How To Start Real Estate Investing With Little Money?
I want to get started in real estate but dont make a lit of money. I dont even know how someone would give me a loan to buy a house. I mean, what happens if i buy a house and can rent it out or sell it? I would be stuck with the monthly mortgage correct? I mean, I wouldnt go out and buy a million doller home and expect to get a loan and make the payments but, what if I was to buy a $50,000 house and got the loan but, wasnt able to rent it out? I dont want to be stuck paying the mortgage on the house.
How do you get started in real estate knowing you wont be stuck paying the mortgage? Also, how can I get a house without making enough money?
Ignore bumpnjump. The fact that he made a bad decision does not make you cannot make money in real estate. I am sure a lot of folks here make their living this way.
I think the Tax lien certs was a good recommendation. I had been interest in tax liens and tax deeds and spent 2 years researching it but was scared to risk the money. I started out with a lot of trepidation and $2500 and since I had little money and not a lot of knowledge about real estate, I bought tax lien certificates. I got the over-the-counter ones from various counties in Florida (18% interest). I did a lot of research on each property because I needed to be sure it was worthwhile. I also made it my goal to buy certificates each month. At first I focused on certs under $200 and as a cert was redeemed by the property owner I would get a higher value cert.
I had an idea how to aquire vacant lots and I refined that idea and eventually put it into practice after I had save up another $2500. I purchased over 10 vacant lots on my own in a 9 month period. I purchased many more with a partner who ended up ripping me off by changing the deeds to his name before filing them by telling the sellers the deeds had been lost. It was a hard blow but I learned from that. The lots I aquired on my own I spent a total of $32,000 on but I aquired the lots one at a time as I had money. Those lots are now worth over $500K less than 3 years later.
Last year I decided I had researched enough about real estateaand had spent time learning construction. I got a tax deed property for $18K. I got my crew to do some of the work, some I subbed out and some my partner and I did to save money. Rehab costs was $45K. That property is now appraised at $160K and we sold it recently for $145K. I got the money for the rehab by having my mom get a loan for me as she had excellent credit. I had insufficient credit and although I had never been later on my mortgage I could not get an equity loan. So I spent about 6 months getting credit cards. This boosted my score. Finally I qualified for an equity loan - 5.25% interest and last year I took $100K out of my home.
You might also try going to foreclosure sales to observe. I started doing that several months ago and just from watching and then checking out the court files and tracking some of the deals other investors made I picked up a lot. I guess I must have look helpless a lot or something because a lot of the men there just sat down and started sharing a lot of information with me. Most of the times I already knew the info but that lead them to opening up and eventually I learned more.
I used the equity loan to buy a foreclosure at the court house and a fixer upper as well as a vacant lot. The vacant lot cost me $10,500 .We sold it 2 months later for $60K.
The foreclosure I made a mistake on because it turns out that the 2nd was who had foreclosed. There was a first mortgage that had not showed up in the title search, Anyway, after a lot of time and trouble and appraisals and back and forth we finally got a payoof info for the first, rehabbed the property and it is now under contract for $50K profit after all is said and done. That process thought me a lot about title searches and making sure abstractors are licensed and insured. The fixer upper, we have had offers on and it is not even completed yet.
Was this easy? Hell no!! Did it happen overnight? Hell definitely no! But I went into this prepared to work my butt off and I did. Many times puttting in 60 and 80 hours or more a week. I have heard folks say they make thousands of dollars and only work ten hours a week. For me that has not been the case. And sometimes money was so tight I wondered if I should just go back to working for someone else.
But I stuck it through. And I persevered and I can say that at this moment taking the leap with the $2500 and spending all that time learning about this business was the best decision I ever made.
So far I have focused on moderate price housing because I wanted to make sure the properties sold fast. My partner and I now build houses on spec. My credit is established enough so we qualify for more loans at good terms.
I still buy tax lien certificates, I still spend hours researching each property that interests me. I still get nervous at the tax deed sales and the foreclosures sales. Now I do my own quiet title actions to avoid paying an attorney the $2500 to $5000 they usually want.
And I still think it is worth it. I did not get rich overnight but then, I learned a long time ago that that was unlikely.
Just be prepared to work hard at this; to put a lot of time and effort into learning and researching and with patience bit by bit you will see that you can succeed at this. Just make sure not to bite off more than you can chew when you start out. Being overly enthusiastic and underly (is that a word) prepared will wreck everything very fast.
Good Luck!!
[ Edited by linlin on Date 04/21/2007 ]
that was absolutely awsome linlin. that is a great read early saturday morning. you made my day.
god bless you in your ventures
happy investing
amynewbie