Posted by MoniqueUSA on October 04, 2002 at 08:13:25:
It’s creative, not imaginary.
It’s real estate, not get rich quick.
It’s no money down, it’s not no money ever.
It’s not a job, but it is work.
– Tim Fierro
Tim,
I always enjoy your posts. This piece was particularly well stated. And worth saving
to share with new investors who struggle with the same question.
MoniqueUSA
What’s your monthly nut? - Posted by Hank
Posted by Hank on October 02, 2002 at 21:41:48:
How much per month are you coming out of pocket to keep those leads coming in?
Bandit signs, billboards, postage, laser printer cartridges, classified ad(s), gasoline, so on and so forth.
My wife gets a little nutty once a month. - Posted by Smile
Posted by Smile on October 04, 2002 at 14:54:11:
Does that count?
Re: What’s your monthly nut? - Posted by Rob FL
Posted by Rob FL on October 03, 2002 at 19:28:40:
I probably average overall about $1200 per month to keep open a brokers office out of my house, manage a handful of rentals, and run an investment business. That includes multiple phone lines, newspaper and sign ads, annual dues, licensing fees, supplies, mileage on the car, etc.
Of course when I first started investing for the first few years I didn’t even spend $1200 per year. Now I’m normally working somewhere between 4-7 transactions as either a broker or personally at any given time which easily takes care of the overhead. I’ve never heard of any business that doesn’t require some money to operate it. That’s kind of a no brainer. After all, it’s a business.
Now as far as no money down goes, it’s true that nearly all of the transactions I do are no money down. Normally they are 100% financed by somebody or else involve some sort of contract assignment.
Re: what happen to no money down? - Posted by ron
Posted by ron on October 03, 2002 at 10:25:10:
so this money is put out before you even make a dime? hmmm, and on a monthly basis? thats what i been wanting to here the truth not fiction. thank you honest investers.
Re: What’s your monthly nut? - Posted by JohnP SFL
Posted by JohnP SFL on October 03, 2002 at 24:04:41:
Hank here is a break down.
Ads $400. per month
Postage $200-$300 per month
Cell $125.00 per month
signs $65 dollars per month
land line $20.00 per month
Hank it adds up quick. I do have a ad in the yellow pages thats why you see such a high cost. I wouldn’t recommend it. I get very little response from it.
JohnP SFL
Re: What’s your monthly nut? - Posted by Kristine-CA
Posted by Kristine-CA on October 02, 2002 at 22:02:39:
This is the overhead for just getting the leads, right? Not total business expenses.
Postage and supplies for mailings, about $100-200 per month.
Ads about $200 per month
Cell phone (I work in an area 150 miles away–so it’s all long distance) about $200 per month.
Gas, coffee and candybars about $30 per trip (4-8 times per month)
Online data services: $60 per month
To be honest , I try to think about this too much.
Kristine
Re: What’s your monthly nut? - Posted by Hank
Posted by Hank on October 03, 2002 at 13:00:47:
Add on everything it takes for you to do business.
The point I’m trying to make is that all this “no money down” talk is overstated.
Re: What’s your monthly nut? - Posted by JohnP SFL
Posted by JohnP SFL on October 03, 2002 at 14:27:23:
Hank,
O.K. you said how much does it cost for you to do business on a monthly basis, not how much money I put down on a property. Its all semantics. Example my first deal was from a 25cent postcard I sent. I made 15K off that postcard. I didn’t put any money down on a property! I did catch up a mortgage for a 4plex. It cost me $2,800.00 dollars. Now let me ask you if i could tell you where to pick up a 4 plex for $2,800.00 dollars are you going to refuse because you have to shell out some dough? What do you think it would of cost you to purchase that property the conventional way or with no money down? You might not be taking dollars out of your pocket but you are paying for it. I have no problem with that as long as it works for you. My second deal was a house that I put under contract with a $100.00 dollar check. I made 7K and the women cash the check after we closed. I guess that was a no money down deal since she didn’t cash the check right away. Oh that was a $1.25 sign on a telephone pole so it did cost me something plus my time to hang the sign. I market heavily and yes it does cost me. But I also reap the rewards. If you think you are going to browse around and find “NO MONEY DOWN DEALS” with no effort or absolutely no cash. You need to get a grip on reality. As my Italian grandmother always said “You need to bring something to the table”.
JohnP SFL
Re: What’s your monthly nut? - Posted by Hank
Posted by Hank on October 03, 2002 at 15:27:11:
So I’m over at the newbie board ( NG 2 ) and I see this post by a rookie that says he’s skeptical about all this “no money down” business.
As am I.
Don’t get me wrong, I love this business, I do it full time, but the reality is that, as your Grandmother said “You need to bring something to the table”.
I think the new investors should know what to expect. Marketing costs aside, when a newbie finds that house at 50% of ARV and goes to a hard money lender, that lender is going to want to see something brought to the table by the newbie. Then there’s the appraisal. Then there’s the draws. Sometimes one needs to put the money out of one’s pocket because one can’t wait for that next draw to be OK’d. Sure, the newbie will get that money back in a couple of days, but he’s got to keep that crew working or the holding costs will kill the deal.
Money out of pocket.
Newbies should be aware that they are going to need a money for education, a couple thousand for marketing and start up costs, and a couple thousand for misc. costs to close deals. We should remember that a newbie is not as good at finding those killer no $ down deals as those that have been around longer.
Also, this talk of making X amount of money from one postcard is poor logic unless there was only one postcard mailed. Newbies also don’t often know a good deal when they see it. And if they do see a good deal for what it is, they often screw the first couple of deals up because they say the wrong thing or in some other way drop the ball.
As Legrand likes to say, “How do you think I know this”.
That’s reality.
Hank
P.S. Again, don’t get me wrong, I don’t want to be John T. Reed over here, but I have seen lots of new guys wash themselves out because of unrealistic expectations.
They find out the hard way that the real world is a bit different from seminar land. Then they become cynical and throw the baby out with the bathwater, saying things like " that real estate stuff is B.S. I tried it and it’s nothing like what they told me it would be like".
Then it’s back to the J.O.B.
Re: What’s your monthly nut? - Posted by Tim Fierro (Tacoma, WA)
Posted by Tim Fierro (Tacoma, WA) on October 03, 2002 at 17:45:26:
Most people with common sense should be able to grasp what is fluff, hype, ra ra cheering, workable, and doable information. If they don’t, they probably don’t have the brains to be doing anything in real estate; the contracts would throw them off kilter.
Anyone who believes you can buy an introductory $39.95 book, quit their job tommorrow, have bad credit, no money in the bank, etc… and make thousands in your first week is ready for a fall. If they haven’t got enough sense to figure out that it takes a bit more than that, there they just plain don’t get it.
It’s creative, not imaginary.
It’s real estate, not get rich quick.
It’s no money down, it’s not no money ever.
It’s not a job, but it is work.