how realistic to make about 100K per year in REI? - Posted by Ryan (WA)

Posted by Ronald * Starr(in No CA) on August 27, 2003 at 12:25:25:


I know of a few vacant and run-down houses close to my area - do you think that these can still be bought at a deep discount?

“I know of a few vacant and run-down houses close to my area - do you think that these can still be bought at a deep discount?” Only if you try. I also recommend that your search for “grouchy old men” in the archives. That particular post ma be a big help to you.

Good InvestingRon Starr****

how realistic to make about 100K per year in REI? - Posted by Ryan (WA)

Posted by Ryan (WA) on August 26, 2003 at 19:16:35:

I’m IT analyst with a 4-year degree. My level of intelligence should be at a reasonable range (if not higher). I’ve been studying Creative Real Estate investment strategies and methods for at least 1 year and have done 1 deal (rehab). I have good credit and should be able to come up with about 80k in cash to use if necessary. My question is how reasonable is it to expect to make around 100k per year doing this full-blown for somebody like me?

Re: how realistic to make about 100K per year … - Posted by Frank Chin

Posted by Frank Chin on August 28, 2003 at 08:28:30:

Hi Ryan:

Thought I comment on your question as I worked as a self employed Computer Consultant, and a Systems Analyst with a large company for nearly a dozen years. Prior to that, I was in the Banking, Finance field for another dozen years. I have an Electrical Engineering Degree plus an MBA in finance.

Do I think my intelligince represented by my education and jobs translates into success in creative REI?? I would say NO.

JT hit the nail on the head, REI is an entrepreneurial excercise. In order of importance, I would say you need gut intincts, people skills, and finally technical knowledge.

As a fromer Systems Analyst and consultant whose job it is to identify user needs, and solving them, the biggest user complaint I hear is “… you guys don’t listen, and I don’t understand the technical gobbleddygook computer speak half the time…”

Are these the same guys going to a explain and SELL a “sub 2” transaction, good luck.

As someone who started two businesses, and recently bought one, one key element is salesmanship. I went into business with a 26 year old back in the late 70’s who didn’t finish college, but showed me a P&L with 100K in earnings the prior year, and 100K in CD’s on the company’s books.

This fella was in the alarm business, and knew little about alarm circuitry. His prior experience was being “an insurance salesman”.

His take is “you need salesmanship to get the customers first”, and I can always hire a guy to install alarms at 30K/year. He said “I used to sell insurance, now I sell alarms”.

How about gut instincts?? The alarm company owner was looking at demographic trends to see where he can open up new offices. Isn’t this the type of knowledge required of an REI?? Certainly!!

I could see this 26 year old dropout succeeding in REI, if he choosed to engage in it, or any other business for that matter.

And his hobby?? He’ll focus in on a particular type of business, and look up phone numbers in the Yellow Pages, call them and gauge the response and customer service. He claims that he called up a dozen companies that installs “Central Vacuum” systems, and few return call, and the two who did was not helpful.

He says “Frank, want to spend a few dollars to telemarket Central Vacuum systems and see what we turn up??”. I asked why??. He said “Frank, I think we’ll be the only one in the County soliciting this type of business”.

Guess what?? I didn’t make 100K a year nor had 100K in the bank when I was 26 years old. You see, all of professional knowledge and education did not give me the wit, risk taking, and adventurism that my friend possessed.

I mentioned to him one day that his other competitor in town, had both trucks parked in the driveway everytime I passed by. He said "Frank, that’s why I pay my installer to drive my truck up and down the streets in a hurry all the time, stop for coffee, and hand out flyers in the local malls when we don’t have a job to work on. “In a hurry, I asked??” “Of course, we want customers to think we’re busy all the time, don’t we?? Everyone knows Aaron isn’t with the trucks parked all day”.

Well, that’s another thing they didn’t teach me in business school.

Anyway my friend, good luck in your endeavours.

Frank Chin

Re: how realistic to make about 100K per year - Posted by JD

Posted by JD on August 27, 2003 at 10:16:40:

1 in 5

a successful r e investor… - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on August 26, 2003 at 23:36:21:


Nice to meet you. I think JT(IN) gave you a good answer.

It would certainly appear that you have the intelligence. There are really successful real estate investors of much more modest intelligence.

The thing is, however, that this is an entrepreurial activity. You are not in a group with a bunch of other people, dividing up the work. If there is something that has to be done to make a deal work, you are the one selected to do that. If somebody has to get out of bed in the middle of the night, you are nominated, and elected unanimously.

Some people function well in a group. Some people function well on their own. Which type are you? The successful real estate investors are the second type. SOme of them fail miserably when having to function in a group setting.

My former employer was making about $300K to $400K a year when I first started working for him. When I left he was making over a $1Mill a year. Profit. After expenses. He was a foreclosure specialixt who had been at it 20y ears or more. You might not do quite so well when you start. However, there is obviously room for high profits in the field of real estate investing. By the way, I DO NOT recommend foreclosure investing for the besginners.

Good InvestingRon Starr*****

You might be too smart for this… - Posted by JT-IN

Posted by JT-IN on August 26, 2003 at 20:49:54:


Seriously… no sarcasm intended. Not really too smart, but too analytical. Many folks like yourself want to analyze RE the way that you analyze computer bits and bytes… (or whatever it is you do). As you can tell, I don’t understand that stuff.

