Beginner's Question: Do I Have What It Takes? (Long) - Posted by Robert W. Smith, Jr.

Real Estate Investing
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Posted by Steve on May 14, 1999 at 19:41:37:

Hi

I have just been to an intense 2 day seminar taken by RK, in which he again went through his ideas (as written in RDPD and Cashflow Quadrant). I think he is trying to educate the masses about the differences between his definition of assets (that feed you + generate cashflow) and liabilities (that eat you + take money away from you).

Unfortunately, most people fund too much equity in their family home (a liability by RK definition as it generates only -ve cashflow until sold). They then have no money to invest because there is a tendancy to fund credit cars and personal loan payoffs with the home equity. This creates a spiral of money troubles and in the end they may own their house but have no passive income for retirement.

RK’s number one teaching is to become financially intelligent, which he defines as thoughts and actions that improve (financial) survival. Or, how to make it AND keep it.

It appears that people who use this site are well on the way to achieving that goal! p.s. RK recommended this site at the seminar.

Hope that everything is going well with your expected child.

Cheers

Steve

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Beginner’s Question: Do I Have What It Takes? (Long) - Posted by Robert W. Smith, Jr.

Posted by Robert W. Smith, Jr. on May 14, 1999 at 17:37:12:

My questions is simple. Do I have what it takes to make money in real estate? I’m not talking about brains and/or business sense here, I’m strictly speaking financially. Here’s the situation:

My wife and I own our own home. We purchased it nearly three years ago for $127,000 at somewhere near 7%, with 20% down. For property tax purposes, the house is assessed at $110,000, which means that most banks only consider us having about $10,000 in equity at this point, even though we put over $24,000 down. We could probably sell it for about $130,000.

I just finished reading “Rich Dad, Poor Dad” and decided that perhaps buying a house wasn’t the smartest move . . . but what’s done is done. Should I consider selling the house, to free up that $25,000 for use somewhere else? Could I possibly get more than $130,000 if I’d be willing to L/O the property to a tenant/buyer who’s having trouble getting legitimate financing?

My wife and I are expecting our first baby in November, and I’m beginning to do what many expecting fathers do - worry about money.

We have zero credit card debt, and about 59 payments of about $265 month left on our car and an interest rate of 6.75%. Our credit is superb.

Can I make money in real estate given our situation, and if so, where would you advise me to begin my search. I love to study and read up on possible investment opportunities. It is between real estate and the stock market. Please give whatever advice you can. Understand that I’m not looking to make 6% to 8% a year. Maybe I’m being greedy here, but I’m looking for much higher rates of return. Where should I begin?

Thanks in advance for whatever help you can provide.

Regards,

Bob

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Re: Beginner’s Question: Do I Have What It Takes? (Long) - Posted by Bill Gatten

Posted by Bill Gatten on May 15, 1999 at 15:59:03:

Q: Could you name any highly sucessful Real Estate Investors who regularly invest large sums in the stock market?

Q: Could you name any highly successful stock market investors who regular invest large sums in Real Estate?

Your two answers should be – “Yeah, probably, if I think about it long enough,” and “Why, of course I could!” When you match the two answers to the appropriate two questions, you should have the solution to your conundrum.

As far as “having what it takes,” if you have a wife, a child, a car payment and a house payment and some assets to protect and expand… then you have what it takes.

Bill

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Re: Beginner’s Question: Do I Have What It Takes? (Long) - Posted by Mark Nyman

Posted by Mark Nyman on May 14, 1999 at 19:02:56:

Dear Bob,

I don’t know if it is your first child but part of what you are describing is what I went through with both kids.

i started worrying about money and my ability to produce sales and results. this in turn passes. I wouldn’t bee too worried about it.

I have been listening to Ron LeGrand’s tapes on lease options, buying wholesale, taking property subject to rather than assuming the loan. All of these investments you can do with little money. You might need very little seed capital but you can then turn that capital over lots.

good luck and thanks for letting people know what’s happening in your life.

congratulations on your new addition to be.

Mark

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H*ll yes you can!!! - Posted by Sean

Posted by Sean on May 14, 1999 at 17:51:59:

Good credit, little/no credit card debt, equity in a house? You are WAAAAAAAAAAAAY ahead of most of the beginning people who post here!

Do I advise selling your house? Only if it doesn’t meet your needs. It isn’t necessary to sell your house to use that equity to buy houses from motivated sellers.

The Carleton Sheets course talks about a simple technique to buy property. You find a property worth $100,000 and you buy it no money down by getting an 80 percent loan and having the motivated seller carry back 20% of the balance of the loan against another property you have that’s got some equity into it. Bingo, you’re in.

And the CS course isn’t even that sophisticated. Once you study the rest of the stuff on this site including all the great how-to articles you’ve got incredible potential considering your financial position.

I’m sure other people can advise you as to what study material might best meet your individual situation, but you are definitely 90 percent there already.

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Re: My take - Posted by Stacy (AZ)

Posted by Stacy (AZ) on May 14, 1999 at 17:49:50:

Personally, I don’t think Kiyosaki was implying that we shouldn’t own our own homes. He was just making a point about assets versus liabilities. Especially in your position in regard to your new family, I wouldn’t sell your house. Everyone needs shelter, and if you sell, you’ll have to go out and get another one anyway.

The best REI strategies are those that don’t have you spending a lot of your own money. This is one of the most important aspects of creative investing. Control is the key.

I would suggest that you educate yourself before you do anything that you regret. Wholesale flipping takes very little money and is a good place to start. Lease options, buying subject to, straight options, Lonnie deals; all of these, executed well, should not require thousands of your dollars to succeed.

Slow down and educate yourself. You look to be in charge of your current debt, which is a terrific start.

Stacy

PS. Congrats on your future addition! My third child is due in November, too (around Thanksgiving)!