Welcome!

By registering with us, you'll be able to discuss, share and private message with other members of our community.

SignUp Now!

Need Advice

L

Lee108

0
Registered
Joined
Aug 13, 2008
Messages
5
Im in my late twenties, and I have a real interest in real estate, but zero experience. Never purchased a property. I rent, I have a job, I have no money saved, I have no substantial debt either, but I don`t know where to start.

I would like to purchase a house to live in soon. I`m wondering should I get a house to live in first, avoid paying rent and then start investing in properties? Or try to acquire cashflow properties first and use money gained to purchase a house?

I don`t have a high income, and no family I can borrow money from. I`m good at saving money, but even 5% down may take a couple years. I know theres no one answer for me, but wondering what some of the more experienced investors would do in this situation, maybe some of you have been in this position before.
 
Lee what would you like advice on? If you want to know where to get started knowledge is good start by reading and find a local real estate investing group attend a quick start event and join REIN. Where are you located? If your in Toronto there are some free clubs where you can meet other investors.

Good Luck
 
QUOTE (Lee108 @ Aug 13 2008, 05:13 PM) I`m in my late twenties, and I have a real interest in real estate, but zero experience. Never purchased a property. I rent, I have a job, I have no money saved, I have no substantial debt either, but I don`t know where to start.

I would like to purchase a house to live in soon. I`m wondering should I get a house to live in first, avoid paying rent and then start investing in properties? Or try to acquire cash flow properties first and use money gained to purchase a house?

I don`t have a high income, and no family I can borrow money from. I`m good at saving money, but even 5% down may take a couple years. I know there`s no one answer for me, but wondering what some of the more experienced investors would do in this situation, maybe some of you have been in this position before.

Hi Lee,

Only 3 short years ago, I was 21, I found myself in a very, very similar situation as yourself. Long story, short, I made the conscious decision that investing in my own backyard wasn`t going to produce what I needed in my life especially after reading Rich Dad, Poor Dad and how he drilled into my mind that my personal residence is really a liability.

So I opted to get started figuring out this `Joint Venture` module so many speak about on this Forum and become a master at it before trying to get my personal residence under my belt. I read tons of books, took a ton of self development and real estate courses and joined REIN. I am happy to say that late last year I was blessed with the opportunity to purchase my own dream home, 2500 Sq. ft. in Victoria with ocean views and fully furnish it! Something I couldn`t even conceive only two years ago.

My rental portfolio is growing at a pace of 3 properties a month, in addition to our current 80 units...even when I write it now, It`s hard to believe. (Also check out: Winner: Young Entrepreneur of the Year 2008)

So needless to say, I would highly opt for building up a portfolio of properties that are in a fundamentally strong environment which will in turn will allow you to reap the rewards as long as you do your homework and set the intention!

Hope that helps!

Dan
 
Lee, congratulations on thinking this way in your twenties! I was in my forties before I had the courage to invest in Real Estate. I started just a while after I had lost my business, and was pretty nearly broke. Now, almost 8 years later, I could retire if I wanted to (but I don`t).

First, get educated- I suggest you start by reading Don Campbell`s book, "Real Estate Investing in Canada: Creating Wealth with the ACRE System". Read any other good Real Estate books you have the time to read. Then get yourself booked into a REIN Quickstart workshop (a Friday evening and all day Sat & Sun). These are held in each of BC, Alberta and Ontario once each year, and you can find out when by checking the Events Calendar on this website.

Once you have done the above you will have a really good sense of what is required, and if investing in real estate is for you. If it is, then your first property may be a small multi-family (duplex, four-plex) where you live in one unit and rent the others. It`s a great way to start.

If you like what you see at the Quickstart you`ll join REIN and begin your ongoing education in the business, and will meet literally hundreds of people doing the same.

Hope that helps a bit,
 
QUOTE (Lee108 @ Aug 13 2008, 08:13 PM) I don`t have a high income, and no family I can borrow money from. I`m good at saving money, but even 5% down may take a couple years.

There is some great advice above; I completely agree with Garth, the first thing you need to do is get educated. This will cost you nothing as you can get the recommended books from the library.

