Want to get into Real Estate

[ProDJ26]

Just lost as to where to go & how to start. Seems like a lucrative business that could pay off. Hell I'm at that age where I need to start making money...

 

[Tenacity]

Seems like a lucrative business that could pay off

Gambling seems like a good venture that could pay off as well lol, but it doesn't most of the time does it?

Well, to get pass my little "smart" comment lol, when you say you want to "get into" Real Estate, what do you mean? Do you mean:

- You want to be a Real Estate Agent?

- You want to be a Residential Mortgage Broker?

- You want to be a Commercial Mortgage Broker?

- You want to work for a Hard Money Lender as a BirdDog?

- You want to do Real Estate Development (find properties, fix them and resell them)?

- You want to work for a Real Estate Lender as an Underwriter? Appraiser? Title Company? Escrow?

- You want to invest in Real Estate through a Real Estate Fund managed by a Fund Manager?

I have always hated the "Real Estate Makes You Rich" ads, infomercials and array of other programs. The reason being is that it doesn't stress the importance of the individual looking to "get into Real Estate" to become educated, licensed, and whenever they configure their niche in real estate, to work FOR a company before branching out on their own so that they even know what the hell they are doing.

If I had a $1 for everytime I heard some Walmart Cashier tell me, "I want to get into Real Estate and fix/flip properties" I would be at Donald Trump's net worth lol. Here this person doesn't even OWN the real estate they sleep in, can barely SPELL real estate, yet they are going to be efficient at doing what a Real Estate Development Company does with NO capital, NO legal, NO education, NO experience, NO nothing? It's insane.

 

[Desdinova]

Moved to W&S...

 

[BadNews]

I'll chime in as someone who has a Real Estate license.

Real Estate can be a very lucrative and rewarding career. That being said, most people do not realize how difficult it actually is to break into the business and be successful; most people who jump into Real Estate are quickly spit out.

When I got my license in October 2011 there were 34 people in my class. By October 2012 there were only 6 of us left still licensed and working in the business, and of those 6 there were only 3 of us working full time as Real Estate agents - the others were working part time, basically making no money from it. Fast forward to today, there are only 3 of us left with active licenses, two of which are working full time as Real Estate agents - I no longer am.

Don't get me wrong, there is a lot of money to be made, but it is hard. Probably the hardest part about starting out as a Real Estate agent is the complete lack of consistency. There were times where I had $30,000-$40,000 sitting in my bank, and other times where I had less than $1000 to my name. I worked full time as a Real Estate agent for 2.5 years before I was offered a job that I simply couldn't refuse; salary, commission, vehicle allowance, fuel, meals, hotels, golf, and any travel expenses paid for. Now I maintain my license to help friends and family, or to work with clients that I know I won't be wasting any time with.

On average it will take you roughly 5-6 years to create a business that is consistently bringing in good money. Until then it really is a feast or fast business/lifestyle. The problem everyone that quits runs into is that they are unable to afford the slow times. Doing it part time is hardly an option, because you will never get ahead if you are not able to put in the required work on a DAILY basis, and your business will likely never develop to a point where you can jump to full time.

There are a lot of costs involved to get your license and maintain it. It cost me roughly $10,000-$15,000 to get my license. The annual cost to maintain it (with real estate board fees, brokerage fees, insurances...etc.) is nearly $10,000.

All that being said, I still believe it is a great business to get into, but don't be naive about it. It will be hard. Very hard. It will be expensive. You will be broke, often. You will mostly work evenings and weekends because that is when your clients are available. BUT, if you can make it through 5-6 years you should have a nice business running that you can certainly make a lifelong career out of, as well as create a lot of wealth. One thing I've always loved about it is the complete freedom it can offer; you make your own schedule - to a point.

I'm not sure where you live, or how similar the licensing process is to my area. If you're serious about getting into it, I would go to the real estate board in your area and ask them about the process. Or you could walk into any RE/MAX and ask to speak with the broker, he should have all the right information to help get you started.

I'll leave you with a story about my favourite deal I've done yet (there have been a few good ones.) I had been doing showings with clients all day. I sent a text to my best buddy asking if he wanted to grab a beer after work since his office is right near the hot spot in our city. So we head down to a bar to eat and have a beer. Well one beer turned into I don't know how many. We were sitting there and started talking to this group of guys at the table next to us, they were all lawyers. Next thing I know it's 3:30 in the morning, I'm hammered, got our waitresses number and plans to meet up for the next day, AND made a new friend. As it turns out my new lawyer friend we were drinking with all night was looking to buy a house - a month later I had helped him buy his new place. This one night that was supposed to just be food and a beer, turned into us shutting the bar down at 3:30am, an $8700 pay check for me, I'm still really good friends with the lawyer, and banged our super cute waitress a few days later. It was a great time in every sense of the word.

