Are you ready to start investing for long-term wealth and cash flow? If you can invest for the long-term, then you’re ready to buy and hold real estate assets and build your portfolio of rentals. And we have a fantastic market for buying and holding real estate investments.
Rental demand is the highest it’s been in several years and although prices are inching upward, there are still great deals for diligent real estate investors who know how to buy houses at discounts.
What prevents most real estate investors from building their portfolio is fear. The fear is typically based on myths, not reality.
Myth #1: All Houses Are Bought with Realtors and Brokers
Let me assure you that this is just not true. Many of the very best deals available in your local market will never make it to the MLS. You can learn to connect with motivated sellers who must sell their home right now as-is. These are typically homes that will not appeal to first-time home buyers and will not qualify for typical bank financing.
The circumstances and conditions are what opens the doors for savvy real estate investors to buy these houses at big discounts. Often, the situations will open the door for seller financing, so there’s no need to go get a new bank mortgage to buy their home.
If you carefully screen your tenants, this won’t happen to you.
Myth #2: All Tenants Are Trouble
When I was employed in Corporate America and had hundreds of employees, I discovered that if I was diligent in my search, did background checks, and verified the information on resumes, I could find the right employees most of the time. The same is true with being a landlord.
If you learn to review rental applications, check references and previous landlords, verify employment and carefully screen tenants you can be right most of the time.
It is not rocket science, but does require processes and discipline to market to and carefully select the right tenant for your property.
Myth #3: You Need Great Credit, Cash on Hand, and a Good Job
Once you learn the skills of buying houses at discounts, rehabbing them to attract great tenants, and learning to manage property long-term, you have a very specific skill set that’s in high demand to private investors looking to diversify their investments and invest in local real estate.
You’re in a great position to work directly with private lenders to joint venture and build a portfolio of rentals without needing great credit or having a job. You can structure joint ventures without needing any of your own cash. You can market to connect with motivated sellers who can provide you with seller financing opportunities.
When you overcome these 3 myths, you can succeed massively as the market has tremendous opportunities right now. The good news is that you can buy houses with nice discounts without needing a Realtor, without needing a bank, and you can still find great tenants for your properties.
What about you? Are you ready to invest for the long-term and build a portfolio of rentals? What is your fear that holds you back from buying and holding assets? Leave me your thoughts in the Comments.
In my local market, the price is soaring fast, almost every house I looked got multiple offers. If any seller can sell at the price they want, why do they need to give me a discount? If I cannot get big discount, I cannot get a private lender to give me a 100% loan. They will only loan up to 65% to 70% of LTV. Please advise.
Which market are you in? That is true in a number of them, including an investor I spoke to yesterday in Austin, TX. As prices increase and inventory decreases the best way to buy is without a Realtor.
Learn to find your own motivated sellers. True private lenders will do 100% financing. Hard money lenders disguised as private lenders will only do 70% LTV or require down payments, etc.
Jim
been landlording for 35 years, look at their vehicle, if its nasty and dirty your house will soon look like that, the ones that brag about how good they are and how much they like yard work are the worst…..
Great perspectives Brent.
What is the number 1 thing you wish you knew when you started, that you have learned over those 35 years?
Jim
I learned the hard way also. The vehicles are definitely a tell tale sign. I have friends who have great homes… on the outside… but the inside matches their cars… trashed.
My biggest fear are absolutely no money, bad credit and a lack of knowledge of investing. I have really good ideas but I lack the previous listed items. Often I skip these emails and miss the online seminar because I think these people have either money, good credit or know how to maneuver in order to invest. I’m ready to let go us my fear and start my dream of investing.
The good news is that you can learn to invest without needing your own money in the deal and without credit. The myth is you need a great job, great credit and money to invest.
Start by investing in yourself to learn to invest. All my best to you!
Jim
I’m definitely ready to do it.
Way to go Chris!
The market is perfect for buy and hold, cash flow and building your equity position.
Jim
I invest in South East Michigan. Here’s what I personally have run into. Only hard money lenders (unless you find private money lenders) will lend in Michigan right now. They are VERY expensive.
Finding private money lenders sounds easy when you listen to “Guru’s” or read online articles or videos. The reality of it is that it’s not easy. NO ONE lends money to a real estate investor they don’t konw or trust without some steep stipulations and money out of the investors pocket. Most will not lend to you unless you have already done deals on your own and have a proven track record of profits.
Banks won’t lend for SFR investment properties in Michigan either right now. Two offer HELOC’s on SFR investment properties as long as you have a credit score higher than 660, owned the property for more than a year, and have a certain percentage of equity in the home. ( I own all 4 of my properties free and clear so this is a huge bonus for me)
So maybe other markets it’s easy to find the money and not use your own. But this technique does not currently work in the Michigan real estate market until you have private money lenders.
I started by buying the $10,000 homes and rehabbing them myself. This was back in April 2011 and rented it out. I bought my 2nd cash home in July of 2012. Flipped on a land contract for a nice profit. Got 75% of my total costs back with the down payment from the buyers. Closed on my 3rd in November 2011, my most costly rehab to date at $27,000 total costs and the first project I contracted out and is now up for sale. Closed on my 4th cash purchase in February 2013 and if I stay on budget, the total project costs will be $16,000.
