Re: Get rich quick in Real Estate - Posted by JohnBoy
Posted by JohnBoy on February 07, 2002 at 11:05:03:
I don’t know where you get or even got the idea that this stuff is a get rich quick thing. Sure, the commercials come off showing where some of the students have done well over a short period of time, 1 - 2 years, but not all of them. The commercial even has a disclaimer on the screen stating the results differ depending on the student. The course tells you this isn’t a get rich quick business. In fact, it tells you this is a get rich SLOW business. Sometimes people just hear what they want to hear and ignor the rest.
If I remember Carleton’s course gave examples of where if you get a deal that would generate as little as $50 per month in cash flow that it was a deal worth doing. Quite frankly I disagree with that, especially if you are someone just starting out with little to no money. He claims his course has been up dated over the years so I don’t know what he teaches in his newer versions.
I for one think it isn’t a good idea for beginners to get started with buying rental property to hold for long term investments, especially if there is little cash flow involved. One bad tenant and kiss that cash flow goodbye for the next year or two or longer until you can recoup that loss from the little amount of cash flow coming in once you get the property rented again. One major repair cost of $1200 would eat up your cash flow for two years on a property generating only $50 per month in positive cash flow. And that’s assuming you have a good renter in there for two years with no other problems. That’s a good way to end up broke and bankrupt in a hurry!
Never buy property for future appreaciation and rent increases. Unless you are looking at something with a lot of up side potential and the cash to back you up until you can profit from the upside potential, don’t mess with it! You ALWAYS make your profit going INTO the deal. Otherwise you don’t do the deal! If you have little money starting out you need to first work on building your cash reserves before getting involved with any deals you stay in the middle of. Otherwise you go will broke in hurry the minute something goes wrong, and something will go wrong sooner or later! You need cash reserves to cover that when it does become a problem!
As far as having to be like a used car salesman convincing distressed sellers of a rotten deal they would be getting goes…what are you talking about??? That is the exact opposite of how you should ever approach this business. That is a sure fire way to end up going nowhere in this business because most people aren’t fools. They may be distressed and need to get out, but that doesn’t take being a used car salesman to get the deal done! It doesn’t mean they are getting a rotten deal! The goal is to HELP these people by being able to solve their problem. Not take advantage of them by being some used car salesman! The problem here is you just don’t know what you’re talking about. If you lost your shirt and had to file for BK, then I assure you or anyone else that it had nothing to do with the courses. It had to do with yourself making some rotten deals that didn’t pencil out and that you should have never gotten involved with from the beginning. You can’t blame that on a course! A course only gives you the information on how to be creative to come up with solutions to being able to invest with little to no money. It’s up to the reader to properly evaluate each deal they get involved with! If the reader makes a bad deal it isn’t the courses fault. The course can’t go out and get and make the deals for you. YOU have to do that part! It’s up to you to educate yourself in knowing the difference between a deal and not a deal. Some people just get caught up in the excitement of just being able to get a deal with no money down that they think it’s OK to do the deal then! Nothing can be further from the truth. Just because you can buy with little to no money down doesn’t make it a deal. The numbers have to work or it isn’t a deal no matter how you’re able to get the property! This business isn’t about, “YEAH! I purchased a property with no money down!” It’s about, “YEAH! I purchased a property and made a NICE PROFIT using little to none of my own money to put down.” If there isn’t a profit to be made at the time of buying the property, then it isn’t a deal, no matter how you can buy it!
Please explain to me by giving an example of what you’re talking about by having to be a used car salesman to rip some distressed seller off by them getting a rotten deal? I’m guessing you won’t be able to because you don’t know what you’re talking about.
How does a distressed seller take the risk for ME??? You have that backwards! It’s ME that is taking the SELLERS RISK! It’s the SELLER that has a problem and it’s the SELLER that is at RISK of losing their home if they don’t get something done with it! It’s the SELLER’S credit that is at RISK if they don’t do something! It’s the SELLER that is at RISK of having to file BK if they don’t do something! It’s ME that comes in and eliminates all that risk on the seller by taking on risks of my own to HELP them out of THEIR PROBLEM! It doesn’t take a used car salesman to do that! Quite the opposite!
