Newbie with $45,600 in pocket - Now what?? - Posted by Brandi_TX


#1

Posted by SCook85 on November 10, 1998 at 22:52:48:

Adam,
I couldn’t have said it better myself. You are absolutley right. Having cash makes it easier when you know what you are doing. The idea behind creative real estate is to limit your exposure and getting started with a lot of cash does not do so.

SCook85


#2

Newbie with $45,600 in pocket - Now what?? - Posted by Brandi_TX

Posted by Brandi_TX on November 10, 1998 at 18:11:45:

My in-laws own there home free and clear. The tax assessment value is $57,000. We have asked then if they would be willing to take out an 80% Home Equity loan for us to use CHARGE our way into the world of REI. If they agree, this will give us $45,600 to for our investing. (Payments will be 442.38/mo)

We proposed to them this:

#1 The money will be deposited into a dual signature account, so that all $ spent from it has to meet their approval.

#2 Any profit from deals made using their $$ will be split 50/50.

We have been trying to put together a solid game plan to use this $$ in the most effective way. We first thought we would use it for cash deals and keep getting equity loans on the new properties, but the calculator quickly told us that we would run out of $$ taking 80% of 80% of 80% and so on. LOL
We are now inclined to use it to use it to tie up the homes and be able to close on them if we had to.

My question is this - What is the best way to use this $$ and keeping it going instead of running out? We know we want to flip as many houses as possible, but for you more seasoned investors, how would you reccomend a newbie use this money to launch their REI adventure?


#3

Re: Newbie with $45,600 in pocket - Now what?? - Posted by MJS(sjca)

Posted by MJS(sjca) on November 12, 1998 at 11:46:36:

Hi Brandi
Reading your responses tells me you might have a little more experience than the average newbee.
There is a little more to making money in RE than most people think. That is why a lot of people get discouraged.
I do not think these posts are trying to put your intent down. But they are putting in what they think will help you to avoid a few pitfalls.
The biggest thing in RE is to buy the property at less than value. And you will be putting $ out before you acquire any property. 70% +/- 10% is a rule of thumb. If you can do this this would be a good bet. A lot of people are buying at 40% to 80% of appraised value after fix-up.
Be careful in advertising $ because there are a few bad eggs out there.
AND you should almost always have a contract ( this will protect both parties in case something unforseen might happen. It is better to be safe than to lose anything.
If you do not have any books you should at least invest in one. And check out a buyer broker to work for you and a (real)RE Attorney.
Good luck mike


#4

YOU HAVE MANY PIT’S TO THAT IDEA !!! - Posted by Mike Knight

Posted by Mike Knight on November 11, 1998 at 19:06:47:

So E-Mail me and I’ll tell you of them and some others you have yet to see with that plan !


#5

Re: Newbie with $45,600 in pocket - Now what?? - Posted by J.P. Vaughan

Posted by J.P. Vaughan on November 10, 1998 at 23:16:12:

I agree with everyone who said to first learn to make
money is real estate with very little or no money down.

With $45,000, I would buy 15 Lonnie Deals at an average
of $3000 each. With avg payments of $225/mo, that’s
$3375 per month income ($40,500 per year). After a year,
you would have 20 grand of your own money to work with,
and you would no longer have to share 1/2 your profits.

Take that 20 grand, and buy another 7 Lonnie deals, and
add another $1575 per month income ($18,900 per year).

Hope you get the idea. Best investment you’ll ever make
is the 60 bucks you spend for Lonnie’s books.