Good luck!

 

[synergy1]

I was having similar thoughts and since someone already started a thread, I'll keep the conversation going. Bear in mind this is just self talk, but is aimed at getting the OP ( as well as myself) some insight to real estate.

I was contemplating buying and renting in order to generate cash flow in areas where real estate prices have not been that volatile. Even after the 2007 crash, values here changed little and recovered within a very short period of time. I have no interest in flipping nor am I looking at "significant appreciation of property value"...I am thinking of a long term hold and using rent to generate cash flow to build the equity and *maybe* extra left over. The goal is cash generation and MINIMAL repair work. My time is much more valuable growing a business and generating more income than doing a floor job that would looking like something helen keller would do!!

Perhaps the optimal path for this is to incorporate ( if others want to also do this) in an LLC. I have not done the DD and do not understand the tax implications or anything, but it seems that an LLC makes sense insomuch that we can either pay out vis dividend, or reinvest into the company and decrease our tax footprint.

Here is maybe where some of the pros could shed some light:

1- best way to generate cash flow in good areas. Not looking to buy in the slums and rent to degenerates.

2- Good way to do DD in "up and coming" areas. I know of a few locally through word of mouth/ networking.

3- Some reasonable models to incorporate realistic "Cost of business" so I can accurately gauge a wide range of potential investments and determine the "best" ( okay ideal) ones, and separate them from the sub optimal ones.

4- My dream is to own property around the world! California, Prague, Boston! It would be great to start somewhere, and figure out a great way to scale up, generate livable cash flow, and manage properties "remotely".

5- Would going into Business with other parties help hedge the risks? I see more people as more problems, but also as a way to lighten the burden on draw downs when things go wrong. What is the ideal number of business partners?

 

[Tenacity]

...I am thinking of a long term hold and using rent to generate cash flow to build the equity and *maybe* extra left over. The goal is cash generation and MINIMAL repair work. My time is much more valuable growing a business and generating more income than doing a floor job that would looking like something helen keller would do!!

Then why not do what makes your time more valuable, and grow another business generating income instead of doing repair and maintenance work on Real Estate lol? If you hate repair and maintenance work, you will hate Real Estate. Even if you don't do it yourself and you pay to have someone else do it, that's still money that has to be invested in order to keep the property attractive to both current and prospective tenants.

You want to become a Real Estate Development Company, that's fine, how much capital do you have and where would it come from? How much experience do you have in Commercial Real Estate or Residential Real Estate as an Agent, Mortgage Broker, etc.? Who are your legal and financial advisers/professionals? Who does your market research, who is your market research team?

Perhaps the optimal path for this is to incorporate ( if others want to also do this) in an LLC. I have not done the DD and do not understand the tax implications or anything, but it seems that an LLC makes sense insomuch that we can either pay out vis dividend, or reinvest into the company and decrease our tax footprint.

An LLC is good to put a property into because, the LLC is the least expensive form of business incorporation, allowing you the benefits of a C-Corporation in terms of protection but the low costs of running the LLC similar to that of a Sole Prop. However, the LLC has to be structured in a certain way for the benefits to come to pass efficiently, if you haven't, you need to be speaking with a CPA that specializes in in Business Formation along with an Attorney that specializes in Business Law so that each LLC that the property sits in is setup properly. Also putting each property in its own LLC sheds other properties from the liabilities of THAT property and so on. If you will have multiple properties, one LLC formation to use is a Series LLC depending on your State.

Here is maybe where some of the pros could shed some light:

1- best way to generate cash flow in good areas. Not looking to buy in the slums and rent to degenerates.

Nobody will have an answer for this that makes any sense, has any level of efficiency, or has any amount of credibility. That's like asking a restaurant owner for his recipe, he will never tell you that. His recipe is a result of years of trial and error, taking this advice and that advice and piecing them together, market research, market timing, experience, education, etc.

Only YOU can answer this question, it's what makes you a Business Owner and everyone else NOT one, it's the fact that you have a secret recipe (in the form of a unique business plan) that no one else has that consistently produces revenues and returns. And when you develop your secret recipe/secret sauce, make sure you don't give it out.

3- Some reasonable models to incorporate realistic "Cost of business" so I can accurately gauge a wide range of potential investments and determine the "best" ( okay ideal) ones, and separate them from the sub optimal ones.

Again, nobody is going to do this for you in a form that has any amount of credibility, you must do your own analysis and scope of this inconjunction with working with your CPA.

My advice to you is to start doing your DD and DO NOT start investing in Real Estate Development in any form (unless it's a house you will live in). As I recommend to people, why not work for a Real Estate Developer? Learn the insides and out of the industry, learn what the legal implications are, tax procedures are, how to find a property worth investing in BASED on the focus of the Real Estate Developer (be a bird dog), etc.?

