Posted by Tony Ferlazzo on December 12, 2000 at 20:07:28:
Thanks for saving me some time and money for a RE license.
Tony
Newbie’s Confusion? - Posted by Tony Ferlazzo
Posted by Tony Ferlazzo on December 11, 2000 at 15:12:18:
Another novice humbly asking the group’s opinion:
Looking into foreclosures here in SF Bay Area California, where the market is white hot, a realtor I contacted said he had a few investment properties. He steered me toward HUD and VET foreclosures. When we started looking at costs, he mentioned a 10% down loan. My thought is that a $400,000 house would cost me $40,000 and then be rented for less than the mortgage cost. Yes, he said, but with home prices raising 15-20% a year, in a year I’d make back my down payment. On paper, perhaps. And then use pyramiding purchasing power to obtain other properties.
But all the potential benefits would still be on paper. In the mean time it has cost me about $1,800/month in negative cash flow ($21,600/yr) plus the original $40,000 I put down. Unfortunately I don’t have a spare $61,600. Even if I did have the money, why would I want to do this? He told me in a few years I would probably have a positive cash flow. That’s not too appealing.
Obviously, most people are in my situation and without a large capital base. Once a person has a few properties, selling one for a profit would provide the funds to live on, but how does one get to that point? Seems like one has to kill the goose to eat at the cost of not having any more golden eggs produced. So becoming a landlord doesn’t seem very advantageous to me in this market.
The other money-making system people seem to be using in REI is to flip houses. Buy wholesale and sell retail. The concept is straight-forward. I’ve read a number of how-to REI books. They concentrate on the what-to-do part but all skim over the how-to-do-it part. I know what to do, buy low. Every house I see advertised is for full retail. How do I find homes with a wholesale price? More importantly, how can I find a real estate agent who will search out these deals for me, while I keep my job that puts food on the table?
Your advice on answering my questions or on correcting my naive understanding of REI is greatly appreciated.
Tony
BTW … - Posted by Redline
Posted by Redline on December 12, 2000 at 14:42:40:
Congrats on realizing that the property you were looking at was a bogus deal - and that the realtors version of an “investment strategy” (if you wanna call it that) was totally bogus as well.
You’d be surprised how many people starting out wouldn’t know a bad deal if it bankrupted them.
RL
Bad deals are easy to find! - Posted by SCook85
Posted by SCook85 on December 11, 2000 at 16:52:53:
The deal you mentioned is a bad deal. Tell your realtor not to do you any favors. You can find deals like that all day long. I might be wrong when I say that, I would have a tough time finding one that bad.
Finding motivated sellers is easy once you know how. You can go after vacant homes, fixer uppers, estate sales, preforeclosures, etc… Also keep in mind that an asking price is only that, it is not what you have to offer.
Steve
Re: Newbie’s Confusion? - Posted by Geoffrey Faivre-Malloy
Posted by Geoffrey Faivre-Malloy on December 11, 2000 at 15:19:43:
Hi Tony,
I like Ron LeGrand’s approach to Wholesale/Retail. I’d recommend picking up his courses. Don’t know much about landlording…
G-Man
Re: BTW … - Posted by Tony Ferlazzo
Posted by Tony Ferlazzo on December 12, 2000 at 20:05:21:
Alright! I’m on the right track. Yes, I’ve had enough experience with agents to know a bad deal.
Thanks for the encouraging words,
Tony
Re: Bad deals are easy to find! - Posted by Tony Ferlazzo
Posted by Tony Ferlazzo on December 11, 2000 at 20:55:37:
Hi Steve,
Thanks for reinforcing what I knew in my heart was a bad deal. Geesh! How can realtors look people in the eye and feed them the story the guy was trying to feed me. Negative cash flow is just plain stupid.
So, I’m on the right track, or so it seems. Next stop: a really good deal! But again, I know (in general) what looks like a good deal. It’s one that puts money in my pocket. Like most people, I was thinking about finding homes I would live in. But investments properties don’t have to be particularly attractive (i.e. one I’d like to call home) to me.
Stories people like to share with me about making money with real estate (from realty agents, that is) go something like this. “I know a couple who buys distressed homes, real fixer-uppers. They move into them, spend 3 to 6 months fixing them up, and then sell them. They come up with enough profit to purchase another fixer-upper home and pay the bills while they live in the new place and fix it up.” Frankly, I’ve never spoken to anyone whose actually in the REI business, making big money, and not playing the fix-it-up game. There’s got to be a better way.
From the responses I’ve received it seems that I need to learn much more about how to make money in REI. Okay, I could use a mentor, someone who is knowledgeable, someone who would get a kick out of helping me get into REI, someone with a great heart whose got the time to answer my questions. Any takers?
No, I’m not looking for a free lunch, or a get rich scheme that is just a way for people to get rich off of selling RE courses. I’m looking for the real thing. Perhaps all that I really need is to participate in this forum. G-Man recommended Ron LeGrand’s Wholesale/Retail course. The course description is appealing. Making FAST CASH is certainly a eye catcher, but is there steak behind the sizzle? Please be kind enough to e-mail me privately or post a message about their experience with the course.
Someone else recommended I take their real estate principle’s course. Would having a RE license help?
Your follow-up messages (for al of you out there) would be greatly appreciated.
Tony
Re: Bad deals are easy to find! - Posted by dewCO
Posted by dewCO on December 11, 2000 at 23:13:02:
No, a real estate license mainly just helps get you access to sold comparables. While that is extremely important, I’d find a cooperative realtor who will do it, even if you have to pay for it.
Learn creative RE here and focus on that first. Read everything here and study—get a course or two. Real estate agent in general know NOTHING about creative RE and they don’t care. Fugggetaboutit with RE agents.