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Old 04-29-2013, 07:40 AM
 
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I'd suggest looking for people who are fixing up houses - ideally small time operators where you will have contact with the owner themselves. Offer to work for cheap to learn the skills. You won't be a sucessful landlord if you don't know about home repairs and when you get started you will need to be able to do most of the work yourself. You'll hear the owner griping and you'll learn about the business.

Next step is to gather a nest egg. The best way to do that will be in sales. People assume real estate sales but you might make more money in auto sales or something else. Learn to live very frugal so you can save money.
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Old 04-29-2013, 02:18 PM
 
Location: Los Angeles (Native)
25,304 posts, read 17,170,506 times
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Quote:
Originally Posted by bmw335xi View Post
You are a bit late to directly buy properties. Most of the good markets are already 50% up from their bottom. The good properties in these markets have international cash investors. I've made over 20 offers on properties this year in the San Francisco Bay Area. I always offer over asking with 50% down payment to 100% cash and still get outbid. The good markets are red hot and it's very difficult for any non-cash investor to pick up good deals. Are you able to pay cash? If so, check out as many open houses as you can. You will learn how to pick out good deals this way.

If you don't have much cash, you could invest in REITs (Real Estate Investment Trusts).
It is true that CA and some other areas have come back especially strong. But there are still many areas that have properties at a price range that will actually cash flow, which most in the SF bay area won't anyways.

There are also areas with homes way below the prices at the top of the market. FL is the #1 foreclosure state , and there are some other markets that just weren't really a part of the whole bubble thing to begin with and those prices aren't too crazy. For example a $50k house that rents for $800/mo but sold for over 100k+ at the height of the market.

To answer your questions

is it a "good" time to get into the market? - I think now is a pretty good time to get in. Prices are just starting to trend up for the most part. Of course being able to time the market a couple years back probably would of been the best time because of supply...but one can't go back into time of course. There are other factors such as possibility to get financing more likely now versus then.
what role does interest rates play?
Interest rates do play a role and they are historically low so locking in a low interest rate is advantageous.
how much should you have to get stared?
How much you need to get started is relative...really depends on what the prices are like and what you intend to do. Even if you plan to 'wholesale' properties . You will probably want to have at least a few thousand for earnest money and money to market your deal(s).
any truth to the whole you dont need money to begin pitches?
This is SOME truth to the you don't need money pitches...but if you don't have money you need to know someone that has money and is willing and able to actually loan you that money or partner with you on a deal. The gurus make this seem simple, but I think it's definitely not the easiest thing to do. People don't care about you they care about themselves. If you present an opportunity that they find attractive , you will have better luck than saying "I really need to borrow money for this property". That won't be too appealing to people.

and the big questions how do you get started? Any courses?

There are real estate investing clubs all over. With courses I'd be careful as much of the same information can be read for free by reading information online or cheaply/free by reading books. I'd definitely study for a while since you are just learning about all this but at some point you do have to take action.
I think offering to help someone that is already doing what you want to do is a great idea. Do you have any family members or friends that own rental property or are in real estate?

Last edited by jm1982; 04-29-2013 at 02:32 PM..
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Old 05-01-2013, 02:12 PM
 
Location: Baltimore
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I was in your same shoes although I 'bought in' to real estate during the height of the bubble. I knew nothing of real estate finance, sales, construction, or acquisitions but figured since everyone else was buying, that I would as well. In 2007 I purchased a home in a speculative neighborhood in Baltimore City for ~$165k. Today it might be worth half that. I don't really know, I take a loss on the rental each month and depreciate it on my taxes.

The point though is the crash didn't deter me from real estate investing. I bought another in 2009 with a friend in a well established neighborhood in need of a complete rehab. We bought it for 87k, put ~50k into it and sold it for 190k. I picked up another for 48k, put ~15k into it and will list it for $130k this summer. If I'm a two-hit wonder on these deals, I'll be more than happy.

The 87k house looked like this when we bought it:


I learned a lot simply by diving in head first into the deep end and teaching myself how to swim. It has been painful, expensive and labor intensive but the lessons learned have shaped how I look at real estate.

Following the second property, I obtained a real estate license and immersed myself in the field. I learned how to sell myself, negotiate (so very important), draft contracts, and analyze deals. From there I started doing very in depth market research in my 'hood that keeps me up to date on what is going on.

As I started full time in sales, I enrolled at Johns Hopkins M.S. in real estate program. This provided me the theory and structure to properly analyze deals from a financial perspective and model out projects in excel. This lead to my current position doing land acquisition for a national builder.

The point is, if you're starting with nothing, like I did, you need to be fearless. You need to accept that mistakes will be made and it will cost you money but you'll learn from it, especially if it's your money on the line. It's nauseating, you'll lose sleep and you'll watch your bank account steadily decrease during rehabs. I did seem to get laid a lot more as a 'real estate investor' which was pretty cool. I also almost collapsed a roof on myself because of a load bearing CLOSET.

And for Pete's sake, understand what margins are. I've met far too many 'investors' that do not understand simple math. This leads to them over improving a property to some bastard manifestation of their ideal property that no one else will purchase.
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Old 05-02-2013, 01:32 PM
 
Location: Los Angeles (Native)
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Great story Davecj! I bet a lot of people after they "lost" on the first house would say "real estate doesn't work", but you took it seriously and treated it like a BUSINESS.

Also very good point about not understanding margins. It's important to recognize what a deal is.

It seems like just on one of your deals you are making more than most people make in an entire year.
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Old 05-03-2013, 06:29 PM
 
Location: Las Vegas,Nevada
9,282 posts, read 6,088,290 times
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any good books on the subject?

PS thanks for the advice, its honest which is rare in this day and age.
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Old 05-04-2013, 06:12 AM
 
Location: Baltimore
1,759 posts, read 4,648,028 times
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This is one of my favorites. I would start here:

A Short History of Financial Euphoria (Penguin business): John Kenneth Galbraith: 9780140238563: Amazon.com: Books

Understand this and it all starts coming together.
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Old 05-04-2013, 06:18 AM
 
2,680 posts, read 3,199,885 times
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Quote:
Originally Posted by gunlover View Post
I am 22 and looking to get in the market, i mean i really have nothing else going for me.

So my questions are the following.
  1. is it a "good" time to get into the market?
  2. what role does interest rates play?
  3. how much should you have to get stared?
  4. any truth to the whole you dont need money to begin pitchs?
  5. and the big questions how do you get started? Any courses?
i see people making alot of money in this industry, and i know for a fact taht you can work for your money or you can for you money work for you, and nobody ever became wealthy working for others. (i have know this since i was about 14)
Answering your questions quickly:

You really do not know when timing is good or not. After some years pass, you know. You need lots of cash to get started (many thousands of dollars) depending on where you live.

Do not rely in credit to buy properties, never, never, never do this. There is too much risk involved.

In summary, if you do not have cash, you can make other arrangements to work for other people to start making some money to save to buy properties. If you already know someone in the real estate business, you can work for them to build up your cash.

You should attend networking events for real estate investors to get to know people in your area if you are serious about staying where you are geographically and being in real estate for the long haul. If you are already a very handy person, this will help you tremendously.

Lastly, some caution here: it is easier to lose money in real estate than to make money.
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Old 05-04-2013, 07:42 AM
 
Location: Baltimore
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Yep- the adage how do you make your first million in real estate? Spend five million.
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