We have all seen the late night infomercials selling courses on how to buy property with no money down, simple and fast and make millions of dollars part time without any hassle. My friends, if it were that easy wouldn’t everyone be doing it? The most popular course is from Carleton Sheets real estate investing course. Those who are my frequent readers to the Intense Apex Alpha Male blog know that I have an extensive library of information. I am a voracious reader. I love to read learn and apply what I have read and learned. I also love sharing those books with my readers. Several years ago, I purchased a used copy, from e-bay, of the Carleton sheets, “No Money Down,” real-estate investing course just to see how applicable the strategies were. As I continued to study the course, I began to do some research on the internet. My research led me to two individuals. These two gentlemen are Bill Vaughn from Intelibiz and John T.Reed from johntreed.com. My main focus was on John T. Reed. The reason why my focus was on John T. Reed was because of his no none sense approach to the business of investing. He tells you what you need to know and not what you want to hear, which is what most of those late night real-estate infomercials do; they tell you what you want to hear in the hope of making a sale. John does not care about selling you on investing information or on his books. He is interested in supplying information to those who are in touch with the reality of investing as well as those in touch with the reality of where their talents may lie. Not everyone is cut out for a career in real-estate investing. You have to come to the realization that this type of business is a business with big risk. It’s not like the infomercials would have you believe where they tell you that you can invest part time and be a millionaire fast and easy; not true, and John T. Reed will let you know this super fast. Now, once you have come to the conclusion that it is not easy, but you still want to learn how real-estate investing is done, then you can begin by purchasing John’s book “How to Get Started in Real Estate for $29.95.” This book goes into some of the things John thinks, (based on his forty years of experience), you have to know as you plan your investing career. Here are some things from John’s website that I would like to share here with you.
Suggested sequence for
starting a real estate investment program
1. Are you really sure you want to do this?
A real-estate-investment program will consume large amounts of your time, subject you to considerable financial risk, force you to engage in the generally unpleasant task of dealing with tenants and maybe employees and subcontractors (some approaches to real estate investing do not involve tenants, employees, or subcontractors), and saddle you with significant responsibilities. There are other ways to make a buck, you know. Is being a real estate investor just an abstract concept to you? Or do you really know what it’s like to be a landlord (if you plan to own rental property)? If you do not know what it’s really like, you’d better find out before you start down this road.
Are you a mercenary? That is, you have no real interest in a career in real estate. You just want to do it because you heard it’s lucrative. Because real estate investment is really a small business, not a pure investment like stocks, bonds and commodities, it is important that you be suited to the daily acquisition, financing, management, and disposition chores required.
If you plan to invest in rental property, I suggest that you start by getting a job as a resident manager of an apartment building or as a property manager. That will give you a taste of the property-management aspects of owning rental property. There are also the deal-doing aspects of real estate. For that, you might get a job as a real estate agent. I did that for two years to learn about the business when I was 26. But since real estate agents are only paid on commission, you may want to take a salaried job in the business instead—for example: real-estate-brokerage secretary, salaried assistant of a top-producing agent, real-estate attorney, title-company employee, or mortgage-company employee.
Guru Jane Garvey said I should add to this section that you must be sure both members of a married couple want to do this. She has been a real estate club leader in the Chicago area for 14 years and has seen many marital problems with couples where one spouse never bought into the plan to invest in real estate. In many couples, the husband takes the fun stuff rehab and finding properties and sticks his wife with the property management, leading to a revolt by the wife. I recently got an email from a guy whose wife was gung ho to do management and other stuff, but she was disastrously bad at it and violated all the rules of good management like going on her gut rather than getting a credit check on a prospective tenant. This is not the kind of spouse to have if you want to do real estate investment.
2. Are you suited to being a landlord?
Many people, maybe most, are fundamentally unsuited to deal with tenants, subcontractors, and employees. To be a landlord, you must be able to stand nose-to-nose with a fellow adult’s tenant, subcontractor, or employee and tell them “No,” they cannot have what they are demanding. For landlords who cannot do that, rental properties are a disaster.
Signing your name on the dotted line for a deal involving hundreds of thousands of dollars, or more, is scary. Some people cannot handle it. When I was an agent, I saw a number of would-be home buyers and would-be home sellers get hysterical from their fears when they were trying to do a deal. If you are one of them, forget about it.
