Q: I am a 28-year old single mother and have been thinking of becoming a real estate investor. I’ve read all the books you recommended on your website on this topic and there is so much information out there.
Everyone seems to want to sell their package on how to get started on investing in real estate. Recently someone offered me their package for $2,552.50. That seems like a lot of money, but they promise I’ll be a millionaire in a few short years.
Is it really a good idea to pay someone to teach you on how to go about being a real estate investor?
A: While some people swear by the folks who advertise in the middle of the night via infomercials, I don’t think it’s necessary to pay someone to teach you how to do this.
There are a few basic steps involved with the purchase of investment property and you only need to know basic math. Here are the steps: Find out how much you can afford to spend. Get to know the different types of housing in various neighborhoods. Hook up with an agent who can help you find available properties and understands what a good value is in different communities. Learn how to spot a deal. Jump off the fence when you find the right property for you.
Buying your first investment property is the hardest. What many first-time buyers do is purchase a two-family, or a two-flat, or even a building that contains up to four units. You can move into one of the units and rent out the others.
When that starts to generate positive cash flow, you buy another property. And another.
Building up real wealth in real estate takes time. You need patience, knowledge, and the assistance of an excellent real estate agent who can help you find good deals. Then, you need a real estate attorney to make sure you’re crossing your “Ts”. You also need a great mortgage broker who can work with you over time.
Creating a home buying team is an important step toward giving you confidence. I would also urge you not to bite off more than you can chew. Start off with a condo that you can make minor improvements to (paint, carpet) and rent out for enough to cover the mortgage.
One good book to read is Vern Hoven’s the “Real Estate Investor’s Tax Guide.” Another is my book 100 Questions Every First-Time Home Buyer Should Ask. It will give you an excellent idea of what happens during the process and what you should know.
The bottom line is, you don’t need to spend a couple of thousand dollars on someone else’s program. Instead, put your $2,500 for your down payment. It’ll be a much better use of the cash.
Jan. 19, 2009.