JPV


#6

Re: Newbie with $45,600 in pocket - Now what?? - Posted by Jason-DTX

Posted by Jason-DTX on November 10, 1998 at 22:40:49:

You should always buy property as if you are dead broke.
All beginners are going to make mistakes, its not worth the chance to ruin a family relationship. It can happen in the closest of families.
If you decide to ignore us and use the money, your first expense should be to a lawyer(one with real estate experience) to draft a detailed patnership agreement. It should include a way to dissolve the patnership if the desire happens. It is to easy to make verbal agreements with family members and that is when you need written agreements the most. DO NOT put it off, DO IT FIRST.
The money could be an asset to your business but it will take you a year or two of experience to use it properly.
What part of Texas are you from?
Jason


#7

Re: Newbie with $45,600 in pocket - Now what?? - Posted by mike

Posted by mike on November 10, 1998 at 21:37:25:

think leverage. buy something at wholesale and use it at retail in the r.e. marketplace. could be a lake lot, an r.v., a mortgage that you bought, something that offers a profit spread. you realize it when you get into the r.e. you want. if you dont know what you want, dont jeopardize the seed money until you are ready. think leverage. dont risk opm and lose the relationship because you cant handle it. practice first. the money will still be there when you find one.


#8

Re: Newbie with $45,600 in pocket - Now what?? - Posted by Adam

Posted by Adam on November 10, 1998 at 20:03:47:

If you dont know how to make money in Real Estate

without money,you wouldnt know how to make money In

Real Estate with money.


#9

Re: Newbie + $45,600 in pocket =not good - Posted by Mike Bickle

Posted by Mike Bickle on November 10, 1998 at 18:56:41:

Ouch! If you are still new to this,i would strongly suggest you learn how to make a few bucks with out using equity in a relatives house. As i’m sure you have read here there ar many ways of doing it without doing as you suggest.

IMHO, not a good idea

Mike Bickle


#10

Re: Newbie with $45,600 in pocket - Now what?? - Posted by Scott

Posted by Scott on November 12, 1998 at 03:29:54:

I agree as well about no money down deals. I have a question though, if you buy no money down, or little down, won’t you have to spend a lot of money to close, title insurance, etc.? So how is it no money down? I get confused.


#11

THAT’S what I’m talking about!! - Posted by Brandi_TX

Posted by Brandi_TX on November 11, 1998 at 02:09:27:

JP-

Thanks!! That’s the type of stuff I’m talking about!

None of this “newbie with cash = trouble” stuff! What happened to the optimism in this group?

I do agree that I need to take extreme caution, but if I choose every deal primarily with the thought of “what if I lose my shirt”, I will never make any deals!!

We can all agree that this business has some risks, and I will definetly head the warnings and use as little cash as possible.

Thanks to all that responded… both good and the bad.

-Brandi_TX


#12

Newbie vs. “scholar” w/o experience - Posted by Brandi_TX

Posted by Brandi_TX on November 11, 1998 at 01:56:40:

Aren’t they the same thing??

Adam-

From our chat last light, you stated you have read $2,000.00 worth of courses and been studying this site for a year now. Yet, to date, you have no deals under your belt. We all learn and do at our own pace, but doesn’t that make us BOTH “newbies”?

While I commend your quest for knowledge, I do think there is such a thing as “over educating” yourself. I truly believe in continuing education, but not at the expense of letting hands-on experience pass you by.

You are submitting an offer for your 1st deal today, and that is great!! You said if you wholesale it, you will profit 3k. We all have our own opinions, and in mine, this deal will still leave you in the negative. Why? For the simple fact that 3k minus 2k (for the courses), leaves you with 1k. Don’t you think all the time you spent on-line over the past year is worth more than that? (Not to mention all the time you spent studying those courses.)

We both have one thing in common. The need to GET A MOVE ON our business. You have been very careful to not “jump” into anything, costing you valuable time. Just because I MAY have access to 45k and have claimed the title of a newbie, does not mean that I will ignore all the great advice here and jump without looking.

“Newbie” DOES NOT = “Stupid” And for those of you that disagree, where did you begin? This flame is not going out simply because there are “dream-killers” on this sight.

I’ll tell you what, Adam. I will promise to use little or none of the 45k to swing my 1st deal - IF - you promise to incorporate a little more dealing and a little less studying and making excuses. DEAL? After all we are both still “newbies”, aren’t we??

Best of luck to you - I will see you in the Player’s Club

  • Brandi_TX