Thread: *A good idea to get my feet wet?*

Originally Posted by AnonymousGuy

*I'm still trying to decide if I want to persue being a real estate as a full time career. I'm 23 years old and I'm not sure what steps to take... (Outside of going to school and getting licensed.) I'm not sure if I should become an AGENT or just buy my first home as an investment property.

If you want to invest, I'd advise getting your license. Since you are living at home then I'm assuming you aren't living from paycheck to paycheck. It's not like you're going to save a ton of money on transactions, but you'll be able to look at what you want when you want without fear of your agent buying a great deal out from under you. When I first started, I had an agent looking for me...but when she saw how successful I was in buying foreclosures, she started buying too (conflict of interest here).

Also, when a super good deal hits the MLS, you literally have like a day to make a decision before guys like me are all over it with a cash offer already in. So being an agent helps you because you're able to check the MLS 3 times a day, you have your own eKey, and can go right then and there without waiting on some agent to free up some time.

SERIOUS QUESTION: Is this how most people start as investors? Let me give an example. I live at home right now, but I make an ok paycheck. Would it be smart to buy my first home, (if I get approved,) with NO intention of living there long - and putting it directly on the market to make some profit?

Careful with intent. No intent to live there long starts to smell like mortgage fraud. Your lender never wants to hear you say that - make sure those words never come out of your mouth. If they hear you say something that sounds like you don't intend on living there - they are required to report you. And then they'd likely not do business with you again if they had any common sense. There are seasoning requirements on homes that you get a home occupant interest rate on. I believe everyone's cool with it if you stay there 2 years. If you get an investor rate, then of course they don't care that you intend to rent it out. If you plan on buying and selling without occupying, then that still requires an investor loan with an investor rate and all of the other bullcrap requirements that go along with investor loans.

This is the only way I can see a normal person like myself getting the ball rolling, and having more money to invest. Is this how a lot of people begin, (when they're not born with a "silver spoon in their mouth," or have rich parents?) Buy a home for let's say $100,000 - sell it ASAP through a realtor if neccessary for as much as you can make, and go from there? Please help! I honestly can't figure out how people get the ball rolling when investing, (if they're not rich.)

I didn't have a dime when I started, but the rules are different now. We were getting 90% LTV investor 2 step loans back in the day. You can't do that today. You're going to have to get all the details from your lender. They'll know what your DTI, credit, and other information is. A good strategy is to get with a savvy agent, get into a super good foreclosure fixer uppper deal, live in it while you do some upgrading, then in a couple of years, you can have enough money to start playing with (it helps to have down payment).

*Also: If I successfully sell my first house quickly, (and for a good profit,) should I do the EXACT same thing again to make MORE money? You can tell that I'm not buying 'my first house' to fall in love with it - I'm litterally just buying it to put it back on the market and move on. I don't care about actually owning a home for good for a while.

Of course, I've been doing that very thing for over a decade now. I've made over a half million dollars on doing that alone (the ex wife got it all though...so my biggest tip for you is NEVER GET MARRIED).

*One more Q. Would I be smart to look for a cheap 'forclosed' home that would cost far less, that I can take out extra money on to make repairs? I know this may sound like the 'obvious' way of doing these things, but I'd really like some advice.

Of course. If you need some step by step guide, go to Ebay and get you some used Carlton Sheets books/Cd's on foreclosures. I wouldn't have bought that stuff but a friend of mine did and that's how I got started. Some stuff in there is garbage but the foreclosure stuff is good advice.

WHAT DO YOU GUYS RECOMMEND!!!?? I'm serious! Is this plan stupid?

No, not stupid. It's probably the best thing you could possibly do to make money and achieve financial independence. The only stupid plan I can think of is to get married.

*Wow Mr1, that was an excellent reply!

- So, step one would be to get my license. You mean a normal real estate license right, (not some 'investor' license I've never researched?) I'll assume you meant real estate.

- I had no idea that 'mortgage fraud' would result from selling a house you buy quickly. I guess I can see the reasoning... (Everyone would be trying to sell their house for more the first month they buy...)

