Can I get rich in real estate?

I keep seeing the infomercial by Carlton Sheets promising that even with my bad credit, and even having no money, that yes, I TOO can make thousands buying homes for $0 down, and even walk away with cash in hand.

I assume it isn’t that easy.

What I want to know is… is it possible?

I currently work from home and have lots of free time. I don’t have any extra money. I have abismal credit. Is it actually possible for me to make some money in real estate?

There’s an old saying in my country, especially on consumer watchdog programmes: “If something seems too good to be true, that’s because it probably is.”

Is it possible to make lots of money in real estate? Yes. But not without a lot of hard work. But I agree with Ice Wolf. “If it is too good to be true, then it probably is.”

Sure, but you would make more money selling instructions on how to get rich in real estate…

I read one of the guys with one of those programs would have his students contact him when they found a cheap cheap house. He would then buy it HIMSELF & resell for a tidy profit. tsk

I’m looking for a rental property because I can make more money by buying a house outright than by leaving the money in my chequing account (which pays 4%). I found a 3-BR house in Washington for only $27,000. But even the photo looks bad. Imagine what it looks like “in person”! I wouldn’t be surprised if it took $27,000 more to get it into shape for renting (at about $650/month in that area). Assuming I lived in the area (not my first choice), it might be okay. I’d be able to fix up the house (rather, one in better condition), rent it, and look for another house to rent out. I won’t get rich with one or two rental properties, but I think there is potential for some additional income.

But the OP is referring to a “buy low/sell high” scheme. Yes, you can do that and make a ton of money; but it’s not easy. If houses in an area are selling for $250,000 and you buy one for $100,000, then you have to consider why the house is so cheap. I think (although I’ve never looked into it other than seeing the commercials) that the sellers of the program will have you believe that the house is cheap because “it’s a bank repo and they’ll take what they can get”. Well, a friend of mine wanted to buy a home, and it was a bank repo. The bank wouldn’t budge on the price.

A $100,000 house in a $250,000 location probably has a lot of problems. How’s the foundation? How’s the roof? Has the entire structure been eaten away by termites? Repairs are going to cost you. You can do a lot of the work yourself, of course; but what if you have a full-time job? How long are you willing to have the property sit there while you’re pouring money into it? If you don’t have a real estate license, how much will it cost you to buy the property in the first place, and then how much will it cost you to sell it? For example, we sold a house for $275,000. My sister played hardball with the realtor and got some of the costs down a little; but after the realtor’s commission and repairs that needed to be made before the house could be sold (many repairs performed by my sister’s roofer husband) it still cost over $28,000 to sell it.

If you have the time and experience to do the repairs yourself, and if you can sell it without paying too large a commission, and if you are prepared to buying and selling houses full-time, then I suspect that you can make a great deal of money. But not without a great deal of work.

(IANA Realtor and I have yet to buy my first house. I’m just posting impressions which may or may not be accurate.)

It is possible, but like others said there is a ton of hard work and quite a bit of risk. Some stories:

The house next door sold two months ago for 180k to a young guy who is trying to get rich by turning houses. He spent two solid months (about 10 hours a day) fixing up the house. It sold last week for 290k. He did all the work and probably dropped about 25k in materials. Not too bad in my opinion.

A friend of mine has also been doing this for several years. He probably pulls down around 80k -100k a year, but is always about 500k in debt due to the various mortgages he has. I have seen him desperately trying to cover these loans, living of credit cards, sometimes even selling homes at a loss to keep the cash flowing (once he even had to sell his car). I don’t know if he was just over extending himself because of greed (opportunity), but it looked like a scary lifestyle to me.

Regarding the work, it is not too hard. I have taught myself (since buying my home) to do drywall, electrical work, tiling, and plumbing. It is pretty easy actually (technically), but it is time consuming and hard work (physically).

I think the hardest part would be getting started and getting the experience on what to look for. You could get yourself in big trouble buying a house that needed serious structural work or had bad termite damage. Replacing an entire roof or replacing a sewer line can’t be fun and would definitely eat into any profit you hoped to realize.

I don’t know how the bad credit would fit into this. I have bad credit and didn’t really have any problems buying my house; but I did put about 20% down and have a good steady income. Maybe someone can tell us how to buy a house with 0 down, bad credit, and no steady income (as I assume you will need all your time to work on the house).

Good luck.

Actually I think that a large part of the program involves renting out properties…

(oh, and we have a steady income. My husband. :slight_smile: )

As suggested by the other posters, there are two main approaches to the business. First, you can buy rental properties to hold and rent. Second, you can “flip” properties - buy them, fix them up, and sell them.

The trouble with the first approach is that it takes a long time to build up gains, and you have to be a landlord.

Of course, the second approach is somewhat riskier.

But the thing about real estate is that it’s not as efficient as the stock market. If you know the market well, and are patient and thick-skinned, you can get a bargain.

So, if I were in your position, I would consider doing it, assuming that you are interested in real estate.

You’ll need to look at lots of houses in your area, so you know the market really really well.

