This might have to go in the Cafe Society section but I figured I’d try it here:
I’m looking to get into the Real Estate Business, that is I want to buy foreclosed upon houses, cheap, and (after fixing them up) sell them for a lot more than I paid for them. NOW that being said here are my limitations: I’m 23 years old, I have NO idea if this is even possible (let alone how I would do it), and finally I have no down payment.
Yes I have three strikes against me. Am I dreaming or can I make this a reality? Also is it even worth it?
And the Cafe part, are there any good books out there on the subject?
My brother-in-law began his business doing exactly that, buying out foreclosures and rehabbing them, then selling (or renting); now he builds new houses.
He got his start by working in, and eventually buying out a real estate office in a somewhat depressed (but populous) section of town.
His main partner is a real estate lawyer, and they’re both mortgage brokers as well. By doing it all themselves, they keep their clients in their office, and handle the complete sale.
Where are you?
In the UK you can even apply for grants to ‘do up’ houses you own. Many builders buy old, derelict houses, apply & obtain grant aid (can be up to £35,000), carry out the work themselves, and sell at a tidy profit.
I have a friend who makes over £80,000 a year just on the side renovating old inner city housing. Nice little earner, on top of his salary.
The grants are means-tested if you are a single owner/occupier at present, but not if you are a registered landlord. Although this is soon to be changed.
Of course, this doesn’t apply if you are state-side. But the money should still be able to be made. It’s just a matter of bank-rolling the project initally, and how good your choices are when buying & fitting out the property. Your age is not a problem, but convincing the bank to support your project might be.
I personally have two properties under renovation at the moment. Took a long time (and a hell of a lot of work) to build up to affording them, but (should) make over £100,000 next year in clear profit from them combined. I’m 27 BTW. And I’m an architect so I cut out the professional costs of drawings, detailing and statutory consents from my overheads (by doing them myself).
Where do you live? Have you investigated the market yet? Where I live the cost of housing has accelerated so much over the past year that there aren’t any real bargains to be had, even fixer-uppers, and you need two incomes to be able to afford anything.
That being said, I’ve also heard (and I don’t have a cite, this is just from talking to real estate agents) that many agents are also into real estate investing and will buy up the really good deals before they even get listed. This is not (at least in NY) illegal.
But is what you want to do possible? Yes. However, it’s not going to be easy money. How much experience do you have with home renovation? Do you have enough assets for a down payment? Can you afford the expense of the materials you’re going to need (even if you do the work yourself, you’re going to run into a lot of money before you finish).
The house I live in was a classic fixer upper, I’m just now finishing it, and it’s worth 3 times what I paid for it…I bought it 5 years ago. The work is alot more time consuming than you would imagine, and each step forward is met by one or two back. Granted, I didn’t concentrate all of my energies on the place, and had the additional problem of living in what I was renovating. Just be warned, it’s tough work, and requires some cash just for tools/supplies/appliances/bandaids/aspirin/hardware.
Running- I’m an exteme amature at this, I’m fresh out of college. Basically I can fix up typical house stuff and I do have an income, not a huge income, but one none the less. I do have a partner in this endeavor (my future wife) and we live at my parents home, so there wouldn’t be any over head.
That being said, I don’t have a lot of assets. Any good books out there to get me started? Or practical advice?
As a Realtor with one of the top 10 companies in the US, I can say that yes, you can make money doing a variety of things with Real Estate. If you have the determination, you don’t need any money down or even good credit. I have some investment Real Estate and I’ve aquired it with NO cash and very crappy credit.
Let me clear up a few misconceptions:
Most Realtors are not investors and could care less about a good deal. They most likely won’t buy it themsleves, but will sell it to an investor that they deal with regularly, sometimes even before it is “listed”.
It is ILLEGAL to intentionally sell properties without listing them in the MLS first, at least in Ohio (Check this in your area “Running with Scissors”), but it is done on occassion.
Real Estate can be had for no money down, you just need to find the right situation. They are few and depending on the size of the area you are in, you may have to look hard. Try calling ads in the paper or beter yet, run an ad saying “we buy homes” and offer to buy a property “subject to mortgage” or on a land contract.
There are good deals to be had. No matter what anyone tells you, there are always good deals that have been overlooked by everyone else. It just takes lots of practice and persistance. Don’t give up and don’t be distracted by the morons who tell you otherwise. This is not “get rich quick”, it is get rich slowly but surely.
There are valuable courses out there to teach you the way. I will not suggest any, but many have a “bad” name. This is a bad name given by people who did not have the determination to follow thru and expected to get rich overnight. I can barely count on the number of people I know who have 5-10 million in Real Estate employing these methods to make themselves financially free.
Let me know your location and email address and I’ll try to lead you in the right direction. People like me find satisfaction in showing the way to others.
One ‘trick’ to look for in buying new properties is a development which a built in phases - if you get in early and have your name down to buy (subject to mortgage) you can then hold it without moving in for a while or payng anything except perhaps a nonimal deposit. When Phase 2 begins on site, invariably the starting prices will have risen, say by £20,000. You can then offer your apartment to potential buyers for say £10,000 less than the new cost. They get to move in immediately, (no waiting for costruction to finish), it costs them £10,000 less & you make £10,000 on the deal.
Here is a web site of a guy who writes books on the subject of real estate investing. He also critiques real estate gurus and programs. I found out about it on the Rich Dad, Poor Dad thread and found it very interesting.
Real Estate prices are subject to market fluctuations. It might one day be worth three times
what you paid for it, but on the other hand, after a big earthquake, it might be worth less than you paid for it.