- So it's official: if I buy a house to invest in, I most likely have to LIVE in it for a year or two?? (To get started I mean...) That kind of sucks, but I guess the money's right - so it wouldn't be so bad. I just don't want to be 50 by the time I'm doing well.

*Thanks again Mr1. If you can continue checking out my topic and giving some advice, I'd greatly appreciate it. I'm a go-getter in life, and I'm pretty sure that with some solid advice, I can make this work.

Originally Posted by AnonymousGuy

*Wow Mr1, that was an excellent reply!

- So, step one would be to get my license. You mean a normal real estate license right, (not some 'investor' license I've never researched?) I'll assume you meant real estate.

Lucky for you I type really fast. Yes, real estate license when we are talking about real estate investing. There's no other related license you could get, and I'm assuming you are in the USA doing business in the USA.

- I had no idea that 'mortgage fraud' would result from selling a house you buy quickly. I guess I can see the reasoning... (Everyone would be trying to sell their house for more the first month they buy...)

Mortgage fraud stench is when you:

buy a home with a "home owner interest rate" i.e. you intend to occupy it as your primary residence. But if you move out shortly thereafter (within 2 years usually) then they have a problem with this. Even bigger problem when you say off the bat "I don't intend on staying here long..just trying to make money off of it." And don't use the word "flip" around lenders. Flipping is a term used in the lender world to refer to an illegal activity. The stupid media used the term and took off with it to mean something that is was not originally.

- So it's official: if I buy a house to invest in, I most likely have to LIVE in it for a year or two?? (To get started I mean...) That kind of sucks, but I guess the money's right - so it wouldn't be so bad. I just don't want to be 50 by the time I'm doing well.

No, that's not what I was saying. You don't have to live in an investment house. You just have to keep it legal. You can buy investment properties - with the intent to invest (either turning it over by selling it quickly, or to keep and rent out) but you would get an investor loan with a jacked up investor rate. You can still make money this way, but just try to understand the difference.

I was advising to do both: 1. buy properties with an investor loan, then either hold them as rentals or quickly sell them, and 2. eventually buy one for yourself to live in (with a home occupant loan and interest rate) while you are doing the investor loans. Make sense? Then after you live in the home for a couple of years (while doing the rehab loans at the same time), you'd turn around and sell your primary residence (being perfectly legal) and use the profit to build your own bank. Building your own bank means that eventually you plan on loaning yourself the money to do the repairs on the rehabs, so that you don't have to do 2 step loans or hard money loans.

The idea is to be in a perpetual state of buying a primary residence, fix it up, and sell it in 2 years, all the while buying investment properties at the same time. Getting your real estate license saves you on the commission per transaction. In 3 years, you'd get your RE broker license and not have to split your commission with a broker. Being as young as you are, right now is the best time to get started. You're not lugging around a family. Just don't ever get married and don't have kids...not until you are at least 70 years old. Think Hugh Hefner.

You need to talk to an experienced mortgage broker who specializes in investor loans. (s)he will be able to better advise you on whether you should go ahead and buy a home to move in to, or to wait on the primary residence until you get a few investment properties under your belt.

If you mess up and get a primary residence with no regard to your DTI, then you could possibly screw up any chance you have at doing the investor loans. Follow me? You'll eventually run into the Fannie Mae investor loan limit, which as of today is 10 (would include your primary residence mortgage).

*Thanks again Mr1. If you can continue checking out my topic and giving some advice, I'd greatly appreciate it. I'm a go-getter in life, and I'm pretty sure that with some solid advice, I can make this work.

Being a go-getter helps, but you're going to need to be more than that. With the right combination of characteristics, you could be financially independent and never have to work a 9-5 job again. The idea is to have money work for you, not the other way around. Oh, and if I didn't mention it yet- don't get married. For a very wise run down on love in marriage, watch this video: http://www.youtube.com/watch?v=hAgEMGfzEN0

Regards.

*Ok, I think I comprehend lol.