IMHO, the best way to get a really good deal on a house is to find a house that’s overpriced, and has been sitting on the market for a while. Then hit them with a “low-ball” offer - something way under the market value. Of course, most sellers will be insulted and blow you off. But once in a while, you’ll hit, for any number of reasons.

Another approach is to look at public records and find out homeowners who are getting divorced or having financial problems. Then approach the people with a quiet, all-cash offer for their house. (Yes this is kinda scummy.)

You need to find houses that need only cosmetic repair. If the house has structural/electrical/plumbing problems, it will likely be too expensive to fix and still make money.

You will also want to line up financing so that you can come in without a financing contingency. Sellers always worry that buyers will flake.

You need to learn how to sell a house too. There’s a lot of issues here, but the main thing is - don’t overprice it!!

The big thing is, I have about $100.

That’s enough for 2 (I think) houses on Baltic or Mediterranean, and with a little luck you can leverage that into a hotel on Boardwalk and then be rolling in it.

Me and a friend went to a seminar preaching just this kind of thing. In a nutshell it works like this.

#1 Find house for sale, any house.

#2 Whoever handles section 8 housing (HUD??) can arrange lower interest loans and or assistance on closing, etc if you promise to rent via section 8 for 13 years. I think there is even a “forgiven loan” program along the same lines from some federal housing program. In a nutshell gov’t pays for property and gets to use it as low income housing for a while.

#3 find a property management company who will handle tenant processing and such.

#4 Walk out to mailbox and pick up check of profit from property management company once a month.

#5 repeat.

Since these program require little if any out of pocket if you can find them, you can buy a house for next to nothing. The trick is you aren’t living in it. So at first you really don’t make diddle except for the $30-$50 a month per property. The bonus comes in 15-20 years later. Once your mortgages start to get paid off your profit margins go way up. I have a friend who is turning part of the profits from 3 rentals to pay down a 4th and should be done in like 6 years. Once you have 10-15 rental properties, paid off, you now have and easy 3K to 5K a month in income and you never even see the tenants, property management handles pretty much everything. You can make more money if you handle all of the arrangements yourself but from what I hear, a decent PM company is totally worth the price.

Get a real estate license in California. Then use the hundred to buy a Saturday night special, with which to kill one of the realtors in Beverly Hills or Brentwood so you can take his/her place and make commish on the sale of multi-million-dollar palaces.

Naw! Even that takes a lot of work. :smiley: :smiley: :smiley:

You know I’m kidding, right? :smiley: :smiley:

There’s no EASY way to make money in real estate. Or anyplace else for that mater. If it were that easy, everybody would be doing it.

“Hello, I must be going.” --GM

How much do property management companies charge?

Dunno, just going by what I was told. My friend that has rentals does most of it herself. I know they will eat up most of the profit margin on a property above (thus only $20-$50/month or so after their cut on a property renting for $700 a month with a $500 a mo payment.) It might be a percentage, flat rate, I dunno. Any property managers out there?

Then again even making pocket change like that you turn into a veritable mountain of stellar credit in a few years.

Marry someone who makes more money than you. Otherwise the “no steady income” is proabably going to get you laughed out of a bank or mortgage brokers office.

I’ve done very minimal research on this recently and it appears to be 8-15% (in the UK).

The good one’s may have a minimum charge, which means that you need to own a small block for it to be cost effective. Not that I’m saying some of the cheaper ones might not be good.

As drachillix says, you’re in it for the capital, not the income.

Although 10-20 years down the line you could sell off all the properties and walk away with a million or two, invest, and retire.

Not a bad way to retire by 55 or so.

One downside I have seen come up. If the property is vacant you still are responsible for any mortgage payments you might have. Depending on your income situation that could get ugly in a hurry.

There are two different questions. “Can it be done?” is a totally different question from “Can I do it?” The fact that someone else is doing it successfully does not mean you can do it.

How about a real life report? In 2000 the average sale price of a home in Carmel, California was approximately $1.2M. In summer 2001, it was about $650k. Quite a dip if you ask me. Of course, most of them were third homes that rich folks own, so they could take that hit.

The most important thing about real estate, as well as the stock market, in my opinion, is that when you BUY a home or stock you think the price is going to go UP. But when you buy that home or stock, there is a person on the other side (who probably knows alot more thanyou do about the area) that thinks that the price is going to DROP. That’s the great irony of these things most of the time for me.

My sister is in the real estate business and has been quite successful over the last thirty or so years. She says that it is possible for one to become wealthy in real estate, but extremely unlikely. And, a lot of her success was due to the fact that her husband earned a substantial income, which allowed her to learn the business without being desparate for sales.
She and a partner have purchased several fixer uppers for repair and subsequent re-sale. On a few, they have done well and on a few, they have not. Her opinion is that she no longer has any interst in that aspect of the business. As to owning rental property, she has been down that road and says, for her, it is not worth the effort. YMMV. Something she has done that has paid off quite well is to hold second mortages on homes, usually for younger couples with wealthy parents who will not allow a default. As to the mail order get-rich programs, she is extremely sceptical.

All this is second hand information–all the usual disclaimers apply.