“How do I get started Russ? I don't have much money. And the little I do have I can't afford to lose. But I see the money you made in real estate and I see what others have been able to do so how do I get started?”
This is probably one of the most popular questions I get. Perhaps you're asking the same question. You've probably seen the get rich quick ads on the Internet, late-night TV infomercials and in the backs of magazines and wondered whether you could really earn enough money in real estate investing to enjoy the cars, houses and lifestyle they claim.
Heck, I even sent away for some of those books and courses that were advertised years ago. I was working in a slaughterhouse just paying the bills. But I always knew I could do something better. But I didn't know what. Not that much different than some of you I bet.
I didn't have much money then so writing a check for a $10 book on real estate investing was a big deal. Believe me, I understand what it's like to worry about not having much money, and worrying whether an investment (even a $10 book) will pay off. But I did write that check and the rest as they say is history. I started with literally nothing, became financially independent at age 27, and built the largest education and training program in the world with 60,000 people registering for our courses every month!
I'm not going to bore you with all the details of my story, but if I were to start over again, here's what I would do….
3 Simple Steps To Get Started In Real Estate Investing Quickly
Step 1: Ask yourself, “Is this for me?”
First, ask yourself whether real estate investing is really something that interests you. As I mentioned, I ran across a variety of different get rich ads for investing in franchises and mail order businesses but you know what? I just didn't identify with those businesses. I didn't understand them. And they didn't interest me ‘like real estate did.
What I learned is that we have to trust our 6th sense – our gut instincts. You see, real estate was attractive to me. I don't know why. I don't think I could even explain it then. All I knew is that the other topics just didn't interest me. But real estate did. And I especially liked it because the concept I started with was very simple. This is the same concept I teach and use today and exactly what I would do if I were just beginning all over again.
Step 2: Follow this ONE concept that will generate wealth for years to come
Here is the concept: Look for the worst property in a market that you can improve quickly and easily without spending much money. Now I'm not talking about going to areas where you need a gun with you when collecting the rent or making a repair. Instead, look for “cosmetically distressed” houses in middle-income markets and look for the worst property on the block. Look for those that need painting, carpeting, and cleaning.
You're looking for a property that needs the least amount of work that will give it the most amount of cosmetic improvement.
Simply by doing a little work fixing up the property and giving it a new coat of paint you can increase the value of the property right away by $20,000 to $30,000. Used car dealers do the same thing. They buy a car at auction that doesn't look very nice, and they wax the outside, clean up the inside, and then mark them up for hundreds of dollars. You can do the same thing with a house, such as a duplex, a triplex or 4-unit building. And you can buy it cheaper than any other property on the block because it's in run-down, beat up shape.
Step 3: Run the numbers
Next, you need a mathematical formula to determine whether to invest in the property. The secret is to determine whether the property is going to make you money BEFORE you spend a dime so there's no risk to you.
For example, let's say you find a duplex and the rental prices in the market indicate that you could rent each side for $1,000. Take a sheet of paper and draw line down the middle. In the left column, write $2,000. That's how much money you know you have coming in. In the right column, list your expenses, such as your fix-up costs, tax, water & sewer, utilities, insurance, maintenance costs, vacancy costs and projected mortgage payments.
From this analysis, you can see in advance whether it's worth investing in a property. So if your expenses add up to $1,200 per month, and you're bringing in $2,000 per month in rent, you know right away you can net $800! That's $800 cash you can put in your pocket to spend any way you like.
This is the same thing I did 30 years ago that worked for me then and is working for many real estate investors today. There aren't very many new ways of investing in real estate. What worked then, works today! And those that tell you different are selling you snake skin oil. Don't get suckered into thinking that you have to have the newest methods. Instead, what you need are proven, time-tested methods that you know will work in any market cycle.
3 Simple Steps To Get Started Quickly In Real Estate Investing
3 simple steps to real estate investing that are working right now:
Step 1: Ask yourself, “Is this for me?” Real estate should be something that interests you. If not, you may be replacing one job with another one.
Step 2: Look for the worst property in a market that you can fix up quickly and cheaply so you can increase its value right away.
Step 3: Run the numbers to make sure the property will produce a positive cash flow BEFORE you say “YES!” to the deal.