The quick answer to your question is start right now. I admire your enthusiasm and planning however, you must start first before you can worry about whether you and your partnet will make enough money so that you could be independent.
Start by getting to do what this site tells you to do for beginners. You might need some time to adjust your techniques - marketing, buying, selling - to your own area.
There’s a lot more that can be said, but what needs to be and must be said is, start now!
I?m 18 and have read so many REI books I?m sure I could set up a no-money-down deal in my sleep. Since I?m only 18 you can probably assume I don?t have much money, other then income from a part time after school job. Before I go off to college I?d like to get my feet wet and do a little deal. SO, here?s my game plan, tell me what you guys think.
I plan to start off with wholesaling (flipping?) contracts to other investors for a small profit. This requires very little money of my own so I think that fits my budget quite nicely! I get to learn the ropes and earn money while I do it?earn while I learn if you will. The next step after I?m comfortable enough would be to find a partner who I can do a 50/50 split rehab with when I find a really good deal. He gets the loans after I find the deals. We could both rehab the properties with both our money (money I make from flipping) then sell them at retail prices. Again this works for me because I lean how to manage fixer-upers while I make money to boot. This next step is where I hit a wall though. Now I?m comfortable enough to get a loan and do rehabs or lease options all by myself but who will lend to me? I could probably get a hard-money lender to do it if it?s got a good LTV, but will I be stuck with hard money lenders all my life? No banks (not even community banks) lend to people that are self-employed and in college! The only way around this (that I can see) is to incorporate and start flipping properties through a corporation so that way I?m listed as an employee when I show the bank my tax returns for two years. (two years is the minimum I think?) And I?ll grow a beard shudder so I?ll look older and wont get laughed out of the bankers office. If I ever figure out a way to overcome the transition from partner too independent I?ll probably move on to 8 unit apartments and build my passive income portfolio section; after that I?ll go up to 8 units then 12 etc, etc? I?ll just keep diversifying my techniques and mastering new ones all the while reading loads of books on REI.
Well, what do you think of my game plan? Sound good? I get to start off with no money, make money, invest the money I make then keep building from there. The only problem is with the transition. I want to get involved in real estate full time as soon as I can. I don?t plan on being a slave working for a boss the rest of my life, no way. I?ve known that for as long as I can remember. However, it seems banks only give loans to people with high paying jobs who work for OTHER people. If I want to start making the big bucks on my own I?ll need to be an employee. I?ve read a lot of success stories about guys just out of college who are now lease optioning houses and rehabbing them, so I know it cant be a huge problem, its just some concept or step I?m missing probably.
So, enough rambling, I?m done. Time to tell me what you think of my game plan.
I startd when I was 21. My original plan was to be a stay at home mom util my childen were in grade school and then go to college, and get a good job. Well that all changed when i had my first baby in 2000. They are too important my husband and I wanted to home school them, leave a legacy and a company. So 4 rental units and 2 rehabs later here we are. An LLC and everything. My hsband worked for Home Depot for 28K a year and I didn’t work, but we found a way.
Oh and you think you look young, I was just putting anad in theaper for a part time Nanny to help with the kids while i do paperwork and the lady said you don’t look old enough to have chldren, I said how old do I look and she said 15. I get it all the time. maybe I’ll start wearing glasses, it might help
If only I had your ambitions and planning and found REI when you did…
In addition to what has been written, I suggest you think as if you are the owner/operator of the kind of REI you’re going for–get to know how to break down a deal, what kind of discount they look for in what neighborhoods, and what they consider to be a good deal. Ask a lot of the players in your area–call up the “we buy houses” people and pick their brains. Some may not like this, so you have to use finesse and offer to bring them something–say: if I bring you a deal (along the lines of what they are looking for), will you pay me $500 (or whatever)?
There’s a 20 year old kid with a dream in my town who will make $70k this year as a bird dog for a big operator on the back of blind ambition, persistence, and clear understanding with the owner/operator of a big dog in local REI. That can be you pretty easily. Find those people, see what they’re looking for and how much they’ll give you for each house, make them some money, make yourself some money, and then work your way up the chain to taking on the deals yourself, working with the financiers (hard money or otherwise) and so on. Zig Ziglar is famous for saying “if you help enough people get what they want, you’ll get what you want” - make that work for you with the big rehabbers/home buyers in your area. You’ll learn a lot, need nothing but time and energy to get started, and be on your way. These folks (buyers/rehabbers) need people out there finding properties–you can do that if you listen and work at it. Make sure it’s worth your while to do so (that they pay you enough per house you bring in).
Also, a side effect and a part of what you’re doing, learn your market in terms of prices, values, and costs, Scott Britton said “I bet not 1 in 100 bother to do this”–if you do, you’ll be many steps ahead and have a system to keep on moving up the food chain.
Good luck!
Hey! You sound like you know exactly what your plan is. That is VERY good! As far as a banker lending money to you…you will meet lots of people along the way who are either lenders themselves, or know of a lender. Another suggestion (which was already mentioned) is to join local REI groups. We have “vendors/speakers” all the time who are mortgage brokers. They understand investor plans, and they WANT to lend us money! And, if you have to use hard-money, so what? Just position yourself with an exit strategy so that you don’t have to pay them forever.
I wish you the absolute best of luck (unless you’re in my area…ha…ha…ha:)))
Keep reading the posts, and asking quesitons here. It works!
See ya…
I think your plan is right on and very realistic. Don’t worry about getting financed down the road…over time you will learn more and more creative financing techniques, have more and more money to work w/, know more and more investors/potential partners w/ money, etc. Right now, as you’ve already indicated in your post, your focus should be on learning from others and finding a way to make a buck along the way. I’d recommend joining a local real estate investment club if there’s one in your area. Lots of great resources there.