Get rich quick in Real Estate - Posted by Hal

Posted by JohnBoy on February 12, 2002 at 14:19:41:

For L/O’s check out Bronchick’s course at:

http://www.creonline.com/c-122.htm

For flipping properties check his course at:

http://www.creonline.com/c-162.html

And Steve Cook’s course of flipping at:

http://www.creonline.com/c-182.html

Get rich quick in Real Estate - Posted by Hal

Posted by Hal on February 07, 2002 at 08:37:25:

I found this discussion board as a result of hearing a Carleton Sheets sales program on the Discovery channel. For those people thinking they can get rich quickly as sweet and nice as described in these types of sales programs on TV, then think again. Think. How lucky do you feel? Years ago in the mid 1980’s, I bit into the Wade Cook stuff, I bit into the Robert Allen stuff, I bit into the Carleton Sheets stuff. I had thousands of hard earned dollars wrapped up into these seminars and books and tapes and legal forms… and you know what? I lost my shirt and eventually filed for bankruptcy. These courses do indeed have valid creative ideas, But the bottom line is, do YOU have what it takes to convince other people to take ALL of YOUR risks for you. Stupid and cash do not go together. If anyone has cash, then they didn’t get it by letting somebody else take control of it in risky schemes. House equity is what the market has created. Slapping a coat of paint on the trim doesn’t gain you thousands of dollars, yet it COULD. It could. Distressed properties do exist. Are you willing to deal with the human factor? If you have the ability of a used car salesman, able to convince these distressed people that the rotten deal they are getting is the best thing since diced apples, then that angle may work for you. These real estate courses do indeed have ideas, approach them with your eyes wide open. Stay in reality, do not let that tiny spot of shining light TV advertisement blind you to the darkness all around it. Be very careful. Try out Amazon.com, I saw a used Robert Allen nothing down book selling for $.49, that is 49 cents. Don’t bet the farm nor the kids education fund. The angle of a special deal if you order with in the next 6 minutes is bunk, they will put it up on TV again. That stuff is all around. Try eBay, you can probobly find this stuff there a lot cheaper. Carleton Sheets isn’t putting his stuff on TV because he is a non profit organization. It takes a lot of work and organization and money to do what he is doing. There HAS to be a lot of money in his seminars, otherwise he would be spending his time investing in real estate. I bet the farm on a get rich quick real estate venture and I lost the farm. I saw the tiny spot of blinding light, and the darkness engulfed me. This real estate stuff may work for you. Just use common sense, evaluate your skills and talents, be careful. Get rich quick should be a red flag. Possibly a way to integrate their ideas is into a get rich slow scheme. Make sure you have enough cash in the bank to pay for legal fees, building evaluations, titles searches and a whole bunch more. This is not written to slam or defame any one person or any investment group. They do have some good ideas. It is written as my personal view point, from my experience. I still have all that real estate stuff, it is boxed up and is stored in the attic of this rental house I live in. Bankruptcy is a hard pit to crawl out of, so be very careful. I wish you all the best.

Re: Get rich quick in Real Estate - Posted by JoeS

Posted by JoeS on February 08, 2002 at 13:16:59:

Too bad a bad experience has made you bitter! When you bet the farm and lost it, could it have been some of your fault? I have made money in this business, but have not become rich. Why have some and not I? Is it the fault of the books or courses? NO! It is because of my own dumb mistakes! I will not make them again the second time around.
If you could do it all over again, this time with the learning experience that you have gained, you would make a lot of money in this great business. We investors are not used car salesmen taking advantage of some unsuspecting sap! If you could lose the bitterness, pick yourself up and do it, you will get it done. Do you know how many times Edison tried before he succeeded? Over 3000 times!
To all the new people that will read this…do not ever think this is a get rich quick business. It is not! But, you can make a good living. Get an education before you spend thousands on boot camps, tapes, courses etc. Never bet the farm!

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!

Re: Get rich quick in Real Estate - Posted by GRQ

Posted by GRQ on February 07, 2002 at 10:27:55:

A bit bitter, eh, Hal?

I can vouch for everything you’ve said… - Posted by Rich

Posted by Rich on February 15, 2002 at 12:38:37:

…especially about having cash reserves.
Having just emerged from bankruptcy, I know too well that having no cash reserve can bury you faster than you can say "What do mean the roof’s leaking?"
My personal house of cards came tumbling down after a combination of unfortunate, but not totally unpredictable events took place. I blamed a lot of people for my problems, but have accepted the fact that my problems were of my own making. I now realize that the old adage still holds true…“It takes money to make money”. I didn’t have a backup plan, or contingency if plan “A” didn’t materialize as I hoped it would. When my plans began to implode, there was nothing to stop the total collapse.
I have to start over at age 47 with zero in the bank, no job, or any real prospects. Not a pleasant place to be, but I’ll survive.

