Beginners guide to becoming WEALTHY

[Sire]

Hey STR8UP,
I jusy got Carleton Sheets's no money down program off e-bay and wanted to know your opinion on his system. Are his techniques similar to Russ Whitney's?

Thanks,
Sire

 

[MacArthur]

It seems like the basic premise of the "getting rich" is buying a run down house and fixing it up and then selling it, or alternatively holding it and renting it out. This is the jist of it, right?

I am not interested in this sort of thing, at this time, but I am very interested in owning my own home or condominium. I currently pay rent and I would really rather not throw that money away each month.

Before reading this I had assumed that one simply needed a down payment of around 20k to buy a home, so I haven't looked seriously into buying, but I am definitely thinking about it now. So, what is the catch with buying with no money down? Is it just high interest rates, or what? Do you need to qualify somehow?

On "no income verify" loans that you mention, are you supposed to lie about your income and then assume they won't verify, or do you list your real income and hope they don't care?

In short, what do you (any of you) recommend for someone who wants to stop renting and own his own place?

 

[STR8UP]

Originally posted by Sire
Hey STR8UP,
I jusy got Carleton Sheets's no money down program off e-bay and wanted to know your opinion on his system. Are his techniques similar to Russ Whitney's?

Thanks,
Sire

I haven't studied Carleton Sheets, but my business partner has. He used his techniques to purchase two properties before I got involved with him in real estate. Most of the no money down systems you encounter are likely similar

I can assure you of one thing. If (and only IF) you put just ONE of his ideas into action, you will pay for your investment many times over. It won't do anything for you sitting on a shelf.

 

[Cesare Cardinali]

STR8UP,
This is an excellent thread. I just stumbled upon it. I'll read it again before posting a more thought out reply.

By the way, sorry for the delay in responding to your email

I haven't forgotten, its just that I've got bad email ettiquette; which works well with replying to chicks (the whole challenge thing) but not too well when chatting with pals.

Cheers,

Cesare Cardinali

 

[STR8UP]

Originally posted by MacArthur
It seems like the basic premise of the "getting rich" is buying a run down house and fixing it up and then selling it, or alternatively holding it and renting it out. This is the jist of it, right?

No.

The premise behind getting rich is acquiring as much income producing real estate as possible. Handyman properties are one way to do it.

The whole idea is to beg, borrow, and steal (figure of speech) whatever you must in order to obtain and HOLD title to as many pieces of property as possible. Ever play Monopoly?

I am not interested in this sort of thing, at this time, but I am very interested in owning my own home or condominium. I currently pay rent and I would really rather not throw that money away each month.

Let me shed some light on a common misconception.

The BIGGEST benefit usually realized from ownership of real estate is appreciation. It will take you YEARS before you notice any kind of paydown of the principal on your mortgage. The property will likely gain a ton of value LONG before it is even close to being paid in full. This is why if you can manage to get a bunch under your belt in a few years you can retire.

Before reading this I had assumed that one simply needed a down payment of around 20k to buy a home, so I haven't looked seriously into buying, but I am definitely thinking about it now. So, what is the catch with buying with no money down? Is it just high interest rates, or what? Do you need to qualify somehow?

I don't want to give the impression that a homeless guy can walk in off the street and buy a mansion no questions asked. That isn't how it works. The more you have going for you the easier it will be. And the lower the rate.

Credit is your biggest asset. With a score of over 700 you should be able to get real estate loans with no problem.

Here's an easy way to get away with not putting any money down- a repair and redecorating clause. You find a lender willing to loan you 95% of the value of the property. Lets say the property is worth $110k. You offer the owner $110k , but include a clause in the contract that states the owner will refund $9k at closing. That should cover the down payment and closing costs. Easy no money down deal.

You may even be able to find a lender to let you borrow 100% if your credit is good enough.

On "no income verify" loans that you mention, are you supposed to lie about your income and then assume they won't verify, or do you list your real income and hope they don't care?

Not at all. Some lenders may ask, but you can say whatever you want if it is a no income verify loan, they take your word on it.

The refinancing I have in progress on my properties right now is no income or asset verify. They took one look at my credit score and didn't even ask how much I make. Unbelievably, this lender is giving us a 95% CASH OUT refi on INVESTMENT properties, stated income and assets.

Some interesting points- at closing of these refi's I should receive a check in the neighborhood of $72k....and there is STILL 10% equity in each of the three properties (about $17.5k is mine), and this is on an initial investment of only $12.5k about seven years ago. Not to mention the cash flow every month. The $12.5k I initially invested was before I knew of no money down techniques. Not bad, huh?

Another point- a few years ago most lenders would only loan 70% on investment property. It's good that things change!

In short, what do you (any of you) recommend for someone who wants to stop renting and own his own place?

