K depending on your experience level. Prehab houses may bring you anything from $2K to $20K depending on how much you buy below market value. In general, if you flip right away, chances are you will need the skills to do some of the work yourself because your profit is too small to spend too much on hiring. The advantage of ‘flipping’ is that you get your investments and profit out quickly, and you do not get tied down by tenant problems; but when you stop to rest between projects, so does your cashflow. You have more free time to breath, but you money is as good as the last flip. If you want to eat tomorrow, you’ll have to find another house to fix and flip. No sitting back to collect.
To come down to where you stand:
1)Do you want to use your head or your hands? or both?
Ability to use both is an advantage. Hiring sucks up your profit, unless you have several projects going on at the same time, or a good income from other sources.
2)What are your skill levels for carpentry, plumbing, electrical work, painting, roofing, furnace repair, etc. Do you enjoy doing heavy physical work? Are you good at it?
Whether you hire or do it yourself, some knowlwedge of the needed skills would definately help with hiring good contractors, or getting small jobs done quickly.
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What kind of time do you have to put into it? Part time? Full time?
Part time investing usually end up with more hiring to save time. You may do more work if you invest full time, unless you are beyound that level, and don’t care to do the work anymore. -
Would you be going into SFR to make your mistakes on a smaller project? or would you be buying a big multi-unit, and try your hands on Landlording for monthly income? or perhaps you may decide to hire a management company?
These are questions only you can answer. Which is most comfortable for you?
Good Luck,
Millie I.
Re: Real Estate Investment Advice…Please help. - Posted by Dick Schmidt
Posted by Dick Schmidt on June 28, 1999 at 12:49:48:
The problem seems to be that you think there is such a thing as “real estate investing” and there isn’t. What is there is about 100 different ways to go about making money revolving around real property. The big basic split is buy and hold (be a landlord) and flipping (buy and sell quickly). Only the first is an investment, flipping is a job just like any other. When you stop, it stops. What I have done is use flipping to fund my investments, but many others have gone in countless other directions. Sheets is a good start, but you need more information before you can make an informed decision. Buy every book on real estate you can find and keep reading until you find a nitch that makes sence to you. Good luck.
Investing is more than Real Estate… - Posted by Jamie M. Perez(TX)
Posted by Jamie M. Perez(TX) on June 29, 1999 at 08:29:31:
Sean,
To follow up on Matthew’s point…whether or not you get involved in real estate on any level shouldn’t be the cornerstone of your existence. You need to take a minute and look at where you are today and where you want to be in three to five years in terms of finances, lifestyle, and career. Now, will real estate help you get there? What if you do lose your shirt? Do you have a backup plan? Try this. Get a job that provides you with steady income for now. Put some of that revenue aside for whatever. Then, look at the ways you can build wealth and increase cash flow. Real estate is just one avenue. I know that most of the people on this board will help you in any way they can. But, don’t make the mistake of thinking you can reach any level of success without a few bumps and bruises. I started off in buy and hold in 1989 and picked up LOs this year. I’d be more than happy to share my limited real estate experiences with you.
Jamie
Great Post Millie!!! - Posted by Dirk Roach
Posted by Dirk Roach on June 29, 1999 at 15:56:10:
I’m printing it out and adding it to my Creative RE Online folder!
Thanks
Dirk
Re: Make money using your best assets - Posted by Matthew Chan
Posted by Matthew Chan on June 29, 1999 at 24:08:50:
Millie,
Thanks for such an excellent and informative post. I, too, believe in doing whatever is appropriate at any given moment in time. I am very clear as to my goals (both short-term and long-term), my abilities, and my limitations.
I know lots of people are emphasizing flipping to get quick immediate payment. There is nothing wrong with it. I will probably do it occasionally. But whenever possible, I will hold either the property or paper. Income streams, cash flow, and wealthbuilding is MOST important to me, not the quick $5-$25K flips.
As such, my thoughts are always in developing that aspect. In any case, thanks for sharing your wide variety of experiences with us.
When it comes to real estate investment advice, there are several key factors to consider. Here are some general tips to help you make informed decisions:
- Set clear investment goals: Define your objectives, whether they involve long-term wealth accumulation, generating passive income, or diversifying your investment portfolio. This will guide your decision-making process.
- Research the market: Thoroughly analyze the real estate market in the area where you plan to invest. Look for trends in property values, rental demand, economic growth, and development plans. Consider working with a local real estate agent or consultant who has expertise in the area.
- Location is crucial: Choose properties in desirable locations. Look for areas with strong economic fundamentals, such as job growth, good infrastructure, access to amenities, and low crime rates. Properties in prime locations tend to appreciate in value and attract reliable tenants.
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