Posted by Killer Joe on April 10, 2005 at 14:53:39:
David,
Thank you for taking the time for your thoughtful response, I truely appreiciate it.
Respectfully, your friend,
KJ
what the gurus didnt tell you… - Posted by Jonathan
Posted by Jonathan on April 10, 2005 at 02:59:51:
I am a new investor and I am very motivated and excited about about it. So far the biggest challenge seems to be finding a motivated seller but with enough effort put into advertising It seems like that problem could be resolved easily. What else is a major hangup in this business???
Re: what the gurus didnt tell you… - Posted by rehabber
Posted by rehabber on April 10, 2005 at 21:35:28:
I think the 3 biggest reasons why alot of newbies
don’t succeed are:
- Not Suited to be in Their Own Business -
What I mean is, most people do not have the guts,
etc. to be an entrepreneur. Want proof? Simple -
Most people work a secure (in their mind anyways)
corporate job- there are far, far more worker bees
in the US than there are entrepreneurs. Doing REI
fulltime, even part time, requires one to have
an entrepreneurial mindset- the motivation,
perserverance to get things done, the needed
flexibility to be able to adjust as conditions change,
and the ability to keep a healthy sense of fear, yet
not let that fear overwhelm and paralyze you.
Our education system in the US trains us to be
worker-bees, so alot of people aren’t taught the
necessary entrepreneural skills.
- Not Having Sales Ability. - Make no mistake, REI
requires strong sales skills on both ends - to
negotiate with the homeowners to buy their home, then
to sell the home. Sales ability can be learned, but
there is a reason why good salespeople in most
companies are among the highest paid employess- because
sales requires nerves of steel and power of persuasion-
skills that don’t come naturally to many people. Yes,
I’ve seen even introverts become good salespeople, but
it takes work and a healthy sense of self esteem to
be able to put all the rejection aside and forge ahead. - Last but not least - Many are not Sufficiently
Capitalized. Yes, there are no-money down deals, but
as others have mentioned, if you have to rely 100%
on no-money-down deals, it will limit the number of
deals suited for you. Proper capitalization and
sufficient reserves go a long way to helping you stay
afloat if you are a rehabber and the repair costs
suddenly go up, or if you have rentals and they stay
vacant for a while. I’ve bought more than one place
from a rehabber who started the job, underestimated the
costs, ran out of money, and was desperate to
‘stop the bleeding’ and sold to me at a discount.
Also, I’ve seen people get crunched when a few of
their rentals sat empty for more than a few months.
You’ll still lose sleep if your rehab costs increase
greatly or if you have empty rentals, but you can
at least survive if you have proper reserves.
To greatly lessen your risks- as a newbie, learn about
REI, but also learn all you can about:
- Owning your own business and the skills it takes -
many free classes are offered by CORE or other govt.
related agencies on this. - Read some good books or take some classes/seminars
on proper selling techniques
and - If you have little $$ now, put aside some $ from
the profit you make on each deal so you WILL have the
reserves built up for when bad things pop-up down the
road.
Best of luck to you in your REI endeavors Jonathan.
Re: what the gurus didnt tell you… - Posted by John
Posted by John on April 10, 2005 at 15:24:49:
Anyone read Kris Kirschner’s stuff? What is the best course for Sub2?
Re: what the gurus didnt tell you… - Posted by Killer Joe
Posted by Killer Joe on April 10, 2005 at 12:38:50:
Here’s something else the gurus didn’t tell you that Mike didn’t put in his post (good post Mike).