1. Don't get married, ever. It sounds fairly easy to remember, but justifying this point to the woman who wants to marry me one day may be a little more difficult. Never-the-less, losing half of everything I'll ever own is worth a squabble here and there.

2. Investor loans are for investments. Easy. The question remains for somebody as 'uneducated' as I am right now: Is this where everything gets put in motion? Better yet, would it be a step 1 and step 2 thing?

STEP 1: Get license.

STEP 2: Find a forclosed home in decent condition, and purchase it with an INVESTOR LOAN.

*Correct? Then make my repairs and hopefully sell it asap? A friend of mine said his father does this, (minus the license and the forclosures,) and just sells 'by owner.' If I'm licensed, I'm assuming it'll be similar to just finding my own buyer, correct? Is the secret to get it off my hands as fast as possible, (so I can avoid paying land tax, etc...) If so, this will obviously be the other half of the battle.

- Once licensed, is it EASIER to get approved for investment loans? Will my own personal credit factor into the whole ordeal? Let me know!

And thanks again Mr. 1. Because of you, I'm on the verge of being successful... and unmarried for all eternity lol.

*Ok, I think I comprehend lol.

1. Don't get married, ever. It sounds fairly easy to remember, but justifying this point to the woman who wants to marry me one day may be a little more difficult. Never-the-less, losing half of everything I'll ever own is worth a squabble here and there.

I kid you not, all the investing in the world won't make a bit of difference if you get married. A prenup won't help you, a "good wife" won't help you...you're wasting your time investing if you get married. We all marry "the one"...but change is a constant...they turn into "not the one." Would you take half of your life savings to Vegas and bet it all on a coin toss? Of course not, but you're doing WORSE than that if you get married. Your odds against staying married are greater than your odds of winning a coin toss - never forget that.

2. Investor loans are for investments. Easy. The question remains for somebody as 'uneducated' as I am right now: Is there where everything gets put in motion? Better yet, would it be a step 1 and step 2 thing?

We are all uneducated at some point. I was dumb as dirt when it came to real estate until about a decade ago. You learn from step 1: (don't get married) get the used Carlton Sheets CD's from Ebay and learn from an investor near you, like your friend's dad. Step 2: sit down and talk to a local mortgage broker who specializes in investor loans. Your mortgage broker will tell you whether you should buy some investor properties while living at home, or if you should buy one to live in first, then invest in others after that.

The technique I've been using is to buy a rehab, fix it up, try to sell it right off the bat, give it about 3 months to sell, if it doesn't go under contract within 3 months, I rent it out and keep it in my rental inventory. Someone is bound to want to buy it (usually your renters) or at least you should be making positive cash flow, taking write offs, and gaining appreciation year after year. I've built a property management business that way. I could care less if any of them sell. Either way - I win. Other people are paying off the mortgages. I have many of those homes paid off already.

Step 3: get your real estate license. After 3 years of licensure, get your real estate broker license.

STEP 2: Find a forclosed home in decent condition, and purchase it with an INVESTOR LOAN.

*Correct? Then make my repairs and hopefully sell it asap? A friend of mine said his father does this, (minus the license and the forclosures,) and just sells 'by owner.' If I'm licensed, I'm assuming it'll be similar to just finding my own buyer, correct? Is the secret to get it off my hands as fast as possible, (so I can avoid paying land tax, etc...) If so, this will obviously be the other half of the battle.

I don't know the details of your friend. I started out "by owner", but it's not the best way to go. Again, you are trusting an agent that way. I trust no one. Your friend is having to find the homes to buy. As an agent, it's easier to find them vs an unlicensed individual. Sure, we have a lot more stupid rules to follow being licensed, but believe me, it's worth it. As a broker you can invest, AND represent others in real estate transactions, AND hire agents to work for you while you make money off of them.

- Once licensed, is it EASIER to get approved for investment loans? Will my own personal credit factor into the whole ordeal? Let me know!

No, it's not easier to get approved but you will earn a little credibility. Your own personal credit will ALWAYS factor in to investing - when you are applying for loans.

And thanks again Mr. 1. Because of you, I'm on the verge of being successful... and unmarried for all eternity lol.