Once you get educated, you will discover that you can be successful in real estate without high income, low debt, big savings or good credit. (It can be much easier if you have all four, but not necessary). If you search this forum you will find several successful investors who didn`t have any of these but became successful.


To paraphrase my favorite Don Campbell Quickstart quote "If you are going to buy Real Estate, REIN is the best investment you can make, if you`re not going to buy real estate it`s not"
 
QUOTE (Lee108 @ Aug 13 2008, 06:13 PM)
Im in my late twenties, and I have a real interest in real estate, but zero experience. Never purchased a property. I rent, I have a job, I have no money saved, I have no substantial debt either, but I don't know where to start.



I would like to purchase a house to live in soon. I'm wondering should I get a house to live in first, avoid paying rent and then start investing in properties? Or try to acquire cashflow properties first and use money gained to purchase a house?



I don't have a high income, and no family I can borrow money from. I'm good at saving money, but even 5% down may take a couple years. I know theres no one answer for me, but wondering what some of the more experienced investors would do in this situation, maybe some of you have been in this position before.


read this REIN post here on "how to get started": http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html



and this on "Five ways to make money":http://myreinspace.com/public_forums/General_Discussion/61-3347-5_ways_to_make_money.html
 
QUOTE (Lee108 @ Aug 13 2008, 06:13 PM) Im in my late twenties, and I have a real interest in real estate, but zero experience. Never purchased a property. I rent, I have a job, I have no money saved, I have no substantial debt either, but I don`t know where to start.

I would like to purchase a house to live in soon. I`m wondering should I get a house to live in first, avoid paying rent and then start investing in properties? Or try to acquire cashflow properties first and use money gained to purchase a house?

I don`t have a high income, and no family I can borrow money from. I`m good at saving money, but even 5% down may take a couple years. I know theres no one answer for me, but wondering what some of the more experienced investors would do in this situation, maybe some of you have been in this position before.
 
QUOTE (Lee108 @ Aug 13 2008, 06:13 PM) Im in my late twenties, and I have a real interest in real estate, but zero experience. Never purchased a property. I rent, I have a job, I have no money saved, I have no substantial debt either, but I don`t know where to start.
....

Hi Lee,

Great advice from other posters. I can only tell you my experience. First of all, there are numerous ways to get get rich, but there is always one common denominator: Live below your means, the rest are savings that you can use for investment.

How you accumulate money (and assets) depends on your personnel circumstances... where can you make most money (legally)? There is a whole range of methods for making money: If you are a neuro surgeon, you may make most money in your field of expertise. If you can only work for minimum wages, you can increase your wealth best through JVs or other brilliant initiatives as suggested earlier. It all depends on your attributes and circumstances.

Having said that, I do disagree with Robert Kiyosaki in his statement that your residence is a liability. You have to live somewhere and you will have to pay for it. So you may as well be your own landlord; much better than giving others your money. As Don Campbell points out, it are the tenants who pay down your mortgage (in this case you yourself).

Also, all real estate, including the one you live in, tends to appreciate. My first real financial goal was to pay off my house ASAP - at the time I did that in four money-scraping years. After that, I could use my freed-up mortgage payments, i.e. free cashflow, combined with salary increases for investment. It certainly took more than 5 years, and I never used leverage, but now at 55, I am more than financially secure.

What would I have done different? I experienced my `childhood` investment trauma in the recession of Alberta`s early eighties. As a result, I stayed away from real estate for decades. Way too long. I should have started to invest in rental properties a lot earlier. But then, you live only once! But whatever you invest in, first read and study it as much as you can. Next thread carefully, with baby steps, into your favorite area of investment. You`re likely to make mistakes and lose some money. Don`t let that scare you off. Don`t gamble, always follow the fundamentals both as a REIN-style real estate investor or as a value investor in the stock market.

But most important of all... `Baby Steps` does mean TAKING ACTION, don`t stay on the sidelines that way you will never reach your goal.

Hope this helps.
 
The easiest thing to finance is your own home. Or like Garth says a small duplex where you live in one side and rent the other. The biggest thing I find with financing for young people is their other debts are too high to allow them to qualify for much mortgage money. Have a low or no car payment. (don`t drive new) and keep your credit card bills very low. There are still a few lenders doing the 0% down deals but only for a very short time. Read the books and discuss your plans with a good mortgage broker in your province that understands investing.
 