RE investing is comprised of 3 things…

  1. Product Knowledge… how to do; techniques, contracts, terms, values, etc, etc.

  2. People skills… controlling, rather than being controlled. How to motivate your potential customers with words.

  3. Instincts… Having the intuition to know what and when to do, or not to do, or apply some of the skills aquired in # 1 & 2 above.

Product Knowledge of the business can be easily acquired. People skills is somewhat more difficult, and some folks never truly master this skill. The above two can be taught, and learned, however the Intuition of what to do when is the ingredient that is the most difficult. There are folks who have been slaving away at this for a long time, because they do not have the intuition or instinct of how to go about it, and it cannot be taught… or at least it is difficult, at best. It may be aquired by seeing others who have it, but for the most part… you will be limited in this business only by the degree of you instincts… assuming you have acquired the other skills…

Take an honest evalution of yourself, as to how you stack up in these 3 areas. If you have an adequate amount of what it takes in each of the 3 categories, making the benchmark income of 100K isn’t even a challenge… It becomes a matter of how hard do you want to work, as the limiting factor of how much money you can make.

Just the way that I view things…


Why not? - Posted by Jim (NY)

Posted by Jim (NY) on August 27, 2003 at 08:53:41:

Hi Ron,

I was just wondering why you think that forclosure investing is bad for beginners. I’m relatively new to REI, and from my point of view it seems like a good way to go. Now I’m not talking about doing full-blown rehabs from the get go, rather, I’m talking about finding good deals and wholesaling them to more experienced rehabbers (while trying to learn at the same time).

From a monetary standpoint (not much capital to start with), it would seem like a newbie investor is better off trying to wholesale distressed properties than buying them to hold and rent. It seems to me that if you can get properties before they get sold at auction (no way I’d even consider going to auction at this point in my career), you might be able to get them at a fair discount. If you do your due dillegence (check the title, etc.) before you buy, I think that you lessen the risk of your first investment being your last one.

In addition, it would seem to me that for a newbie, buying RE to hold and rent is a dangerous proposition if you don’t have adaquate cash reserves. Wouldn’t it make more sense to buy properties that you can wholesale for a small profit, build up your reserves, and then venture into buying to hold?

Like I said, I’m new to this, and I would really value some insight (I’m still trying to find the best stragety for myself). Thanks.

Good answer, I saved this one. Thanks. - NTXT - Posted by Brent_IL

Posted by Brent_IL on August 27, 2003 at 01:52:54:


Re: Why not? - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on August 27, 2003 at 10:49:22:


My views are laid out in the article “Is foreclosure investing for you” in the money-making ideas forum of this CREONLINE.COM website.

The use of the word “foreclosure” is very loose for some people. When I use it, I mean buying at the auctions.

While I am not enthusiastically advocating people try to work the preforeclosure market, which is what you are talking about, I see it as less risky than buying at the auctions.

However, it is still a somewhat advanced technique in my view. You should know the foreclosure laws and procedures in your state intimately to make it work well, in my view. Most beginners do not seem to want to put out the work it takes to be a specialist and really understand what they are doing. If you are willing to spend a few months studying before you start messing around with people’s lives–even already messed-up lives–you may be able to make money.

If you want to do wholesaling, I’d recommend avoiding the foreclosure market. Go for rundown, condemed, vacant, or out of area owners first. The people will probably be easier to deal with. Depending upon where you are, there may be more deals available, and you won’t be competing with the professional foreclosure investors, some of whom work preforeclosure. And then you don’t have to learn all the foreclosure laws either. Although you should still study real estate investing, I feel.

Good InvestingRon Starr*

Thanks, Ron. - Posted by Jim (NY)

Posted by Jim (NY) on August 27, 2003 at 11:20:32:

My ultimate goal is to be an investor, not a dealer. I’m just a little weary of buy and hold without having adaquate reserves (which I don’t have a lot of right now). In addition, it would take me forever to save them the “conventional” way. I know of a few vacant and run-down houses close to my area - do you think that these can still be bought at a deep discount?

Re: Thanks, Ron. - Posted by dell-ohio

Posted by dell-ohio on August 27, 2003 at 21:55:22:

I think you are on to something that has a lot of potential.

We have been buying quite a few rehab properties. Now that we are doing a couple deals a month and have the contractors in place to double our “production”.

We have decided to track down rundown,vacant distressed, and neglected propertie to hopefully ensure a good supply of good rehab deals for us.

One of our staff is going to drive all the streets in one of the neighboring towns looking for these properties. He will be collecting photos(digital camera) and keeping a log of the adresses and any information he can find about them on his drive. We will then track down the owners. We will put together a mailing list of all the property owners and send them letters which will be followed up with phome calls.

We will mail maybe 10 letters to begin with and make calls a couple days later, see what the response is to these and then mail however many more the results dictate.

If I was just getting started I would learn everything possible in this area, become VERY good at it. The competition is likely slim. If you develop you strategy and technique of how to find these properties and their owners, learn what the investors are willing to buy from you “what makes a good deal”. When you have made some money, gained some valuable experience and will be ready to run your own rehabs from a steady source of available properties.

The book by Meyers “Find It, FIx It, FLip It, Profit” goes into more detail with this strategy and has some useful forms. Its one of the best books I have read on rehabbing, and finding rehab deals.

My Viewpoints