What should I do with my LAST $600??? - Newbie - Posted by Kelvin

import · March 21, 2006, 9:46am

Posted by Chris in FL on March 23, 2006 at 08:46:38:

Johnny, Glad I could help. You got the concept, and it works anywhere as long as you can find bargains. Some people find bargain R.E. easily, some people struggle, and some people say “those deals don’t exist”. I don’t know of a book just on wholesaling - I don’t think it is that complex of a topic to warrant a book by itself (though there may be some). Many of the gurus cover wholesaling as one of their strategies, and, yes, it is an excellent way to get started - the best in my opinion. Robert Allen and Ron LeGrand both cover it [probably find Allen’s “Nothing Down” at librabry or any bookstore - it is old, but mostly still applicable, or LeGrand’s “How to Make Millions in Quick Turn R.E.” (or something similar) - I have a signed copy at home.
Now, let me get on my soapbox for a minute. If you don’t have much money, and are just getting started (because there are a lot of you out there), wholesaling is great - but if you don’t learn how to manage your money, etc., you will never be wealthy. The deals where you make a million overnight are few and far between; R.E. is, largely, a get rich slow plan. Assuming you haven’t already, get Robert Kiyosaki’s “Rich Dad, Poor Dad”, and learn the fundamentals of how rich people think differently than poor and middleclass people. Then, do yourself this one favor as you go through life: live below your means, and save and invest the difference. “If you save 10% off the top, you will never miss it. If you save 10% off the bottom, you will never do it” - very, very true. I religiously have a set amount of my income automatically transferred to a savings account, which only gets touched when it is time to invest it (for me, mostly R.E.). This starts to create your money machine. You put money in, and create cashflow, but never take money out. “The Millionaire Next Door”, boiled down, says 95% of millionaires have one thing in common - they are very good at managing their money! Best wishes!

import · March 21, 2006, 9:46am

Posted by Kelvin on March 21, 2006 at 10:46:03:

Due to certain circumstances I have a check for $600 and no job. I’m fairly educated I have Master’s Degree and all but I’m really looking to build my own business. I have bought 2 homes in my life to live in so I’m pretty familiar with that process but can anyone help me and point me in the right direction on how to make this LAST $600 work for me in real estate.

Thanks!!

Kelvin

import · March 21, 2006, 5:36pm

Re: What should I do with my LAST $600??? - Newbie - Posted by speednxs

Posted by speednxs on March 21, 2006 at 18:36:15:

Congratulations, 3 years for the Bachelors and another 2 or 3 for Masters is quite an accomplishment. Just don?t expect any sympathy from people who couldn?t/didn?t stick it out. It?s possible you weren?t paying attention when they spent 5 minutes explaining capitalism in one of your required humanities classes.

You have to create value to receive value. Call me a cynic, but if you provide no value, you will receive no value. What you do will inevitable be a reflection of your personality. Oprah Winfrey would be a miserable failure trying to be Conan O?Brien. Your path to success isn?t necessarily the same as anyone else. Feel free to listen to the Rock Opera ?Tommy? if you need confirmation on this point.

I do buy and hold rentals. Filling rental vacancies is a huge skill to me. I?d train someone to interview, call references, spackle, paint and clean grout. To some people this is garbage. (90% of everything is garbage. 90% of you income comes from 10% of your efforts.) If you ended up with a rental, would you know what to do with it?

Do you know how to research liens against title? If you want to deal with motivated sellers, understanding the liens against title is essential. Do you know why a trustee owns the property for purpose of selling in case of default, but doesn?t own it for purposes of exploiting equity? Do you know the difference between living trusts and land trusts? Do you know how to contact the IRS and finding out about tax judgments. Ditto bankruptcy filings. Understanding title issues is critical to some real estate transactions.

If you had a PHD you would know how to run a research project. This would qualify you to evaluate the effectiveness of direct marketing advertisements. Perhaps you picked up some of this along the way.

Could you make a checklist of all documents needed to sell a property? Disclosure (easements, lead paint, deaths on the property, etc.), termite inspection, building inspection and on and on. If a buyer turns vengeful, you don?t want to have skipped any. Do you understand every sentence of every contract? Taking someone to court to enforce a contract is really expensive.

So what you need to learn depends on what you plan to do. You?ve had lots of suggestions of what you need to know, that you don?t know. I?d concentrate on learning early on, and earning later on.