Bachelorhood!

Mr.1 -

*Again, you're the man. A couple things are still lingering for me though:

- When you say, "sit down and talk to a local mortgage broker," - you make it seem as though I can schedule a meeting, even with zero credentials. This is actually a great question, because you also mentioned speaking with an experienced investor. (I'd rather *not* talk to my friend's dad, he wouldn't share his knowledge.) So the question remains: How do you 'talk' to these experienced people, who sincerely have no incentive to give you the time of day? I would love nothing more then to find a successful investor and play "1000 questions," but I'm not sure how I would go about doing that. *Also, would I most likely need a license FIRST, to speak with a local broker for advice?

- Secondly, were you suggesting that I have to get a BROKER license to get investment loans and invest, or were you just saying it would be a wise move? If so, why!? What are the advantages?

- Third, would property without a home be the perfect thing to invest in Mr.1?? Think about it: almost zero labor is involved, and land can worth a lot. I'm sure that there must be forclosed land out there as well. What are your thoughts on this??

- "Your friend is having to find the homes to buy. As an agent, it's easier to find them vs an unlicensed individual." Why!? How and where does it become easier as an agent? I was always under the assumption that you needed to be licensed just to view forclosures. What are you refering to, as far as an advantage goes? "Easier as an agent."

- I've been reading around. What can you tell about "REITs" ?? From what I understand, you don't even need thousands of dollars to invest to make money. Have you ever looked in to this, or am I dabbling in things out of my league?? How do you go about participating in a REIT?

*You're steering my future here Mr.1. I'm following your guidance and I'm an inch away from going about getting my real estate license. I'm scared man, because once I have it - I don't know where to start. Either way, I'll look for those CDs on eBay.

Mr.1 -

*Again, you're the man. A couple things are still lingering for me though:

- When you say, "sit down and talk to a local mortgage broker," - you make it seem as though I can schedule a meeting, even with zero credentials.

Because you can. Sit up straight, be confident, know what you want and be the go-getter you claim to be. Stop holding all of these other folks to such high esteem that you are paralyzed to engage them. Mortgage brokers are generally poor. Most attorneys - poor: especially real estate attorneys - dirt poor. Here's the break down of paychecks at a closing I attended on Monday as I represented a buyer. Seller: +$50K Buyer: -$20K Selling agent: +$9760.00 Buyer's agent: +$9760.00 (yeah my week is off to a decent start) Attorney: +$500 !!! poor attorney has to pay for his student loan for his JD, his payroll of employees, his new building he bought, and he works from 9am to 7pm Mon - Fri. Not so glamorous, now is it? Most doctors - uh huh - poor. My ex-wife is now married to one of those sought after doctors that every American woman's mom teaches her to go after. Good luck to that broke guy - he just married my ex-liability. He's about to get even poorer.

This is actually a great question, because you also mentioned speaking with an experienced investor. (I'd rather *not* talk to my friend's dad, he wouldn't share his knowledge.) So the question remains: How do you 'talk' to these experienced people, who sincerely have no incentive to give you the time of day? I would love nothing more then to find a successful investor and play "1000 questions," but I'm not sure how I would go about doing that. *Also, would I most likely need a license FIRST, to speak with a local broker for advice?

You're talking to me and I'm giving you the time of day. The moment you start having a stench of the love of money I assure you no one will give you the time of day. Switch your focus. I know it goes against the typical greedy nature of our culture, but try to do this: TO SERVE. Focus on God, family, friends and helping others. You'd be pleasantly surprised at how successful you'll become if you give those things priority. Think about that for a while. Now back to real estate.

No, you do not need a license to meet with brokers. I'm still using the original mortgage broker I started out with as one of my mortgage brokers. I was just some kid off the street when I first met her. I'm sure she had her doubts because chances were pretty high that I'd flake out when I figured out how much work was involved in making it all happen. I did have excellent credit when I walked in to her office for the first time and I had a job paying only $40K per year. That's really all they expect - job and credit for starters (class and good manors are a plus too).