If you want to be concert pianist and you don’t have the talent…guess what…
If you want to be an olympic athelete and don’t have the time to hone your skills…guess what…
If your hankering for a big thick juicey steak and the only meat in your fridge is baloney…guess what…
If you want to ask that beautiful woman across the room out on a date but your afraid to talk to women…guess what…
If you want to change your life and really take some big gambles but your afraid of what others might say…guess what…
If you want to run a 26 mile marathon but a flight of stairs requires a minutes rest…guess what…
If you want to make a lot of money but are afraid of losing a days pay if you call in sick…guess what…
If your idea of a good investment is a pretty house that only sets you back a little each week…guess what…
If continuing your education means one more book or one more course before you take action…guess what…
If the thought of dealing with a hassle makes your stomach upset…guess what…
If a vacation is more important than handling business…guess what…
I’m guessing you’ve guessed the point. Not trying to be negative, just addressing the post.
Now let’s all get back to planning that golf outing at the Wiamea Country Club & Spa we’ll be going on right after we get back from the African Safari we took to celebrate that first million we made, that only took 6 months of working 7 hours a week from our bed, so we wouldn’t strain ourselves and not be in condition to enjoy the fruits of our labors, and have to sleep the whole way to the Islands on our own private jet we got by trading that option on the Donalds’ failing resort we put together while reading the morning paper on the throne in the poolhouse.
I love this life…
KJ
Re: what the gurus didnt tell you… - Posted by Mike-OH
Posted by Mike-OH on April 10, 2005 at 08:43:56:
Hi Jonathan,
Most of the gurus give you good information, but what they don’t tell you is that it is not as easy as advertised and the road is filled with potholes!
For example:
-
The gurus tell you that you can buy property with no money down. This is true, but buying property with no money down drastically cuts down the number of properties that are available to you. The vast majority of deals will pass you by if you don’t have some money. Cash is King in real estate investing. The investor with cash has a great advantage over the wannabe with no money.
-
The gurus tell you that you can buy property without credit. This is also true but again you will are eliminated from the vast majority of deals. A person with great credit has a great advantage over someone with no credit or bad credit.
-
The gurus will tell you (or at least imply) that you can spend a few hours per week in real estate and become a millionaire! This is true although very unlikely! You could also spend just $2 and become rich if you buy the right lottery ticket! (Also unlikely). The investor that spends a LOT of time and energy in real estate investing is much more likely to be successful than the 3 hour a week wannabe!
-
The gurus tell you that you can build a great net worth which is true, but net worth doesn’t pay the bills. Cash flow is harder to come by than net worth!
-
The gurus tell you that if you only spend a few thousand more dollars on their training materials, that you’ll surely be successful. This is total nonsense. A basic education in real estate investing is needed along with a LOT of initiative, persistence, and hard work. What the gurus don’t tell you is that the vast majority of the wannabes that attend these seminars and bootcamps will never do a single deal.
-
What the gurus don’t tell you is that finding the deals is the easy part; finding the money to do the deals is harder.
-
What the gurus don’t tell you is that significant time and effort goes into finding the right tenant for rental properties.
I could go on and on, but you get the idea. Real estate investing is a great way to make a living, but it is a business like any other. It requires work, effort, and money to be successful.
Good Luck,
Mike
Re: what the gurus didnt tell you… - Posted by Mr. Big
Posted by Mr. Big on April 10, 2005 at 06:41:42:
The typical guru is strong on how to acquire real estate but doesn’t go into what you do afterward. Sort of like a movie that ends with a wedding and “they lived happily ever after” with the emphasis being on the one month courtship not the 50 year marriage.
Re: what the gurus didnt tell you… - Posted by David Alexander
Posted by David Alexander on April 10, 2005 at 04:08:07:
If your looking for a business that doesn’t have problems… then you’d better rethink your plan…
If you think the gurus can identify all the places you’ll have problems then again… you’d better rethink what your doing…
Finding motivated sellers is quite easy… once you understand marketing…
The major hang ups are like any other business… there are ups and downs and good days and bad days…
There are days when you get the big checks… and months when you go without them… just writing them…
It’s all part of the game… We call investing…
David Alexander
Re: what the gurus didnt tell you… - Posted by David Alexander
Posted by David Alexander on April 10, 2005 at 12:38:50:
Great Post… Although… I disagree with points 1 and 2 to an extent…
Having lots of cash lying around before you’ve developed the skills to utilize it properly can be as great a burden as Not having cash…
This is a cash intensive business and cash can dissappear quick if your not quick…
It’s better to learn how get deals without your cash… especially starting out…
There is a time when it helps… but, using the noggin’… is a good thing…
As far as the credit thing… I’ve never used mine… don’t intend to… I don’t see that as a limiting factor in any way…
It’s all a matter of perspective…
David Alexander
Re: what the gurus didnt tell you… - Posted by Than
Posted by Than on April 10, 2005 at 08:32:12:
David,
I am glad to see that someone finally hit the nail right on the head!