  • Older and wiser.

Where were you when I started??? - Posted by Kevin

Posted by Kevin on February 11, 2002 at 24:47:51:

Excellent advice! The only problem is that I wish I had seen it earlier…then I would be alot wealthier than I am now. Yes, I have an income producing property, but with what that property ate up in down payment and getting into it, I realized, finally, that I could have been buying “subject to” and setting up Lease Options! (I could’ve had a V-8!) This is definitely good advice to anyone starting out…but also good advice for me too. Thanks

JOHN BOY GREAY POST 1 QUESTION THOUGH - Posted by scott in va

Posted by scott in va on February 07, 2002 at 11:50:17:

I understand the concept when you are first starting out but where do i find investors to assign contracts to.So what you are saying is i find a property tie it up then find another investor who deals with l/o flipping etc and assign it to them for a fee like bird dogging to get my cashflow started then i can start keeping the deals myself for more profit.Is that what you are saying Thanks again for your time scott

Re: Get rich quick in Real Estate - Posted by cechd16@aol.com

Posted by cechd16@aol.com on February 11, 2002 at 11:36:58:

You give up to easy the riches in real estate are all around you you just have to get of your rusty dusty and write 100 offers 10 to 10 different realtors and I will bet my shorts you walk into at least one deal worth $10,000. I know better because I was bankrupt and I bought my first home with 650.00 cash and it was financed by the owner. At that time I was a bartender making $7 hourly and a poor student!!! I challenge you to step up to the batting box and begin swinging!!

Re: JOHN BOY GREAY POST 1 QUESTION THOUGH - Posted by JohnBoy

Posted by JohnBoy on February 07, 2002 at 13:08:36:

Yes, that’s what I’m saying. You can find investors through local rei clubs and through your ads advertising the property to find a buyer. If you have other investors already lined up then you can save on advertising costs by just calling up the investors when you have a deal under contract.

It works sort of like bird dogging, but only you make a lot more money from doing it this way. Bird dogging you just refer leads to other investors. If they buy the property they kick you back $250, $500 or so for referring the lead to them. By you finding the property and doing all the work of getting it under contract you can make $2500 - $5000 on average per deal! You can also advertise to retail buyers looking to buy on a L/O and assign your contract to them. Instead of getting the $2500 - $5000 for option money, you just take that as an assignment fee and the tenant/buyer just assumes your contract with the seller. They move in a make the payments under your contract terms and exercise the option when they’re ready to buy. Just make sure that you ALWAYS get a signed release of liability from the seller releasing you from any further liability on the contract. Otherwise if your buyer ever defaulted the seller could come back after you since you would still be liable under the terms of the contract. Getting a release of libility avoids that potential problem.

Re: JOHN BOY GREAY POST 1 QUESTION THOUGH - Posted by scott in va

Posted by scott in va on February 07, 2002 at 23:39:09:

Thanks again John but i have a question my biggets fear is the contracts what do you think is the best course to get to learn about assigning.I understand the concept but going out and doing it scares me what if i screw up on a contract and get stuck with a bad deal what advise would you give.Thanks for your time

Re: JOHN BOY GREAY POST 1 QUESTION THOUGH - Posted by JohnBoy

Posted by JohnBoy on February 09, 2002 at 24:20:22:

If you are flipping a deal like a junker to a rehabber, have the contract subject to approval of your final inspections within 30 days. If you can’t find someone you don’t approve of your final inspections and the contract becomes null & void! You can either negotiate to extend for more time or walk away.

If you would be assigning to another buyer as a L/O you make your contract subject to you finding a suitable tenant to place into the property within 60 - 90 days. Get as much time as you can. Then if you don’t find someone within the time allowed in your contract, you either extend for more time or walk away! The contract becomes null & void!

You can’t get stuck with anything that way. The only thing you can lose is the cost of advertising the property trying to find someone to flip it to!

Re: JOHN BOY GREAY POST 1 QUESTION THOUGH - Posted by JR

Posted by JR on February 11, 2002 at 18:16:40:

Johnboy, if you intend to assign a l/o away, do you tell the sellers this upfront? I might be easy to do a l/o if the sellers know you will be involved, but if you are going to assign it away to a t/b, then the sellers might be more reluctant to do a l/o deal with you. How can this be handled to make it easy for investors to setup l/o assignment deals? Any suggestions would be greatly appreciated.

