Getting Started in Real Estate for the Penniless - Part One
You probably won't like what I have to say. But, the brutal reality is that you can't spend everything you make and expect to get rich. Period. If you are slipping further and further into debt each month and you think real estate investing is going to save you, I have bad news for you. It won't.
I know... those guys on late night television introduced you to people who got out of debt and quit their jobs just 60 days after taking their real estate investing course. Let me tell you first hand that if those testimonials on t.v. are real, those people are the exception, not the rule.
You can, and we believe you WILL, create massive amounts of wealth through real estate investing. Set your goals, find properties that meet those goals with plenty of good research and then hold onto them for at least five years...preferably longer. It works... look at the richest people in your city. Of those that are self-made, I bet at least 25% of them did it through real estate. We always go through the richest people in Canada and Power List for Vancouver, and this number holds up.
The secret to successful real estate investing is to learn what you're doing first, then you can make more investments as your knowledge and assets grow. If you do that, you CAN get rich off of real estate, with less money and fewer headaches than people who try to do it in other ways.
We started out with $16,000. Thankfully my wife Julie was a saver. When she graduated from University and started working as a sales rep, she continued to live like a student. And, she put every extra penny she had into paying down her student loan. When that was paid off, she proceeded to save any extra money that she had. Her plan was to go back to school for her MBA so she wanted to have as much cash in the bank as possible to pay for school.
In contrast, I was not a saver. I didn't live above my means, but I was right at them with some credit card debt, a nice new Volkswagen (financed) and nights out on the town. I had a small piece of property that I owned with my mother and no savings to speak of. I got very excited when Julie explained to me how we could retire at 35.
It didn't happen overnight, but it only took a few months to change my situation. I quickly paid off my credit card debt and started putting a few hundred dollars away each month in savings. And then we started shopping for our first investment property.
Our first investment was a lot easier to do thanks to Julie's savings. But, you don't need money to buy your first property.
You may have heard of 'no money down' programs, and though they certainly exist and they can work, they're also very risky. Usually this is too much risk for an average person to handle, and why would you want to handle it anyway? Especially when there are three much less riskier ways to get into real estate investing:
1. Cashing out your savings, including stocks, retirement and GICs
2. Home equity
3. A partner with cash.
Here's the hard reality that you won't like to hear though. Finding a partner will be next to impossible if your own finances are ugly. If you have no experience investing in real estate, you are deep in debt and you are trying to get rich on my money, what exactly is in it for me, as your potential partner? It just sounds risky to me.
In contrast, if you had $30,000 in student loans with only $5,000 remaining to pay and you've found a really great deal and seem to know what you're doing, then a partner will want to hear what you have to say.
Did you notice the difference? In the first instance, the person is in debt with no plan, no experience, and no way to get out. In the second instance, the person is in debt, but has a plan - so you know their debt will be over soon and they will be not be depending on your money forever.
Before you can buy a single piece of property, you have to be able to control your own finances. This gives you control of your destiny. Living beneath your means is the only way to do that. If you're unsure about what you make versus what you spend, try this: for the next six months, keep track of every penny you spend. Once it's there in black and white you'll be able to see how you're living and where you can make changes.
It's possible that a few of you may be thinking "well, I couldn't possibly cut back on buying expensive birthday presents", or "I'm not willing to give up my yearly beach vacation". That's fine, as long as you have a plan to save for those things rather than going into debt for them. If you go into debt often when things like this come up, you are a SPENDER, not a SAVER, and are not serious enough at this point about growing your wealth by becoming a real estate investor. - 23212
I know... those guys on late night television introduced you to people who got out of debt and quit their jobs just 60 days after taking their real estate investing course. Let me tell you first hand that if those testimonials on t.v. are real, those people are the exception, not the rule.
You can, and we believe you WILL, create massive amounts of wealth through real estate investing. Set your goals, find properties that meet those goals with plenty of good research and then hold onto them for at least five years...preferably longer. It works... look at the richest people in your city. Of those that are self-made, I bet at least 25% of them did it through real estate. We always go through the richest people in Canada and Power List for Vancouver, and this number holds up.
The secret to successful real estate investing is to learn what you're doing first, then you can make more investments as your knowledge and assets grow. If you do that, you CAN get rich off of real estate, with less money and fewer headaches than people who try to do it in other ways.
We started out with $16,000. Thankfully my wife Julie was a saver. When she graduated from University and started working as a sales rep, she continued to live like a student. And, she put every extra penny she had into paying down her student loan. When that was paid off, she proceeded to save any extra money that she had. Her plan was to go back to school for her MBA so she wanted to have as much cash in the bank as possible to pay for school.
In contrast, I was not a saver. I didn't live above my means, but I was right at them with some credit card debt, a nice new Volkswagen (financed) and nights out on the town. I had a small piece of property that I owned with my mother and no savings to speak of. I got very excited when Julie explained to me how we could retire at 35.
It didn't happen overnight, but it only took a few months to change my situation. I quickly paid off my credit card debt and started putting a few hundred dollars away each month in savings. And then we started shopping for our first investment property.
Our first investment was a lot easier to do thanks to Julie's savings. But, you don't need money to buy your first property.
You may have heard of 'no money down' programs, and though they certainly exist and they can work, they're also very risky. Usually this is too much risk for an average person to handle, and why would you want to handle it anyway? Especially when there are three much less riskier ways to get into real estate investing:
1. Cashing out your savings, including stocks, retirement and GICs
2. Home equity
3. A partner with cash.
Here's the hard reality that you won't like to hear though. Finding a partner will be next to impossible if your own finances are ugly. If you have no experience investing in real estate, you are deep in debt and you are trying to get rich on my money, what exactly is in it for me, as your potential partner? It just sounds risky to me.
In contrast, if you had $30,000 in student loans with only $5,000 remaining to pay and you've found a really great deal and seem to know what you're doing, then a partner will want to hear what you have to say.
Did you notice the difference? In the first instance, the person is in debt with no plan, no experience, and no way to get out. In the second instance, the person is in debt, but has a plan - so you know their debt will be over soon and they will be not be depending on your money forever.
Before you can buy a single piece of property, you have to be able to control your own finances. This gives you control of your destiny. Living beneath your means is the only way to do that. If you're unsure about what you make versus what you spend, try this: for the next six months, keep track of every penny you spend. Once it's there in black and white you'll be able to see how you're living and where you can make changes.
It's possible that a few of you may be thinking "well, I couldn't possibly cut back on buying expensive birthday presents", or "I'm not willing to give up my yearly beach vacation". That's fine, as long as you have a plan to save for those things rather than going into debt for them. If you go into debt often when things like this come up, you are a SPENDER, not a SAVER, and are not serious enough at this point about growing your wealth by becoming a real estate investor. - 23212
About the Author:
Learn How to Retire with Real Estate with Dave's free Real Estate Investing Starter Tips Guide. Learn how to find money for real estate deals, create financial freedom, extra revenue and massive wealth with tips like: How to find quality rental properties, finding and keeping great tenants, and easy ways to make more money with real estate.
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