Good Luck

import · March 21, 2006, 1:27pm

Re: What should I do with my LAST $600??? - Newbie - Posted by Chris in FL

Posted by Chris in FL on March 21, 2006 at 14:27:32:

Kelvin, While some of the responses you got were good for a chuckle, I will try to give you some practical advice. Sounds like you have not done much studying so far, so you probably need to learn how to buy real estate with little or no money (much of which you can do at this sight, with no money down - lol). Most likely, you want to start with wholesaling, so you can put some cash in your pocket, be able to eat, etc. Find a bargain, most likely a fixer-upper, and put it under contract, cheap, then run an ad in the paper “Handy man special, way below value, will not last, call Kelvin at xxx-xxxx”. Then, answer the phone, and assign the contract for $1k, $5k, $10k, or whatever you can get. Obviously you have to buy cheap enough to leave money on the table - your intent is to sell to a rehabber, who must be able to make money on the deal as well. Wholesaling is the easiest way to get started in this business, whether you have money or not. If an experienced rehabber buys it, see if you can get them to show you how they plan to fix up and make money on the deal (so you can add to your tool kit).
Also, Probably a good idea to join your local REIA, to build contacts, knowledge, have local people to turn to with questions, etc.
After building some funds wholesaling, because you can’t live on $600, maybe look at subject-to deals, as well. Good luck!

import · March 21, 2006, 12:20pm

Re: What should I do with my LAST $600??? - Newbie - Posted by LandVestor

Posted by LandVestor on March 21, 2006 at 13:20:53:

Perhaps a down payment on an old mobile home fixer upper. A little paint and some repairs might net you a nice profit, and you can just keep on repeating the process from there on!

import · March 21, 2006, 4:08pm

Re: What should I …for Chris in FL. - Posted by Johnny

Posted by Johnny on March 21, 2006 at 17:08:46:

Hi Chris,
I am the quintessential newbie and I am trying to get a better understanding of your advice. When you say “find a bargain…put it under contract.” Are you saying find a fix-er upper and buy it to sell it? Or, are you saying, find it and come to some sort of agreement with the owner to sell his/her house for him/her under contract for a certain price? I’m a little confused due to my own ignorance but you always give well thought out posts and I really want to grasp what your saying in this case because I am also a newbie with limited funds. Thanks Chris, and good luck with REI!

import · March 21, 2006, 12:49pm

Re: What should I do with my LAST $600??? - Newbie - Posted by Galactica Man

Posted by Galactica Man on March 21, 2006 at 13:49:25:

After he uses his $600 on the down payment, he won’t have any money to buy the supplies/tools to fix up the fixer upper.

import · March 22, 2006, 6:46am

Re: What should I …for Chris in FL. - Posted by Chris in FL

Posted by Chris in FL on March 22, 2006 at 07:46:21:

Johnny,
Definitely don’t try to reach an agreement with the owner to sell their house for a certain price - that is a Realtor’s job, and I am pretty sure is illegal to do without a license. Wholesaling is finding a bargain, usually a fixer-upper, contracting with the seller to buy it from them, and immediately advertising to investors to sell your position in the contract (i.e. - assign the contract for a fee).

Example I bought from a wholesaler a year or two ago:
Mike Homeowner selling fixer-upper; wholesaler did 30 day contract to buy for $25K (with $100 down). Estimated repairs - $6K. ARV (Approximate retail value after repairs) - $56K. Wholesaler assigned his contract to me, rehabber, for $5K, and I assumed his position in the contract. I bought for $30K ($25K contract price, plus $5K assignment fee), and had $6K in repairs, so my gain was $20K less some closing costs. I still own that house as a rental, but majority of rehabbers probably flip. In this case, wholesaler assigned the contract to me the day he got it under contract, we closed 10 days later (was supposed to be a week, but title company was slow), and wholesaler made $5K for less than one hour of work. Key to wholesaling is you must find bargains, and be able to make money as well as leave some money on the table for the rehabber to make. FYI - most serious rehabbers should want to close very quickly; when they stall for time, pass and find another investor. If you have a true deal, investors will come out of the woodwork to buy it. Good luck Johnny!

import · March 22, 2006, 8:37am

Re: What should I do with my LAST $600??? - Newbie - Posted by LandVestor

Posted by LandVestor on March 22, 2006 at 09:37:38:

A few gallons of paint and some patch up supplies shouldn’t cost much, and he could probably just slap it on a credit card. Sometimes that’s all it takes to resell a mobile at a profit!

import · March 21, 2006, 1:46pm

Re: What should I do with my LAST $600??? - Newbie - Posted by James

Posted by James on March 21, 2006 at 14:46:50:

How about use a HML then?

import · March 22, 2006, 4:22pm

Re: What should I …for Chris in FL. THANK YOU! - Posted by Johnny

Posted by Johnny on March 22, 2006 at 17:22:15:

Hi Chris,
I just wanted to say thanks for answering my question. I think I get it now. When you “wholesale” or “assign your contract for a fee” you are selling your contractual right to buy the property, to a rehabber for a price. I think this is right but if I’m wrong please let me know. Are there any books on wholesaling that you would recommend? Being that I’m a newbie my funds are kind of limited and it sounds like wholesaling would be the best way to start. Also do you think theses techniques would work well in Southern California?

Thanks again Chris. You are a great help to myself and everyone else on this site that reads your posts. I just hope my questions are not too trivial or “dumb”. I know I need to study more on the subject of REI so I’m hoping you can point me to some good books. Goodluck buddy.

-Johnny

import · March 23, 2006, 12:15am

Re: What should I do with my LAST $600??? - Newbie - Posted by RE King

Posted by RE King on March 23, 2006 at 01:15:42:

How do I get into the $600 mobile home HML business? I have the funds available.

Any input appreciated.