Re: JOHN BOY GREAY POST 1 QUESTION THOUGH - Posted by scott in va

Posted by scott in va on February 11, 2002 at 14:45:44:

John what is a good course to start with if i want to go about doing this one that gives me all the forms and basic knowledge

Re: JOHN BOY GREAY POST 1 QUESTION THOUGH - Posted by Aaron Stafford

Posted by Aaron Stafford on February 09, 2002 at 02:11:23:

This is some of the best advice I’ve seen!
I’m just barely getting started learning about flips and rental real estate. I’ll definitely look for more of your posts.

I hope your loved ones appreciate the sage who lives among them.

Re: JOHN BOY GREAY POST 1 QUESTION THOUGH - Posted by JohnBoy

Posted by JohnBoy on February 12, 2002 at 14:21:27:

All of my contracts are assignable when I’m the buyer. When I’m selling none of my contracts can be assigned.

My right to assign is a standard clause in my contracts I enter into with the sellers. I’ve never had anyone question it. BUT! Just because I have the right to assign doesn’t mean the seller has to release me from my liability of performing on the contract. Which means I can assign my contract whether the seller likes it or not, but if I don’t get a signed release of liability from the seller then I remain liable if the buyer I assigned to was to default. Then everything falls back on me as far as the seller having recourse. This is why you ALWAYS get the release so this never becomes a problem. So you are going to need the seller to go along with it.

One problem you will run into is that many sellers just want to be done with having to deal with the property. They don’t want to have to deal with anything once they unload it to someone. Actually when you think about it, what difference does it really make whether you remain in the contract or someone else takes it over? Either way the seller has a risk of either party performing. It’s just that they assume since you are an investor that you are more credible than the average wannabe homeowner. For all they know you could be the one with lousy credit and the buyer you want to assign to would be a much better risk to them! Of course you couldn’t tell them that without losing the deal though.

My contract is subject to me finding a suitable tenant to place into the property. So before I become obligated to the contract I have to find a buyer first. Meanwhile the seller has to continue making the payments until I find someone. Usually I have 60 - 90 days to do this. Then I either negotiate for more time if I haven’t found someone or just walk away.

Usually what seems to work best is when I find someone I want to assign to, I go back and approach the seller about it. I say, Mr. Seller, I have some good news but there is a small problem. As you know I’m in business to make a profit. But there are times when my making a profit isn’t always for the best interest for everyone involved. I have someone who really wants the home but based on what they can afford there wouldn’t be any room left to make myself enough profit to justify my staying involved with the deal. I’ve checked this buyer out and everything looks good as far as them being able to qualify for a loan within the next few years. They can afford to pay what I have contracted to pay you per our agreement, but they can’t afford to pay any more than that. So for me this wouldn’t work and I would have to just wait until I found someone else that can afford to pay enough to justify my risk in this. I know how you really need to get out from under those payments so I feel it would be in your best interest if I just allowed this buyer to step in and take over my contract I have with you. They would be able to pay me a little something to where I would recover my expenses with the marketing I’ve spent on this and walk away with a small something for my troubles. They could start making payments right away where you will no longer have to come up with that money yourself while waiting until I found someone that had more money. I can have everything set up with an escrow to where you wouldn’t have to be bothered with anything. The buyer would forward their payments to the escrow and they would send your payments from that to your lender to insure your payments are being made on your loan until they are ready to get financing and pay you off by exercising their option. Of course, if you feel to uncomfortable about me not staying involved in the deal and you dealing with these buyers after I’m out of picture, then I understand. I can just tell this buyer no and I’ll keep looking until I find someone else that can afford to pay more so I can justify my risk involved! I just can’t guarantee how long that may take. I just hate to see someone that is qualified get away just because they can’t afford to pay more so I can profit. But I’d be glad to keep looking if that is what you would prefer! :slight_smile:

What’s the seller going to say? NO, let the buyer walk away and you keep looking until you can make enough money off my property while I keep making the payments on it??? Hey, you never know, but more than likely they will jump on getting someone in there that can start paying now. Especially if you already qualified them and have everything set up with an escrow and through your mortgage broker to get them financing in the near future. Otherwise if the seller won’t go along with it then you still have the option of walking away once your 60 or 90 days is up to find someone. You only lost your advertising costs and some time.