Investing in real estate is one of the most powerful ways to earn money while you learn how to make more money. When you consider the cost of higher education today and then factor in the chances of gainful employment once you’ve completed that $40,000+ education the amount needed to get into real estate investing begins to look pretty sweet. Our current success story, Matt A. saw the opportunity and jumped on it. His journey was not all roses. I asked Matt what he came up against and what he learned from the bumps in his investing road.
"In addition to what you can get out of books like Your Castle Real Estate’s “Investor’s Guide” & Gary Keller’s “Millionaire RE Investor”, I’ve learned several things that don’t come in the books. How to listen to my gut, who I need on my team and when to listen to them, the importance of controlling fix-up costs & remaining flexible, and the one that saved my butt - having multiple exit strategies.
“The first several months were about learning how to look at property – first on paper and then while walking through the houses. Looking at property on paper can be deceiving. The pictures often times make the homes look really nice. But then we’d get to the house and realize it was a total shambles. Pictures can lie. You had told me I’d need to look at 100 homes on paper & then go see 10 to write one offer. It’s tricky because there are so many variables. But after seeing several dozen properties those variables became less intimidating & more familiar.
"The biggie is location. But I found that even in the less desirable areas there can be pockets that are great. With my first three deals we were in three different areas: North Aurora, Montebello & South Denver. Each area had its own set of influencing factors. Now I know that it’s important (at least in my case) to choose an area and learn all I can about it: avg. price point, quality of schools, acceptable level of fix-up. And perhaps the most important – do the inspections before you close!”
Ah Yes, I remember. Would you like to share that story?
“Sure. We’d just closed on the 3rd flip and one of those “too good to pass up” deals came to our attention. It was back in the east Denver/north Aurora area that I really liked, a 2 bed/1 bath for $70K. I knew the area was running low on properties under $100K and we’d had some down time between a couple of the earlier deals which I didn’t want to do again. Having my money sit in the bank wasn’t getting me any closer to my goal. If we wanted the house we needed to close in 48 hours to save the house from its foreclosure sale. So I jumped on it. The comps were showing resale in the $140K range. That’s $70K in wiggle room – how could I loose, right?
“So we closed Tennyson on a Tuesday & bought Willow on Thursday. Then we did the sewer scope. (insert the sounds of fate here- “dun, dun, dun, dun” in a descending scale) And of course it was trashed so I had to replace it to the tune of $5000. Then we decided it really needed a garage - $11,000. By the time we got it fixed & back on the market it was mere days before the tax credit expired and I had little room to reduce the price and still make some money on the deal.
"We had the house on the market for 6 months with very few showings when you and other investors I know started talking about keeping the place as a rental, re-financing to pull out equity and picking up a couple of other rental properties. This was the “remain flexible & multiple exit strategies” lessons in practice and it lead to my best buy to date."
We’ll save that story for the next Success Stories installment. In the meantime, if you’d like a FREE copy of the Your Castle Real Estate “Investor Guide” give me a call – 303-726-1051 or shoot me an email at ludmilla303@msn.com