The first thing is to read some books on how to buy property with little or no down. Even if you only use the techniques to buy one for yourself.

Then, if you aren't a total numbskull you wil continue to use the methods you learn to buy at least one more per year. In ten years you'll have a NICE little retirement plan.

 

[STR8UP]

Originally posted by Cesare Cardinali
STR8UP,
This is an excellent thread. I just stumbled upon it. I'll read it again before posting a more thought out reply.

Thanks. Hit me with your best commentary.

By the way, sorry for the delay in responding to your email

I haven't forgotten, its just that I've got bad email ettiquette; which works well with replying to chicks (the whole challenge thing) but not too well when chatting with pals.

Cheers,

Cesare Cardinali

Good thing I know better than to sit around all day waiting for your email. You might sense my desperation and leave me wondering what I did wrong.

 

[kingNav]

Hey.. I was wondering what you would suggest for someone like me. I'm 18 and in college, and doing well in accounting, economics, info systems management. I'm living off the part time supermarket money I get each week, no car, no credit card, living with my parents. What the hell can i do? I read all these books telling me to get off my @$$ and start investing, start buying real estate, start doing something, but they don't tell you what to do when your young and dont have a pot to piss in, nevermind a wall to pitch it over..

Any help is appreciated..
thanks

 

[diplomatic_lies]

Originally posted by kingNav
Hey.. I was wondering what you would suggest for someone like me. I'm 18 and in college, and doing well in accounting, economics, info systems management. I'm living off the part time supermarket money I get each week, no car, no credit card, living with my parents. What the hell can i do? I read all these books telling me to get off my @$$ and start investing, start buying real estate, start doing something, but they don't tell you what to do when your young and dont have a pot to piss in, nevermind a wall to pitch it over
thanks

If you have time, buy bulk from "drop-ship" places and sell them individually on ebay, sold.com, or other auction places. Even door-to-door (although that is VERY hard, especially for us youngsters). Most drop-ships give you cheaper prices (ask them which of their products they give additional discounts to), and each place usually have 1-2 products they are able to provide bigger discounts to (dunno why, direct import maybe?).

You usually need around $5-$10K to start, and depending on the sales, you can make profits of around 10-20%, after all fees and stuff are taken out.

Only risk is if you can't sell the stuff....then you'll need to cut prices and lose some money (people always buy cheap stuff on ebay). I did it with digital cameras, software, and mobile phones, and so far racked up around $8K or so in profit. The benefit is that I don't even need to do anything for the money - just post some pre-made ads on ebay, make some phone calls to the drop-ships, and occasionally wander a block to the milk bar to post off the stuff to buyers.

However, it can be occasionally time-consuming (takes a HUGE amount of effort to find drop-ship companies in Australia. Its easier in the US cuz you can just buy those dodgy e-books with the company lists). Also frustrating if you can't sell the goods, and have to lower their price. The worst is if you contact some dodgy company and their goods end up defective, with expired warranties. But check with the Australian Tax Office (or US equivalent) to see whether the company is real, and whether they've racked up any charges in the last 10 years. Then theres the annoyed customers, not to mention poor postal services and risk of breakage....add in postage costs and you've got a pot in your hands.


If you want something less-time consuming and without frustration, I wouldn't know. I've done this a few times, and most were sucessful, although I lost some money once because I couldn't sell off some cameras.



Not sure what else there is.....I haven't been able to know any people who are willing to lend $100K to a teenager with no assets (and who lives in his parents house) to buy his own property......



The only other thing I know which makes money is stealing. Used to do it with friends, but to get something good requires a lot of time. Houses are a lower risk, but you often come out empty-handed. Shops are a HUGE risk, due to modern alarm systems for the ones with expensive goods. Plus risks are far bigger (criminal record isn't something you can wipe off). If you really want to do this, get some guides to lockpicking and spend a few months learning, to save the trouble of broken windows and alerting the entire city.

 

[thissucks003]

Originally posted by STR8UP
Russ Whitney really helped me. He thinks along the same lines I do. Looks like he has a newer book that I need to order. Make sure you read Rich Dad too.

You should probably order his home study course of one by Carleton Sheets. Robert Allen may have something as well....I've read some of his stuff and he knows what's up.

Now get out there, read up, and post the details of your first deal!

I will check those out. Thanks!

TS

 

[STR8UP]

Originally posted by kingNav
Hey.. I was wondering what you would suggest for someone like me. I'm 18 and in college, and doing well in accounting, economics, info systems management. I'm living off the part time supermarket money I get each week, no car, no credit card, living with my parents. What the hell can i do? I read all these books telling me to get off my @$$ and start investing, start buying real estate, start doing something, but they don't tell you what to do when your young and dont have a pot to piss in, nevermind a wall to pitch it over..

