The first question I get asked when talking about how I got into real estate investment is: “How did you get all that money to start investing?” or some people just hit me with the: “Not all of us are blessed with that much capital”.
So, in this post I will address everyone’s concerns with solutions, because the truth is, it is not about the money, it is ALL about the information. If you have any questions or would like me to clarify any points I’ve made, please feel free to comment so we can have an open discussion!
Before you can even start thinking about investing you need to know and understand your budget. Create room in that budget for the purchase, renovations and most importantly, make room in your budget for mistakes. Unfortunately, no matter how much you plan, mistakes will happen and they will happen often. Being successful is not about preventing mistakes but about pivoting from them.
For those of you who don’t know what “pivoting” means, it’s just a fancy way of saying BOUNCE BACK.
I don’t want to throw too much information at you today, but just enough to give you the confidence to overcome any fears you may have about starting!
Ideally, the best way to capitalize off of your money is to buy homes as cheap as possible; again not rocket science. Now, I am sure many of you are thinking, finding cheap property is not easy, but I am here to debunk that MYTH. Yes, in fact your township makes it extremely easy by listing all of them online and hosting a “Sheriff’s Auctions”. Sheriff’s auctions are live (in person) auctions held once a week, selling off foreclosed homes. These auctions are great because the Sheriff tells you how low the bank is willing go, which means you are purchasing these properties at the bare bottom price which leaves room for EQUITY.
Now, again, I know what you’re thinking: “well if it’s that easy, why isn’t everyone doing it”. The reason why everyone is not doing this is because these auctions require you purchase the property in stone cold CASH. Yes, I know not everyone has access to large lump sums of cash. But, as someone who has been to these auctions in person, I will tell you that I’ve seen houses go for as low as $2,000! When I researched the comps of those homes, I learned that you can rent them out renovated for $800/month; talk about return on investment. Now, prices as low as $2,000 do not come around often but if you are at the sheriff’s auction once per week every week, your odds of finding a deal increase. The median cost I found at the county I was in was $45,000.
Now, I am not going to tell you which sheriff auction I go to, but I am sure you can imagine the area is not the best which means tenants will be a bit of a hassle but this is something that I am personally willing to deal with. If you are not willing to deal with the management side of things flipping is always an option!
Remember information is power and more valuable then money! Before you go into an auction, make sure you do a title search so you know all the liens on all the properties you are willing to bid on. Also be aware of the fact that there may be someone living in the property so it can take up to 2 months to evict them; include all of these costs into your purchasing budget.
I will tell you the people in that auction making the biggest return on their money were making the biggest purchases, but we all have to start somewhere! If you comment on this post telling me you don’t even have two grand, I will tell you to find a way to get the money by working for a period of time or find a group of people to invest with. The ball is in your court and I just gave access to the information so you can go grab it.
My next post tomorrow will be: “How your primary mortgage can make money for you!”.