Posted by SteveS(CPA) on June 19, 2001 at 23:05:01:
When I first started, I had my little 5k buring a hole in my pocket. I put it down on a nice little piece of the American dream and pretty much broke even afer two years. Learning how to play the game without cash will help you not only keep your saving intact, but help you when those little unexpected events happen.
When starting out, keep your money. You may need it to pay for your mistakes.
Just my humble opinion
What the heck has happened… - Posted by Shawn
Posted by Shawn on June 19, 2001 at 18:47:09:
What and when did people start forgetting about saving? Not that all people invest with “no money down” but it seems like a lot of people on these boards find it to be the holy grail. It amazes me that so many people want to get into investing in real estate yet can’t bring themselves to first invest in themselves. I mean first of all REI takes a lot of personal investment; it takes your time, physical ability, headaches, worries, etc. This is what most new REI’s will sacrafice in the beginning, yet they can’t sacrifice saving a few grand to get started. Really if you think about it this way; either you can work hard for a few months and save up $5K or $10K and elliminate the headaches, time spent,etc. or you can go ahead and spend all that time trying get places with no money down. I guess its a personal choice, but the former should be the choice if one is absoutly serious about REI. The guru’s have done a great job and marketing and they do offer some good information, but, If we just stop and think about it, we can make it easier on ourselves if we just “save”. That’s the cold hard facts, I am sure I’ll hear it. But I wish everyone luck in their endevors. Please forgive me if I have offened anyone.
Shawn
Re: What the heck has happened… - Posted by Alex Guervich, TX
Posted by Alex Guervich, TX on June 20, 2001 at 10:27:43:
I agree with you about saving money in general with the idea to set them aside in liquid form.
I disagree wholeheartedly about your idea of saving money for real estate investments. You are right, having $5-10K available will close many more transactions, however, if it’s the money you are saving you’ll run out of them in a heartbeat, just after 1-2 purchases. Then you are out of the game for a couple of years.
So, don’t count on or wait for your own ability to save before you start investing. Instead, develop other resources that will make cash available for your deals: partners, private money lenders, etc.
Re: What the heck has happened… - Posted by ken in sc
Posted by ken in sc on June 20, 2001 at 08:21:00:
The point I think is not how much one puts down, but what kind of an investment did you make! For example, if you can get into a rental house for $500 down in a so-so neighborhood but rent it out section 8 for a $200 a month positive net cash flow, then that is a good investment. If you buy another rental house in a GREAT area for $20,000 below market, put $10,000 down and break even cash flow but the value increases $10,000/yr, that is also a great investment. I do both, but I focus on the investment, return on my money, not the cash down. Of course, if you buy some with little to no down, you can buy more than if you put a downpayment on every house. I have purchased 26 rental houses in 6-7 years - I could not have this many without finding some zero down deals. I can’t save that much!
Ken
Re: What the heck has happened… - Posted by SandyFL
Posted by SandyFL on June 20, 2001 at 07:53:16:
I think this is an assumption on your part that real estate investors are not saving. A huge - erroneous - assumption. In fact many investors I know have big whopping IRA’s and Roth IRA’s. Alot of us still work (ugh) and sock money away in a 401k.
You know what I like? I like that alot of us here are now thinking along the lines of Lonnie Scruggs - or Robert Kiyosaki. We LIKE the idea of making money in our sleep. We ENJOY thinking up new ways of creating passive income. And the other cool thing is - alot of us are teaching our kids the same.
I remember when one investor said (in person, or was that here?) - that he always takes his older children along to negotiate deals and to closings - because he wants them to be as nonchalant about buying property as if they were going out to buy a sandwich.
Dang I think that is ultra-cool.
Re: What the heck has happened… - Posted by Kim (FL)
Posted by Kim (FL) on June 19, 2001 at 22:14:20:
I think part of what you’re missing is that people do save but want to get into real estate to save even more and don’t want to risk their current savings for future savings. That’s true for myself atleast, we have retirement savings, emergency savings (I’m commissioned so we have cash to fall back on when I have slow months), we have college fund savings for our kids and we have savings for things like weddings and other things for our children’s future. We don’t want to use that money for real estate - but when we make money in real estate we’ll use that money to make more money and use it for fun stuff like paying off our student loans (that sounds crazy but we’re going to celebrate like college kids when we pay off our student loans. We had a GOOD time in college and we’re paying now!) 
So – it’s smart to find creative ways to invest without utilizing your money. We’d use our savings if that was the only way - but it’s not!
Also remember, many people want to make money in real estate so then can save (too many people are living hand to mouth these days) – that’s a good plan and if they can do it, that’s fabulous!
Re: What the heck has happened… - Posted by Ronald * Starr
Posted by Ronald * Starr on June 19, 2001 at 21:19:15:
Shawn----------------
Many people agree with. William Nickerson in his classic “How I Turned $1,000 into Five Million in my Spare Time” suggests saving money.
Jimmy Napier, of Chipley, FL, suggests saving money to buy real estate or other investments.
Jack Reed suggests saving to buy real estate.
You are not alone.
Unfortunately arrayed against this advice is the whole radio/TV media. The constant message is to buy, buy, buy. This is the opposite of save.
I think even those of us who are frugal have a tendancy to spend more when more money is coming in.
I agree, though, save what you can. You never know when a great real estate deal will pop up.
Good InvestingRon Starr******
Re: What the heck has happened… - Posted by Rob FL
Posted by Rob FL on June 19, 2001 at 20:24:45:
I think most people when they start out should try to invest without using their own money especially their savings nest egg. In the beginning more mistakes are made and if you screw up then, you could blow your whole nest egg.
On the other hand, I have found that when you have easy access to cash (either your own or thru credit lines) it is very easy to make much greater profits and to close faster. It also allows you to go after deals that you otherwise couldn’t.
Re: What the heck has happened… - Posted by Lazaro
Posted by Lazaro on June 19, 2001 at 19:34:04:
Shawn,
I don’t agree with you in one way. It is not completely true that you need a huge sum of money to start. That is just not true. But I do agree people should save for the future. But it doesn’t mean that because you don’t have $5-10k you can’t invest. If you don’t have money you shouldn’t leave your job but should look for Real Estate on your free time. Everyone has to learn how to get the max. out of their time. IMOHO you can do both (work and look for real estate). The only thing you have to do is work hard. By the way you can make $5k-10k in any deal. I don’t mean to slam you on your comment. I do believe people should save with out a doubt.
Cordially,
Lazaro