You stated you bet the farm on a get rich quick real estate venture and you lost the farm? What did that have to do with any of the courses you purchased? Did the courses teach you to go out and make a BAD deal for yourself so you could end up broke and file BK??? I don’t think so. It was YOU that made the bad deal(s) by not doing your homework and making sure you were getting a deal before you bought into it! It has nothing to do with the courses. But you’re not alone on this either. Not by a long shot! Just about every investor has made mistakes and lost money on a deal or two. It still happens even to the best of them! Hopefully it’s a lesson that is well learned so you don’t go out and repeat the same mistakes twice! Hopefully you learned from it and become a better investor by knowing more than what you did before. Sometimes it takes the school of hard knocks to learn these lessons. Not everyone is going to listen to all the warnings given them and they will get themselves wrapped up into just getting a deal because they can get it with little to no money down. Especially when you’re just starting out! When you’re starting out it’s that first deal that seems to take the longest and the hardest to find. Then it becomes easy to get all wrapped up in just being able to buy any old property just because you can! They forget the cardinal rule that you must make your profit going into the deal or it’s not a deal! Only they get all wrapped up with just being able to buy something with no money down and get themselves into a mess because they went into the deal with blinders on!
This is big business and it comes with a lot of risks involved! It’s up to each person to properly educate themselves to know how to limit those risks as much as possible. Otherwise if you jump in with blinders on, you are heading for financial disaster!!!
EDUCATE YOURSELF! ALWAYS make your profit going INTO the deal. ONLY deal with MOTIVATED SELLERS. ALWAYS do you your homework and properly screen your buyers. ALWAYS get plenty of money up front from your buyers in the form of option money or down payments. ALWAYS make sure the deal will cash flow enough to justify your risks. ALWAYS put the up front money away to have adequate reserves to cover anything that goes wrong. NEVER touch that money to spend on other obligations unless you already have enough cash built up for reserves. NEVER get involved with skinny deals just because you can get them with nothing down.
If you’re just starting out with little to no money then start out with flipping and assigning your contracts until you build up your cash reserves before getting into deals that you remain involved with. That would be by flipping junkers to other investors by assigning your contracts to them for a fast profit. By dealing in NICE homes where you can assign your contracts to other investors or retail buyers for a fast profit. By getting options on property and selling your options to other investors or retail buyers. Then you can take that profit and spend it on whatever you want because you have no further involvement with the deal. Use it to pay off your debt. Use it for whatever. Then start putting that money away to build up your cash reserves. Keep doing this until you get plenty of cash built up. THEN start looking at deals you can remain in the middle of that will provide good cash flows with nice back end profits when your buyers cash you out! If you do this you won’t end up in a major cash crunch when something does go wrong and you don’t have any money to deal with it! If you spend your profits up front you’ll find yourself robbing from Peter to pay Paul when something does go wrong and before you know it…BK city, here we come!!!
If you are someone starting out that has credit and financial problems because of your not being able to properly manage your money, then don’t get involved with deals that require you to remain involved with. ONLY do deals where you can get in and out of with a fast profit. Then use that money to straighten out your own financial affairs and until you learn how to properly manage your money. Then build up your cash reserves until you have at least $25k in the bank. THEN, AND ONLY THEN, start looking into deals where you can remain involved with. Then take half the up front money you get from those and add it to your reserve fund to allow your cash reserves to grow with the added number of deals you obtain in your portfolio to maintain a proper balance of having plenty of reserves. Then you can take the other half and all the cash flow along with the back end profits and spend that money to live off of or spend it on whatever you want! You will have plenty of cash built up in your reserve fund to cover any of the unexpected!
This isn’t a get quick rich overnight process. It takes time and LOTS of persistance with LOTS of self discipline! Depending on what your current financial situation is will depend on how long it will take until you can get that cleaned up and then build up your cash reserves to get on your feet where you have a solid foundation to build off of! Do it RIGHT and you will eventually get there if you just keep at it. Do it wrong and you’ll never get off the ground and run the high risk of ending up in a financial nightmare! The choice is all up to you!