Begginners course of action - Posted by Kent C
Posted by Kent C on February 26, 2002 at 16:41:04:
The answer to your question is multi-faceted. There are many myths due to too much late night TV on Realty. You build a hard bill to fill having no cash, credit or knowledge. Let me take this time to harp, here, PEOPLE…TAKE CARE OF YOUR CREDIT!
I general, Realty is NOT a get rich quick game. It IS a wealth building game (as in, time is required). Now, there are exceptions but these are for knowledgable investors.
Rental property is NOT a good income for highly leveraged buyers (zero downers). It IS an excellent savings program for highly leveraged buyers. (Builds equity over time.)
You CAN get into property for zero down. It usually requires good credit however. You CAN get in zero or little down and with poor credit but it comes at the expense of needing repairs or being in a poor location or something…usually. However you find a way to own property, you WILL need operating capital to cover expenses (upkeep, mortgage pmnts, taxes, renters blowing up the toilet using ammonia and chlorine because they heard it is a good cleaning solution.).
You can get into property with no money down and no credit (subject 2’s, owner carries and sandwich leases come to mind) but knowledge has to be there. But be aware that if you have contracted for this house, you may be responsible for upkeep and pmnts to the owner when your leasee or tenant bails and tears the place up. So once again you may need money in the end if not up front.
There are many “games” to play in Realty. First you have to understand there is a give and take in EVERYTHING. Here is a flawed example but one that is easy to picture. Picture a triangle. One side is credit, one is cash, one is knowledge and the triangle as a whole is “the deal” or actually, the profit from the deal. To shorten any side requires the others to be larger to make the same amount of money. The area inside the triangle is the amount of money you can make. So to have 2 sides small means the third side has to be very large to make even a small amount of money. (This is the flaw in my example. The 3rd side can only be so big if the other 2 are small…however in real life, sometimes just having one of the 3 is enough to do a deal…but you get the picture). Maybe I should have chosen a 3 leaf clover for my example…grin. If cash and credit are small, and knowledge is large you can make a fair amount of profit but Knowledge has to be VERY large. But remember…it does not have to be YOUR knowledge. Stand on the shoulders of giants, those available to you through this site or locals. But having little knowledge is okay. It just means you have to expect smaller profit until you start building on knowledge, credit and cash.
You can start flipping for no money. But I think flipping requires something special…a bit of savvy…a bit of marketer in you, whether natural or born of experience. I dont think it is a begginners game for most. (But it IS for some!!!)
Okay, so what am I suggesting for someone with NO experience, NO cash and NO credit?
Start reading and start calling people and talking to them. Find someone you connect with to help you. Start reading and figure out what begginners game you want. Subject-2’s can get you into a lot of trouble if you arent ready. KNOW your game.
As far as the cheapest way to start reading? I would start with a $20 book on Amazon.com by Bronchick on Flipping.
Still intereseted? Next get the $130 book on flipping by Steve Cook.
These 2 fill in some critical begginners gaps. Now you can decide if a more specific (and more expensive) course is for you.
Talk with people, connect with someone to be a mentor, read some books, watch this site, peruse this sites archives.
You have little cash and little credit. Make up the difference in knowledge.