Thanks for all the help, you guys have given me lots to think about.

For now all I can really do is learn and raise capital, which is a slow process, but got to start somewhere.

More questions:

-Is it not important to be building equity instead of paying rent? I mean that 800/month I currently pay could be put towards a mortgage and make it easier to get access to a HELOC.
But at the same time I think the downpayment involved in a mortgage would offset this, since that downpayment could be invested in JV or a rental property if I could find one with a positive cashflow.
 
QUOTE (Lee108 @ Aug 19 2008, 06:25 PM) -Is it not important to be building equity instead of paying rent? I mean that 800/month I currently pay could be put towards a mortgage and make it easier to get access to a HELOC.
not necessarily !

having a high ratio mortgage is like renting from the bank ! and future quity upside is not necessarily for sure .. and certainly not fast .. and likely your mortgage payment + taxes + insurance will be HIGHER than rent !!


try buying a small (potentially cheap, ugly) house and sub-let a room or 2 .. this may make a lot of sense for you ! Fix the house up over time .. have 2 people subsidize your equity building .. plus no taxes on gain when you sell !

QUOTE (Lee108 @ Aug 19 2008, 06:25 PM) But at the same time I think the downpayment involved in a mortgage would offset this, since that downpayment could be invested in JV or a rental property if I could find one with a positive cashflow.
To do a JV you need skills and a smallish track record ! Do you have that ?

Maybe ask Granny or your parents for $20,000 for that small property with 2 room mates .. that might work very well for Granny (or parents), you and the 2 room mates ! win/win/win !
 
Personal residence first - ideally with secondary suite that can be interconnected so you can utilize the sq ft and not move when you don`t need the income. Tax benefits + and no rent collection issues.
 
At your age I would recommend concentrating on savings. At this point in time you should already have savings since you don`t you have not proven to "yourself" you are a good money manager. Cut back on all unnecessary expenses-cable tv, cell phone, meals out, car payments etc. Once you establish a regular monthly savings set a target amount to achieve as a down payment or working capitol. You may be looking at a 2-5 year time frame depending on your ability to save.
Decide if you personally want to own a home or generate income.
Your short term goals can not include both. A personal home is a money pit and the mortgage payments (interest) will consume most if not all of your cash.
Yes a home will build equity but too slowly and is not quick to access.
If generating income is your goal a 3 or 4 plex is a good path to go. This is a investment property that you can live in and reap the benefits but that may not be your best business plan. If you chose to live in the building a 3 or 4 plex is better especially if you can live in the smallest unit. The unit you chose to live in should have a lower rent ideally than what you presently pay or you are better off staying in your own apartment and renting out the entire property to others.
Concentrate on cash flow initially not appreciation. If it doesn`t make you money every month you won`t be in the business very long at your stage in life.
Good Luck.
 
I`d try to get a place with a secondary suite and live in the secondary suite and rent out the moneymaker
 
QUOTE (thomasbeyer2000 @ Aug 19 2008, 09:25 PM) Maybe ask Granny or your parents for $20,000 for that small property with 2 room mates .. that might work very well for Granny (or parents), you and the 2 room mates ! win/win/win !


Unfortunately thats not an option, nobody in my family or friends has money to hand out.
$20,000 I could save in about 2 years.

Also, theres nothing wrong with the place I rent, so staying here does make sense. I got in when the renters market was low, now its gone up at least 50/month higher than what I`m paying, and with ontario`s 1.8% annual increase cap, it will take 4 years for my rent rate to catch up to market value.
 
Hi Lee,

I bought 2 rental properties before I bought my principal residence. I started by reading everything I could a great book that really helped me get started was Real Estate Riches by Dolf De Roos. No Don Campbell books back then. And I started attending local cashflow games and different investment groups. This can all be done with no money I see your in Ottawa there is a group OREIO I know some of the investors in the group and they are very experienced and you can learn from them. [email protected] they have a yahoo group as well.

Good Luck
 
You must log in or register to reply here.
Back
Top Bottom