3 Top Secrets for Buying Your First Real Estate Deal
1. Knowledge and education
2. get the down payment
3. Jumping in and “Just Do It”
This is my story of how we bought our First Deal. When my husband and I decided to buy our first “investment multi family property”, the first thing we did was investigate and get got education. We talked to realtors, mortgage Brokers, people who were already investors and owned property. We picked their brains as much as we could.
I happened to be up late one night and heard Carleton Sheets talk about his No Money Down real estate investing program. I bought it. I listened to it at least 2 times and got really excited. I had wanted to buy property and get into the real estate game for a long time. Keep in mind when Carleton Sheets says “no money down” he means none of his OWN money down. This is the big misconception. At that time about 10 years ago, Carleton was the only one selling any kind of information programs on Real Estate Investing.
So I started having my realtor send me deals that she thought would be a good investment. We started going out with her and looking at these properties. At that time, our price range was very low, so we had to buy in the lower end market. I have to be honest some of the areas were a little bit scarey. The reason we had to buy in the lower end is because we only had at the time about $5000.00 to put down as a down payment which is usually 10% of the purchase price.
We made our first offer…wow was that exciting. It was on a 3 family which was listed for 90,000. The rental income was 2100.00 a month! My realtor did the math and told us our mortgage would be about 1200.00 a month with taxes and insurance and the rest would be profit in our pocket! Now I was getting really excited! I would be making $900.00 cash flow for each month!
We ended up getting that house for even less. They accepted an offer of 76,000. Home Run! The only problem was that we had no idea how to manage tenants and had no knowledge of how to be a property manager. Again, we started to get educated. We talked to everyone we knew, we talked to professional property managers to see how they actually worked and ran their business. So we jumped in! After about a few weeks before the closing, I started to get really, really scared about what we were doing. We did not know anything about this business. My mind went crazy. All the stories anyone told me about the “nightmare tenants” rumbled in my head in the middle of the night and keep in mind that $5000.00 we were putting down was about all we had in savings at that time!
I got up the next morning and said to my husband, “I think we have to withdraw our offer, I just don’t think I can do this!” He said that he too had been having some of these thoughts and that maybe we should go talk to our lawyer and see if we can get out of this deal without losing our $5000.00 that we had already given to seal the deal. Our lawyer informed us that it might be hard to get that money back because we signed the contracts. In retrospect ,this was the best thing that he could have said because I have to be honest. if he gave us that money back, I don’t think we would have ever bought a property at all. Today we own 15 properties with over 50 units in total. I look back on that day as we talked to our lawyer and realized that sometimes you have to just as Nike says” Just Do It”. Jump in and buy that first property. I am not saying do it without getting the proper education and facts regarding the property, but if it is something you truly want to do remember “the first one is the hardest”.
After we bought the first one and started to collect the rent money for a few months, we thought this is really not so bad after all, in fact, it is pretty great getting a check every month and having our tenants pay for the house. We bought 3 more that year and were on our way.
After about 2 years, we decided to sell that house and buy a few properties in better areas and we sold that house for 179,500. How about that profit for 2 years! Remember we bought it for 76,000 and sold it for $179,000. Don’t forget all the tax benefits you get for owning property too. To learn more secrets and strategies about starting out new in real estate investing go to http://www.investingwiththestars.net/season2 for free teleseminars and webinars on many subjects of real estate investing for beginners and experienced investors.
Investing with the Stars