I had no choice but to go it on my own (with reading, talking, and networking though for knowledge). I’ve bought houses for as little as $7000 and as high as $13,500. All are 3 bedrooms. 2 have basements. Two don’t. My best one was a 1500 sq.ft. 5 bed 2 bath house. Picked it up for $13,500. And none of these properties are in Detroit. They are in low to middle class neighborhoods. Easy rentals.
Oh, and all of these deals were bought using the MLS. If you have your ducks in a row and are ready to pounce with all documentation needed, you can still get deals on the MLS. You can’t wait for a realtor to find the deal for you though. You will have to do the footwork yourself. Find a realtor who is ready to work also. These are hard to find. Everyone wants to make money off of you but all most of them do is list on the MLS then sit back and wait. Realtor.com is about the best and most up to date site for mls listed houses. I am attempting a 5th agent in 2 years! Again, I only use them for paperwork and offer submissions.
And by the way. I travel for work in the auto industry and still make real estate deals work. So don’t get discouraged. I’m just trying to say that if you are passionate enough, you will make it happen. The biggest thing you need to have to make real estate work is the “DESIRE” to do it. You also need to equip yourself with knowledge. Read books. Go to REIA meetings. Network. It takes time but only you know whether you can do it or not.
Don’t listen to nay-sayers. Don’t listen to your friends and family that give you negative feedback. Only listen to people who are actually making money in real estate!
It’s NOT a “Lazy man’s job” although one Guru told me that it is at a Robert Kiyosaki seminar. It takes work and dedication. I work 50-65 hours a week on the road. Come home every two weeks to see my wife and 3 kids.. plus juggle rehab projects. Its definitly do-able.
Plus… my credit is less than to be desired by the way. Here’s a tip. Don’t listen to people about credit cards. I started with one and a very small limit. I now have 5 and access to over $5000 in credit to help purchase rehab materials. The key is to try not to keep them maxed out. Always pay more than the minimum balance. I pay at least $100 towards each card a month if not more. Two of my cards I pay off every few weeks. This has increased my credit limits from a starting of $500 to the now over $5000.
I got a card in my wife’s name also. I just recently got approved for another one with a $1500 limit that should be arriving soon. DO NOT buy liabilities with these cards if you go this route. Use them ONLY for rehabbing projects. Follow my instructions and not only will your credit limit increase, but your score will also.
I started getting cards back in October of 2012 with a Trans Union credit score in the 650’s. As of March 2013 I have a Trans Union score of 666. Plus March is my 3 year date for my bankruptcy discharge.
I’m not trying to boast or brag. I just want you and anyone else who reads this to know that ANYTHING is possible if you TRULY want to do it. It’s only a failure if you give up!! I have lost thousands of dollars trying to do this back in 2009 without any knowledge or experience. Projects don’t always go as planned. But you have to overcome these obstacles and move forward.
I admire Aaron’s persistence, and “knowledge and experience” seems to be the key. In my case, fear of constantly being denied seems to be discouraging, but, that doesn’t mean “fear” will defeat me. It took 48 “NOs” until I got my first rehab; held onto it as a rental. I liked doing the rehab work that I decided to concentrate on fixer-uppers. Within 4 months from my first rehab, I acquired 3 more rehabs and held them as rentals.
Just as Aaron had done, persistence prevails – consistent real estate education, find your niche, and take action.
Aaron and Joel
Congrats to you both for desire that overcomes obstacles on your path to investing.
Inventory levels are dropping and more investors are buying. As an example, I tried to buy a house off the MLS this week, List price was $20k, my max buying formula said I could pay $26k so I offered $26k.
I did not get to buy this house. It had many offers. A friend of mine bid $32k and he did not get it either. With an improving market the opportunities on the MLS will become harder to find. They are still there, but expect multiple offers on the very best deals.
Private money – Without a doubt it is the way to go. Yes, it takes an intentional plan and knowledge to connect with financial investors. BUT, once you start to buy with joint venture partners, you will no longer need the banks, big down payments and aggravating underwriting criteria to invest.
Jim
HI Aaron this is good stuff. I am new to this business. I spent over $27000 in cash and credit card just for education material and really need a break through to help pay back all these debts. I can’t find a good investor friendly realator in my part of town ( Bronx) I am planing on going to RIEC meeting out of town. Is ther anyone out ther can give me any advice thanks
Hi Ann Marie
What are your initial goals? Are you looking to wholesale first to create some faster paydays or invest for the long-term with some rental properties?
Jim
sorry for the late reply, I would like to wholesale first to clear my debt and then invest in rental properties. the other thing do I have to have an LLC to wholesale? how do I start in new York I was told you have to publish your entity for 2 weeks first. Can my LLC be in a different state even though I living in new York/ awaiting your respond
Ann Marie , Am also trying to find deals but can’t seem to be getting anywhere , I believe that REIC is a good way to start in order to get more info, am dedicated and just won’t give up just yet. I know we are all in this together and we need to think positive and think outside the box am also in your state. Like you said the real estate agents are not very helpful so we just have to find other leads and forget about them. Thanks!
HI Eurica how is it going for you? my first meet with a agent today he is trying to help too soon to know the outcome
how many properties should I have before I need a property mgnt company?
I think If you are living in close proximity you can manage maybe 10 by yourself, but more than that you need property management.
Can someone enlighten me on the LLC need to move forward