Any help is appreciated..
thanks

First of all, anyone suggesting you steal for money should have their hands broken.

Let's put it this way. I don't care how little credit or cash you have you can STILL get started if you know your stuff and know how to use your personality to influence others. If I lost EVERYTHING tomorrow I would be right back on my feet within a year with the knowledge I have acquired over the years.

You are only 18 so you have plenty of time. Cool your jets for now and save some money. Your biggest asset at this point is the fact that you are living with your parents and have no bills. Eventually you will get to a point where you will have to sit back and take inventory of the assets you acquire (both tangibe and intangible) periodically to decide whether or not you are utilizing them efficiently. For now use your situation to save some cash!

You need to build some credit as well. WHATEVER YOU DO DON'T GO OVERBOARD WITH CONSUMER PURCHASES ON CREDIT! Get yourself a deposit secured Visa and use it to buy school clothes and whatnot. Also follow Russ Whitney's ideas for establishing credit in Building Wealth. His methods are simple and effective.

Until you have a foundation built you need to continue to read about and understand wealth building principles. Don't think you can conquer the world in a few months. Given time and persistence eventually you CAN conquer the world. Be patient.

 

[kingNav]

After reading the Rich Dad, Poor Dad (Went to the bookstore today with my moms credit card trying to buy some more of the guys books and this ***** of a lady said they wont let me use someone elses credit card.. even though ive been using it for 2 years everywhere.. i tried to convince her by telling her if she let me use the card i would buy 4 or 5 books as opposed to the only 1 I could afford with cash but she wouldn't budge.. guess they don't really want to make any money..)

anyhow, its discouraging reading the book and then going to my cashier supermarket job and slaving there for 6 hours, only making kiddie change. I suppose I'll just wait it out and save as much as I can, putting so much money in a compounded interest account each year or something. I was browsing through one of the books and it mentioned that if I start now putting a grand a year into the account by the time I'm 60 it'll be somewhere around 1.5 million. Not a bad birthday gift to myself someday when I'm old.

I had around 50 grand in the stock market from all my birthday and graduation money as a child thanks to my dad these last few years, and last year I wanted to take it out and buy a Hummer (I figured it would be safer to cash out for a while and get a nice car that would somewhat keep its value) My dad laughed at me and we kept the money in, only to watch it fall to almost nothing. He blames me because I was never interested in learning howto use all his stock watch programs and other things, but thats kind of ****, I was young and didn't really know any better. I'm gonna try to see if he'll lend me around 10g or so to play around with in the market.. wonder if he'll go for it.

 

[kingNav]

The other time my dad d!cked me over was with this stock called INVN. Me and a friend who was into the military were playing our highschool stock market game and he suggested that we buy it. I think they made some sort of airport x-ray machine devices. It was after 9/11 and I knew the stock was going to be good so I called my dad up (he drives a truck around the country, hes a mover) and told him to put all of my money into the stock. He told me yea yea, but apparently he never got around to it. The stock started at around 10 or something, and within 9 weeks it was up to over 50. We ended up winning the state tournament by turning 100,000 into 240,000 but they ended up taking it away from us because of some little rule where you have to buy a certain amount of stocks and trade them a certain amount of times. So no real money and no fake money either

 

[STR8UP]

Originally posted by kingNav
anyhow, its discouraging reading the book and then going to my cashier supermarket job and slaving there for 6 hours, only making kiddie change.

You have YEARS ahead of you to make things happen.

Use the next few years to get yourself into the right mindset, save some cash, and if the right opportunity presents itself by all means take advantage of it.

I was browsing through one of the books and it mentioned that if I start now putting a grand a year into the account by the time I'm 60 it'll be somewhere around 1.5 million.

By all means, saving is good. The problem is that it will take a long, long time to build a substantial net worth simply by saving. Not to mention that by the time inflation takes its toll that 1.5million is actually worth quite a bit less in tomorrows dollars.

 

[kingNav]

str8up what do you make of this website - http://www.johntreed.com/Kiyosaki.html

 

[STR8UP]

Originally posted by kingNav
str8up what do you make of this website - http://www.johntreed.com/Kiyosaki.html

Someone else brought this site to my attention awhile back.

Consider two things. 1) This guy isn't just a concerned citizen looking to protect the public, he is selling his own real estate course. That's a conflict of interest. 2) It's ridiculous that he has to resort to digging up completely unrelated personal information on guys like Russ Whitney to try to smear his face in the dirt. Whitney is suing this Reed guy for that.

I read quite a bit on that site. It seems he is a "save the down payment" kind of guy. I can tell you that while this is not an incorrect strategy, it is far from the best. If you adopt his ways, you'll likely never be rich.