Re: what the gurus didnt tell you… - Posted by Killer Joe
Posted by Killer Joe on April 10, 2005 at 12:46:11:
David,
As a rehabber, the credit factor is as valuable a resourse as a good set of tools. Use it wisely, keep it clean, and always remember to wear your safety glasses.
KJ
And that’s… - Posted by David Alexander
Posted by David Alexander on April 10, 2005 at 12:57:01:
probably a difference in the way we do things…
I don’t rehab… I don’t believe there is money in fixing houses… As a business for me…
Rehabbing is a business…
I do sell and finance the sell of houses to rehabbers…
David Alexander
Re: And that’s… - Posted by Killer Joe
Posted by Killer Joe on April 10, 2005 at 13:26:38:
David,
True story.
I’ve got the rehab part down cold, finding, lining up finance, buying, fixing, selling, profiting, all on ice.
The way you do RE is why I come here to learn. Eight years of doing this and I still am a newbie. Well a one trick pony anyway. Not for much longer. Just sold my rehab, made out good, and all set to line up the next project. This time I might try a new technique I wouldn’t have considered six months ago. Who knows, might even be from an idea I got from reading your posts. Made 6 figures on this one (God bless these CA prices) so yea, it’s possible to make money rehabbing. Possible to make money lots of other ways too, can’t wait to get started on another technique.
Keep up the good work,
KJ
Re: And that’s… - Posted by David Alexander
Posted by David Alexander on April 10, 2005 at 14:07:55:
If you got the rehabs down to a science… put the people in place… let the business roll… that in itself would the investment… Not the rehabbing… but, the business…
Or take the cash generated and payoff a keeper property or buy a note… that would be the investing…
Investing moves us closer to be retired… or to being more retired… improves our lives…
Sometimes if were not careful… we can end up further away than when we start…
David Alexander
Re: And that’s… - Posted by Killer Joe
Posted by Killer Joe on April 10, 2005 at 14:17:32:
David,
The subject matter that brought me to this site was the hunt for info on NOTES. I typed in Notes on google and this site came up. I had no idea there were so many REI heads out there that find this subject so fasinating.
Since we’re having this conversation, I would highly value your opinion on what steps, books, etc. that you deem personally valuable regarding Notes. BTW, this is the first time I’ve ever asked for advice on this site, so let’er rip.
Thanks,
KJ
Re: And that’s… - Posted by Paul
Posted by Paul on January 18, 2006 at 18:58:09:
Try the website papersourceonline.com for notes. The forums they have are really helpful.
Re: And that’s… - Posted by David Alexander
Posted by David Alexander on April 10, 2005 at 14:30:18:
That’s where I started… and that’s where I’m back to…
I got into RE to create notes… cause I didn’t have the money to buy notes outright… and figured I create my own cashflows…
Where to start… John Behle’s site… PaperGame.com
Tons of Articles to get your creative Juices flowing…
There’s a cashflow forum on this site… and Terry, Lonnie, Michael Morriengelo, Dave Butler are all about notes…
I’d start with all of John Behle’s Articles…
There are basically 3 ways to get into notes…
As a Principle… Using your own and others money
As a broker… Brokering off all or part of the notes…
Or Creating your own…
And of course any combination of the above…
Also, Read Wade Cooks Real Estate Money Machine… that book is what got me started…
David Alexander