- Secondly, were you suggesting that I have to get a BROKER license to get investment loans and invest, or were you just saying it would be a wise move? If so, why!? What are the advantages?

I didn't say that. Reread my post. I listed some advantages.

- Third, would property without a home be the perfect thing to invest in Mr.1?? Think about it: almost zero labor is involved, and land can worth a lot. I'm sure that there must be forclosed land out there as well. What are your thoughts on this??

I believe I answered that thoroughly in another thread of yours.

- "Your friend is having to find the homes to buy. As an agent, it's easier to find them vs an unlicensed individual." Why!? How and where does it become easier as an agent? I was always under the assumption that you needed to be licensed just to view forclosures. What are you refering to, as far as an advantage goes? "Easier as an agent."

I answered that too. As an agent you have access to the MLS and can check it 3 times a day for when the great deals hit the market. I've made as much as a quarter million dollars off of one property that was listed in the MLS- and I bought it the day it came on the market.

How do you go about participating in a REIT?

Forget about REIT. You're kinda all over the place. Focus on those first few steps before you get bogged down.

*You're steering my future here Mr.1. I'm following your guidance and I'm an inch away from going about getting my real estate license. I'm scared man, because once I have it - I don't know where to start. Either way, I'll look for those CDs on eBay.
Reply With Quote

No, you're steering. I'm only giving you a little gas and a little bit of a map to get to where I think you may want to go. Scared? Why? Once you have a real estate license- YOU HAVE MORE OPTIONS. Nothing to fear from that.

*Ok Mr.1 - I want to 'start from the start' and get my license as suggested. I've been searching online, and as dumb as it sounds, I can't seem to find a direct answer to WHERE I actually obtain my license. Better yet, where can I find the materials I'll need to study to PASS the license exam? I live in New York right now... Again, I know this sounds really lame, but I honestly took a look online - and although I can find plenty of links to "real estate colleges" and enrollment ads, I can't seem to find out where I can get info and take the exam... There has to be a place that I can go, sign up, get a book to study, etc... Are there no practice tests for this? I don't know what to expect, and I don't want to buy 90 books on real estate if there's a specific study guide for taking the first exam to get licensed. Thanks again!

Originally Posted by AnonymousGuy

*Ok Mr.1 - I want to 'start from the start' and get my license as suggested.

Great. Don't listen to the horror stories about agents failing the test multiple times. You'll do fine.

I've been searching online, and as dumb as it sounds, I can't seem to find a direct answer to WHERE I actually obtain my license. Better yet, where can I find the materials I'll need to study to PASS the license exam?

The answer to both of those is: with an accredited instructor. You sign up for a class, they give you the materials, you take some tests including a "local test" and then a "state test."

I live in New York right now... Again, I know this sounds really lame, but I honestly took a look online - and although I can find plenty of links to "real estate colleges" and enrollment ads, I can't seem to find out where I can get info and take the exam... There has to be a place that I can go, sign up, get a book to study, etc... Are there no practice tests for this? I don't know what to expect, and I don't want to buy 90 books on real estate if there's a specific study guide for taking the first exam to get licensed. Thanks again!

No, there's no practice tests. You'll get all the practice you need from your course. Simply call one of the biggest firms in your area and ask for the best instructor for the REAL ESTATE PRELICENSE course. Make sure you use exactly those words in describing which course you are interested in. You can either take the course in a classroom setting, or you can take the online course and only go to the instructor's class to take the final exam. Once you pass that exam you'll then move on to the state exam (same test just slightly different).

It will cost you between $400-$500 for the course and the final state exam (they charge roughly $100 per time you take the state exam).

Again, you don't need a study guide. Just sign up for the course and you'll be fine.

Oh, one small thing. If you want your license active, then you'll have to get a real estate firm to sponsor you (meaning you are working for that Broker). Broker's foam at the mouth for new agents so don't worry, you won't have to do much convincing to qualify. Just an f.y.i. on that: Most Brokers don't want "part time" agents. They're looking for agents who want to work full time and are go getters. My requirements are a little more stringent but most brokers aren't like me. They look for quantity - not quality.