How he can justify slamming Kiyosaki, I have no clue. I have acquired several pieces of real estate and was blown away by the scope and depth of Kiyosaki's knowledge. He was the first person to present the poor vs. wealthy mindset in a way that anyone could understand.

The choice is yours. Either invest the few dollars on the reading materials and put the ideas to work to get wealthy, or go your merry way content to live a life of hard work for little pay.

If you put only ONE idea from ONE book into action, it will pay for EVERYTHING you purchased many times over. Take Russ Whitney's credit building ideas in Building Wealth, for example. You save $1,000 and deposit it in a bank account. You then ask the banker to borrow $1,000 using your deposit as collateral. You then take the new $1,000 to ANOTHER bank and repeat the process. After a few times doing this you return to each successive bank and pay off the loan. This establishes a lending relationship with multiple sources. This ONE simple idea you can use to make THOUSANDS. Sounds like a good investment to me.

Anyways, I'm proof that with a little persistence these ideas DO work. And I'm not trying to sell you anything. Choose your path wisely, my friend.

 

[kingNav]

I agree with you, but I think the guy made some valid points. The way kiyosaki avoids questions and hides everything is pretty shady.. the way he says the rich dad died in the book yet in real life he says he still lives, yet its a nonfiction book..another thing is the way he gives those sort of empty pieces of advice. "Don't work for money, let money work for you." the guy from the website is right, at first I thought I was getting some good advice but then realized, what the hell does that mean, and how do i do it? Regardless, I'm gonna finish the book as I've found it pretty interesting so far. Do you have any other recommendations? I need something that goes over the basics of real estate, and using the income from the properties to accumulate wealth. These books make it sound easy, 'buy the property with no money down, get a loan, let the tenants pay off the loan, and you take whats left' but I imagine its a lot harder than that

 

[Sire]

Originally posted by kingNav
str8up what do you make of this website - http://www.johntreed.com/Kiyosaki.html

I think this john reed guy needs to seriously get a life. It seems like he has nothing better to do than to analyze and criticize everything about these people.

 

[STR8UP]

Originally posted by kingNav
I agree with you, but I think the guy made some valid points. The way kiyosaki avoids questions and hides everything is pretty shady.. the way he says the rich dad died in the book yet in real life he says he still lives, yet its a nonfiction book..

I would assume that most of these authors use a certain bit of dramatic license to drive home their point. It doesn't mean they are out to cheat or defraud anyone.

another thing is the way he gives those sort of empty pieces of advice. "Don't work for money, let money work for you." the guy from the website is right, at first I thought I was getting some good advice but then realized, what the hell does that mean, and how do i do it?

Ever see the movie Karate Kid? Miyagi has Daniel "wax on, wax off" and the kid gets pissed wondering what the hell any of this has to do with fighting. Over time, of course, the kid realizes that everything he has done was part of the learning process.

Acquiring the mindset of the wealthy is much the same. You will not fully understand what you are being taught until later.

Rich Dad isn't written as a step by step guide. It is more to teach you to think the way rich people do, and that it does so very well.

Regardless, I'm gonna finish the book as I've found it pretty interesting so far. Do you have any other recommendations? I need something that goes over the basics of real estate, and using the income from the properties to accumulate wealth.

Once you finish Rich Dad you need to read books that teach specific techniques. Any of Russ Whitney or Robert Allen's books will give you a foundation.

One thing you must remember is that although these materials will teach you basic methods, nothing, I repeat NOTHING is going to tell you exactly how to do it. Everyone uses the basic knowledge that is readily available through books as a basis to develop their own techniques based upon their circumstances.

These books make it sound easy, 'buy the property with no money down, get a loan, let the tenants pay off the loan, and you take whats left' but I imagine its a lot harder than that

It's extremely simple, but not easy. If you think things are going to fall into your lap just because you read a couple of books you're going to be very disappointed. You MUST get out there and DO SOMETHING. You will learn as you go and your confidence will grow by the day enabling you to tackle bigger and bigger projects.

 

[STR8UP]

Originally posted by Sire
I think this john reed guy needs to seriously get a life. It seems like he has nothing better to do than to analyze and criticize everything about these people.

Yea- the fact that he feels it necessary to attack the people he "critques" on a personal level rather than sticking to an objective analysis of their products says alot about him.

The guy is full of sh!t. He's trying to sell his own stuff by slamming everyone else. How pitiful.

 

[diplomatic_lies]

By the way, do you always sell houses yourself instead of getting a real estate agent to do it? I read it somewhere about saving costs for selling property.



Its too bad I can't afford a single piece of land now. I don't think a college kid with less than $20K and no assets is liable to buy property, much less manage it while studying for a transfer to law and balancing a social life.



Hmm, one of the things I hate is the government stamp duty on property, as well as their taxes. I was told recently negative gearing isn't as good as it sounds, specially with soaring tax rates in Australia.