Or, become a Real Estate Agent, or a Commercial Mortgage Broker, or a Residential Mortgage Broker, do something in Real Estate for at least 5 - 10 years to learn the damn industry. These damn infomercials on TV and all over the internet has everybody talking about "Real Estate is the ideal thing to do," well how in the hell do you know that? Who goes out and OPENS a restaurant before having WORKED for one?

Succeeding in Real Estate Development is significantly more complicated than it's promoted to be, it's perhaps one of the MOST complicated forms of businesses to succeed in. No one without any strong Real Estate background should EVER attempt to do it.

 

[Prime_Beef]

Bubbles.
To get wealthy in this country you need to attach yourself to inflating bubbles. You have to haverify good sense to get off while still rising..and look for the next.

In real estate you don't make large amounts unless:
1. You prove your abilities at sales and leasing commercially. Think class A office quality stuff. You then get promoted to supervise other go getters constantly nipping at your heals and get a piece.
2. Buy and hold. Start small, low down payment fha, VA. Live in one unit rent the rest. Over time, continue to buy, hold, or break in two and buy two. Takes time, but millions can be had. Live frugal, have day job. (Qualify for loans) Don't blow your seed corn on coke and hooker 2 at a time.
3. Securities - stock broker principal license. You package and sell securitized real estate or work for one much bigger than you.
4. Legal + securities.. Big boy game. Legal searches and strategies for buying commercial properties out of bankruptcy/foreclosure. Find buildings in default highly likely to come back. (Trepp reports) Use legal system to dispossess or otherwise out maneuver existing owners and take control low money down by convincing courts and debtor you have ability to take over and run it, and the cash spread to make up the loan defeasance. You buy for no money (of your own) down, because you paid attention to #3, right?

I always felt if I was going to spend time searching for stuff, doing the paperwork, I'd just as soon own it. Most agents don't make much considering the competition and expenses.

 

[Fugitive]

Some of my terminology may be different as I work in Europe. I'm a Developer so in simple terms I effectively buy up real estate and flip it.

My advice would be if you don't have much experience in real estate then be very cautious and think long and hard before going into it. The reason being that you enter a market as a fish swimming amongst big sharks. You will be eaten alive if you enter a market where you are a competitive disadvantage in terms of finance, experience and skills. A key point is you're more likely to be successful going into business in a field that you already have some skills and experience in.

Real estate is attractive from a distance because if you get it right you can be talking earnings in the millions rather than thousands. However the same way I can't wake up one morning and decide I like the idea of being a brain surgeon, you can't wake up and decide you want to be Donald Trump. It takes specific skill sets and qualities to be successful in business.

The best way to learn about real estate or any sector is to work under someone successful in that sector. It will take you a good few years just to learn the ropes. Alternatively you can dive in head first and lose your money learning the ropes lol.

 

[Bible_Belt]

My family has a lot of rental properties. If you want to be a landlord, you need to be able to do most of your own maintenance, as well as clean up the messes your trashy tenants leave. It's not glamorous.

 

[Robert28]

The number one complaint I hear about real estate brokers is this: they are d@mn near impossible to get ahold of during the most crucial times (like when you are ready to make a serious offer or have questions, etc). They either don't answer their phone, don't return your call, return your call hours/days later.

 

[synergy1]

My family has a lot of rental properties. If you want to be a landlord, you need to be able to do most of your own maintenance, as well as clean up the messes your trashy tenants leave. It's not glamorous.

Yes. One of the engineers at my workplace had to do this first starting out and it took 20+ years to get to the point where it is now fully self sustaining. He probably could have retired years ago, but kept working the job and R/E on the side. I see a lot of people doing this and it eats up time, and causes stress in marriages/ relationships.

I did more research and am concluding that this type of investment isn't for me.

 

[Fugitive]

My family has a lot of rental properties. If you want to be a landlord, you need to be able to do most of your own maintenance, as well as clean up the messes your trashy tenants leave. It's not glamorous.

Only if you're intent on saving money. Its obviously cheaper to handle small jobs yourself.

However in many European countries the outgoing tenants are liable to pay for cleaning costs. So you simply hire professional cleaners to clean the place up at the end of tenancy. Many companies also offer full management services where they will take care of all the maintenance. Obviously you pay more for these services and many landlords don't want to pay for jobs they can simply do themselves without too much trouble but if you don't want to do the dirty work yourself then you do have options.

 

[insanity is humanity]

My family has a lot of rental properties. If you want to be a landlord, you need to be able to do most of your own maintenance, as well as clean up the messes your trashy tenants leave. It's not glamorous.

personally this is what I want to do

 

[mandyoi]

re

Moved to W&S...

oh so need to move W&S