Ask tommy2 about Real Estate

[tommy2]

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There are so many other ways to get into RE than flipping. Honestly, I think this is one of the most dangerous RE plays out there. Even guys who are professional General Contractors lose more often than they win at this game. If I were just starting out, I'd go the syndication route. Get 10-20 people together who have 10-20K each and buy a small retail or light industrial building through an LLC. Keep your leverage reasonable (less than 75%) and you can make a ton of money if you are cautious and patient. Give your partners back small checks on a regular basis and maintain your integrity at all times. Others will flock to you to repeat.

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could you explain this a bit more? or point me in the direction where i could find out more information.

also to note, your replies are hard to follow since youre not using quotes.

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Ok, I learned how to use the quote function just for you and since you asked nicely. [img]/images/graemlins/smile.gif[/img]

Step 1: Get verbal commitments from 10-20 solid people who are all interested in real estate deals in general and who have enough money that they won't be bugging you to sell the property or buy them out all the time.

Step 2: Become a broker or network with several brokers who are "jobbers"--newer guys or more entrepneurial guys who don't think a $30-40K commission is a joke. Have them show you some inventory. Be assured--everything you see for 6 months will be crap (they want to see if you are the clown who will buy the bad deal that has been hanging around forever).

Step 3: Learn how to underwrite real estate investments. Buy Real Estate Finance by Fabozzi (link: http://www.amazon.com/Real-Estate-Fi...dp/0974451835)

Step 4: Learn the lingo. Know what an NOI, Cap Rate, DSCR, and other key terms are. This stuff isn't rocket science, but you need to know it.

Step 5: Try to hit a single or double on your first deal. Look for a deal that has a 5-7 year IRR of 10-12%, with leverage of no more than 70%. Don't blow yourself up with debt no matter what everybody tells you.

Step 6: Run you property yourself (have an operating agreement with your investors and pay yourself 4-5% of the collected rents each month) to keep control of the deal.

Step 7: Send checks to investors (even small ones) regularly. Do quarterly status reports. Be on the up and up even (especially) when there is bad news.

Step 8: Repeat.