Opinions on what to do - Just bought house and want to get into REI

[Thorin]

Hello Everyone

I have been looking at REI for a while but have never had the capital to get started. My wife and I have just bought our first home which I look at as a start into the world of REI. We would like to get a couple investment properties but at this time have no money of our own for the down payment`s and because we used 5% down for our own house we don`t have very much equity. Ideally we would like to use our experience in our area which is Saskatoon. We have lived here for over 10 years and know areas that have potential (there are new houses going up in older developed neighborhoods) and also areas to avoid because of crime, violence, gangs, etc. I am wondering though if attracting OPM can be used if you are real estate beginners like us. I have read that it is very difficult to use OPM if you dont have a developed portfolio of properties already but the problem is that we would not be able to get a rental property for 1 to 2 years. I know that the property we bought just went up in value by 10-15 K and we have not moved in yet because it is a new house being built. Any information to help us get started would be appreciated.

 

[kboughen]

QUOTE (Thorin @ Oct 7 2009, 08:19 AM) I have read that it is very difficult to use OPM if you dont have a developed portfolio of properties already
Hi Scott,


No matter where you are in your investing career, it is easy to find an excuse for why you can`t progress. The human mind is great at this.


There are many successful REIN members that have built a portfolio without any of their own money. Some started very young and before they even owned their own property. At the REIN conference in Ontario this past weekend, we heard from individuals that were in this position and succeeded. There are also some great audio interviews in the member section of this site.


If you are going to attract other people`s money without practical experience, you need to bring lots of other stuff to the table in addition to desire and time, including; education, systems, resources, expert team members ……… If you are going to dedicate yourself to doing this, becoming a REIN member and leveraging all the resources that are part of that membership, seems like an appropriate next step.

 

[Thorin]

Hi Kevin

Thank you very much for your reply. That helps alot. One thing I am also wondering about is if anyone has taken out a PLC for training purposes before they got started in the groundwork (looking for quality properties with positive cash flow, etc). I have been researching REIN for about a month now and so far can not find anything bad about membership which has to be a good sign. If it were only up to me I most likely would have been signed up and ready to get started with the training part of this business. My wife is more conservative than myself and due to some bad investments in the past (not with RE but other ventures) she is skeptical is well and I will not get involved unless my wife is 100% involved with me. Is it possible to get some of the testimonials from people who have succeeded at a young age with little or none of their own money without being a member. My email address is [email protected] if anyone would like to email me. I did explain my thoughts about training to my wife last night and she saw the reasoning I had. I explained that anything you do today takes some type of training which costs money. I feel it is better to learn from experts before getting started in REI because I am sure that will save $ and headaches in the future. In my opinion the $ amount on REIN membership is only a fraction of what it costs to get training to be a doctor, lawyer, truck driver, anything in the trades and has the potential for much higher returns on the initial investment as long as a person goes out and puts into action what is learned. Like I said before though I will not come on board unless my wife is 100% convinced and willing to work with me.

 

[invst4profit]

My only comment would be that there are plenty of books to read and lots of potential research sources available that you may consider before committing to spending money to join anything.
Without money or experience of your own you could be a REIN member for several years before ever buying anything.
When I first found REIN it took me 6 months of researching before I came to the conclusion that I would not benefit from being a member.
Participate on the forum and see how things develop.
Lots to learn, take your time, start slow.
You will have more than enough on your plate with a new house for a year or more before you will have money or free time for investing.
Enjoy home ownership first.

 

[Thomas Beyer]

QUOTE (Thorin @ Oct 7 2009, 05:19 AM) ... Any information to help us get started would be appreciated.
Read these two posts here .. then make some more money .. then invite others after you`ve done at least 3 deals with your own money ! Don`t be so impatient !


5 ways to make money http://myreinspace.com/public_forums/General_Discussion/61-3347-5_ways_to_make_money.html

How to get started http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html

Real estate is heavily scewed to work UPFRONT: educate yourself, find the area, find the micro-location in a city, find a property, negotiate a deal, find a decent mortgage broker, find a decent lawyer, find an accountant, get the mortgage, find a property manager, do the right initial improvements, find JV partners .. MOST WORK IS UPFRONT (90% or so) .. but then it is downhill form there !

Similar to an airplane: 90% of the fuel is burned on the first few kilometers to get it to 30,000 ft .. then soaring / gliding for the next 1000 km .. then a bit more work / fuel for landing !

Some properties I (co)own provide thousands of dollars per month cash-flow plus mortgage paydown plus at least some inflationary appreciation .. with perhaps 1-2h / month now .. but most of the heavy lifting happened 4-6 years ago !!

