Several years ago, one of my relatives was struggling to get his start. He was young, ambitious and poor. That Christmas he arrived with gifts wrapped in comics. Turned out his resourcefulness was the big hit that year. It was the only time I can remember us delaying the opening of our presents.
“Wait! I haven’t finished reading that package.”
Now there’s a new crop of [tag-tec investors]ambitious[/tag-tec] investors who are getting started. Many of them are sacrificing to scrap together just enough cash to put down on their first properties. Exactly what are the guidelines for this group? How can a real estate future and fortune begin with very little?
Here’s priceless advice from seasoned investors:
1. Be on the lookout for the motivated seller.
That’s the “don’t wanter”. The homeowner who has to get out from underneath that mortgage so badly he’ll practically hand the keys over to you. People like that do exist and there will be more of them in the future as this new markets [tag-ice seller]mature[/tag-ice].
These are the homeowners who are stressed out because of a divorce, job loss, or ARM (adjustable rate mortgage). They desperately want to salvage their credit and get a new start themselves. Take care of their headache and they’ll reward you with a very good property.
2. Don’t do a lot of rehabbing on your first few deals
Concentrate on properties that are distressed because of the sellers. Avoid those houses with a lot of physical problems-for now. Massive amounts of improvements to properties can pull you in over your head fast. Instead put your efforts into a house which only needs a few cosmetic changes. That will get you started.
Later, as you become more confident you can invest in properties which may need more work. Stick with the basics first. Growth will come.
3. Know your market
The best buys with terms will generally be from November to February. Get ready. Go out and farm. What that means is drive around the neighborhoods you’ve chosen to invest in until you know them like the back of your hand. Then as opportunities present themselves you’ll be able to make your offers and get results. You can succeed if you’ve done your homework.
4. Find your mentor(s) at your local real estate club
Here’s where you’ll make the contacts. We can’t emphasize how important this is. You can meet mentors and seasoned investors who will be more willing to take you under their wings. There are folks out there with encyclopedic knowledge of the markets. Connect with one of two of them and you may have made one of the most important moves of your life. There is plenty of room for new investors who can do a lot for the older ones. It’s a win-win. This alone can open big doors for you.
Keep reminding yourself that real estate has been the way more millionaires have made their money in America. Build a strong foundation and you’ll be set for the excitement of making massive bank deposits for many years to come.