You reap what you sow !!

So, sow away big time now .. and reap lots later !!!

It`s not a "get rich quick scheme" .. it`s a "get rich for sure" game if set up properly with win/win for team members, investors and yourself !

 

[Thorin]

Hi Gregg

Thank you for your response. That helps alot. One thing I have been looking at is purchasing the ACRE home study course and spending at least 6 months learning the system inside and out. I have read Don`s book Canadian Real Estate Investing and found it quite informative.

 

[Thorin]

Hi Thomas

Thank you very much for your reply. I do realize that REI is not a get rich quick scheme although some like to advertise it that way. My wife and I said we want a house of our own first and then we will get into investing. I am finding it difficult to decide on how to start and your posts have definitely gave me insight. Some on this forum say it is best to join REIN before buying any property because of the valuable contacts as well as information that you get. Others say it is better to wait and save up money first. I also realize that it will take time and effort on our part to get started as it does with any business if you want to succeed. One challenge that I have is that I am a long distance truck driver so am on the road for 5 or 6 days at a time and home for 2 days and sometime 1 1/2 days. My wife is visually impaired and stays at home with our daughter and we prefer that. I tried a job that had me home everyday but took a major paycut to do so. The great thing with being a truck driver is that I will never be out of a job because there is always someone that will hire a 1A driver with experience. I would like to be home more and the only viable business I can see eventually being able to achieve that is Real Estate but we will not be able to afford cutting back my days on the road until we can get a substantial portfolio. I have written out some goals for REI and have given myself 10 years to achieve total financial freedom and being able to work because I want to not because I have to. I am following all of the posts on this board and am starting to get a little overwhelmed with information. I feel very confident that we will be able to achieve our goals and dreams through real estate investing and look forward to meeting successful investors in the future and also look forward to posting under the success stories section in the not so distant future

 

[housedoc]

QUOTE (Thorin @ Oct 7 2009, 09:07 PM) One challenge that I have is that I am a long distance truck driver so am on the road for 5 or 6 days at a time and home for 2 days and sometime 1 1/2 days. My wife is visually impaired and stays at home with our daughter and we prefer that.

Who`s going to manage your properties? Hell! Who`s going to manage your home?
You need people around that can TCB when you`re not there. Work on those relationships now.

Why not try renting out part of your house.....a room....a garage?
Get a taste for "landlording". You will learn alot.

 

[Thorin]

QUOTE (housedoc @ Oct 8 2009, 04:35 AM) Hell! Who`s going to manage your home?

Hi housedoc

Not sure exactly what you mean by this but my wife is at home and does a fine job at managing our home. As far as the property management goes we have a best friend who did PM for years and I am sure she would help us out. We talked about possibly renting out part of our house but the reason we bought our house in the first place was to have something of our own and not have to share any part of it with anybody except for friends and family that we invite over. We have been renting apartments and now a basement suite for over 12 years so I don`t think we would be able to handle renting out part of our house. We do not have a garage as of yet so that is out.
Thank you for the information

 

[BenSanderson]

Hi Thorin,

You`re already heading in the right direction - educating yourself.

Make sure to spend lots of time on these forums and ask as many questions as you can. The knowledge you gain from simple conversation with other RE Investors will save you time/money/sanity in every stage of your REI career.

A few thoughts:

1. A huge benefit to a REIN membership is being able to attend the monthly workshops and other events like the recent ALIFE weekend workshop in Toronto. It`s a huge boost in motivation and gives you the chance to network with hundreds of other people who can help you on your journey. However, if you are in Saskatoon and will have trouble making it to these events, the value of that membership is significantly reduced. You can sign up for a less expensive `long distance` membership instead, which means you will be shipped all the audio and materials from the live events, but you will not be able to attend them in person without an additional charge.

2. A REIN membership is truly worth every penny in value, but if money is an issue, you could try joining or starting an Investors Club in your city. I`m a member of two "Mastermind" groups in Ontario and they are a great way to network with many of the same types of people you will find at the REIN events. We just meet monthly at Williams Coffee Pub and discuss REI for an hour or two. Easy enough to ask around on these forums and see if there are any interested parties.

3. ***Just saw your other post, so take this with a grain of salt*** As mentioned before, you may want to consider renting out an extra bedroom or perhaps your basement as a way to get experience as a landlord, as well as save some money for investment. Might be a more difficult decision to make, depending on your personal circumstances, but if done right, could make a huge difference in how fast you can get going with your REI.

4. ***Just saw your other post, so take this with a grain of salt*** Another valid point was raised - with you gone so often and your wife at home trying to manage a growing family, you have a challenge regarding the management of any rental properties you own. The solution could be in hiring the services of a credible Property Manager, but this will require you do some research before hiring just anybody. Managing your Manager is another skill set altogether, not to mention it will eat into your monthly profits. Entirely doable, but do your homework first.

5. As Thomas mentioned above, don`t rush it. REI is a slow and steady wealth building process, and it may take a bit to train your brain to get comfortable with the gradual and incremental nature of this business. It`s not a race - just stay focused and keep moving forward and things will start coming together.

6. You can do it.

 

[housedoc]

QUOTE (Thorin @ Oct 8 2009, 06:18 AM) Hi housedoc
Not sure exactly what you mean by this but my wife is at home and does a fine job at managing our home. As far as the property management goes we have a best friend who did PM for years and I am sure she would help us out. We talked about possibly renting out part of our house but the reason we bought our house in the first place was to have something of our own and not have to share any part of it with anybody except for friends and family that we invite over. We have been renting apartments and now a basement suite for over 12 years so I don`t think we would be able to handle renting out part of our house. We do not have a garage as of yet so that is out.
Thank you for the information

I`m sure nothing ever goes wrong in a new home.
What about grass? Snow?
Since you won`t be there much, you will want to have "people" to deal with things around your home, just like you would if you had a rental didn`t/couldn`t visit.
Your property manager friend is great. BE sure she`s willing and able.
If she`s handy too, she`s gold!
You`ll need a network of people with money looking to invest(REIN, family, friends, lottery).
$200/ month is 48K @ 5% *edit* (don`t do math when you`re half asleep)
I don`t know what prices are doing in Saskatoon, but with 5% down on your home, it doesn`t take much of a correction to put you in a negative equity position.

Good luck.

 

[Thorin]

Hi Ben

Thank you for the valuable information. I don`t mean to sound rushed or anything but I would like to get started into REI sooner rather than later because if we keep waiting then we will always find excuses not to do it instead of asking how we can do it. I have just finished listening to Rich Dad Poor Dad and found that book quite interesting. We do have a plan for getting some income from our house and hopefully it will pay our Mortgage payment and some of the bills.

Good idea for the Mastermind group. From member profiles I can only find about 3 people from Saskatchewan but 3 is better than none

 

[BenSanderson]

QUOTE (Thorin @ Oct 10 2009, 03:00 AM) Hi Ben

Thank you for the valuable information. I don`t mean to sound rushed or anything but I would like to get started into REI sooner rather than later because if we keep waiting then we will always find excuses not to do it instead of asking how we can do it. I have just finished listening to Rich Dad Poor Dad and found that book quite interesting. We do have a plan for getting some income from our house and hopefully it will pay our Mortgage payment and some of the bills.

Good idea for the Mastermind group. From member profiles I can only find about 3 people from Saskatchewan but 3 is better than none


Believe me, I totally get it. I`m in the exact same situation right now. I want to do as much as I can to move forward, and yet at the same time I`m trying to lose the `get rich quick` mentality.

I think the key is maintaining focus. Many success coaches will tell you that one of the easiest ways to keep making progress toward your goals is to simply think about them more often. Your actions are always the product of your thoughts, so the more you can think about what you can do to move ahead in REI, the more likely you are to actually do it. I guess my point was to make sure you don`t get discouraged if things don`t progress as quickly as you`d like.

You mentioned listening to Rich Dad Poor Dad. That one book was key for me (and many others I`ve met in REIN) in deciding to pursue REI. One thing I like to do to keep my mind focused is to listen to audiobooks or recorded seminars whenever I`m in the car or doing work around the house. The Rich Dad series is great and there are many others out there that can motivate and educate. Other favorite authors/speakers of mine are Brian Tracy and T. Harv Ecker. I also highly recommend either the print or audio version of George S. Classon`s "The Richest Man in Babylon" to learn the principles of sound personal money management. And, of course, make sure you keep up to date with these forums, as you won`t find any other material more specific to what you want to do.

The Mastermind Group can function well even if there are only 3 or 4 people involved. Just talking to one other RE Investor in your area can make a huge improvement in your education, motivation and networking. Chances are, if you`re looking for a group to join in Saskatoon, so are others. So, get talking to people and start something up ASAP.

Sounds like you`re on the right track regarding your mortgage payments, so you`re already taking action - that`s great! Preparing your strategy is important, so make sure you take a look at every aspect of your finances and your life and see what adjustments would make the most sense. Then make whatever changes are necessary to allow you the best possible start down the road to wealth.

Good luck, and keep moving forward!