3. If you still want to do this, set specific goals.
If after following the advice I described above you still want to invest in real estate, you need a specific goal. It should be written down and have three components:
- Specific net worth amount
- Loan-to-value ratio
- Specific date for reaching those goals
The typical real estate investor net-worth goal is five million dollars or some multiple thereof. I do not like that. It’s probably too much. Five million dollars is a nice round number. It’s impressive, especially if you are relatively young when you attain it. If you are doing this to impress your friends, or trigger envy in your enemies, you don’t need real estate investment information, you need to grow up. Truth to tell, neither your friends nor your enemies care how much money you have.
The proper way to set a financial goal is to work backwards. Money should not be an end in itself. Rather it is a means to an end. So step one in financial goal setting is to make a shopping list. What exactly do you plan to buy with the money you want to make? Most people want a nice home, reliable cars, and a good education for their children, health insurance, and retirement. What does that cost? The nice house requires an annual income of about $50,000 to $150,000 depending upon where you live and how you define a nice house. College costs about $50,000 a year per child at most. Retirement costs relatively little if your home is free and clear. If you can afford the big expenses of a house and college you can afford the other stuff. Furthermore, the amount you need rises and falls according to the age of your kids. Do the numbers. That’s how much you need.
When you do the numbers, you will probably find that you need less than five million dollars. Your goal should only be what you need. There should be no additional amount the only purpose of which is to inflate your ego. Why not? Because every dollar you add to your goal increases the risk and therefore increases chances that you will subject your family to financial disaster. It’s altogether fitting and proper to take risks to achieve worthy goals. But risking your family’s financial future for ego reasons is irresponsible.
Every dollar you add to your goal also takes more time away from other things like health, family, and friends. Since more money than you need has little real value, and health, family, and friends have great value.
Your ultimate loan-to-value ratio goal should be to own your properties free and clear. A good generic goal that should work for most investors would be to achieve a net worth of $1,000,000 in today’s dollars, combined with an overall loan-to-value ratio of 0%, in twenty years.
4. Start studying real estate investment.
Once you have made an informed decision that you really want to invest in real estate in order to achieve sensible financial goals, it’s time to narrow your focus and to study the details of the real estate niche or niches you choose.
Most beginners seem to assume that there are thousands of dollars worth of worthwhile books and courses they can take. There are not. You can probably read all the good ones in a few months. I, of course, recommend my book How to Get Started in Real Estate Investment. Another book you should read is The Millionaire Next Door. It’s not about real estate per se, but it is definitely about the reality of becoming a millionaire, as opposed to the fantasy world described by the vast majority of real estate gurus.
The only worthwhile national course I know of is the CCIM course. The IREM and Appraisal Institute courses were marginal when I took them in the ’70s. The Bar Association and accountants organizations usually offer books, loose-leaf services, and seminars on topics related to real estate. I generally recommend them if they pertain to the real estate niche or niches you have selected. Some local areas have good adult education courses and/or good real estate investors associations. Take the good local courses if there are any in your area and join a good club if there is one in your area.
Sorry to tell you this, but you will probably have to learn by self-taught on-the-job training. The demand for good real estate investment information far exceeds the supply. However, a large group of con men have come forward to part undiscerning fools from their money by promising to deliver good real-estate information, but instead delivering a mishmash of stuff that sounds good to the ignorant novice, but which would be laughed at by experienced investors.
What real estate books should you read? Most of my books have long lists of recommended books, periodicals, and courses in the back.
Find as many of the good real estate books as you can and give yourself six months, and no more, to read them. Then get your butt out into the market and start doing deals! Do not study real estate endlessly.
5. Do it!
I am sorry that the above course of action has not rid you of all fear about the real estate investing career upon which you are about to embark. Get used to it. That’s an unavoidable part of real estate investment. When you are experienced, you will lose most of the irrational fears you had as a beginner, but you will always have plenty of rational fears to worry about. You have to learn to live with that uneasiness. It cannot be eliminated. There will always be quack real estate gurus who will lead you to believe they can make your fears go away. But they are the same as the quacks who claim to cure cancer. They want your money. They will take it if you are dumb enough to give it to them. But they cannot help you. They can only give you a false sense of security.
6. Do not draw over broad conclusions from early results.
You will probably have initial success or failure. Do not jump to any big conclusions based on the first five years. You need 10 to 15 years to really understand real estate. In shorter periods, you don’t see enough of both the ups and downs. The real estate world is full of guys who had a bad experience at the start of their real estate investment careers and drew the erroneous conclusion that you cannot make money in real estate. It is also full of guys who came in at a good time and drew the conclusion that making money in real estate was easy.
It’s neither easy nor impossible over the long run, but it often looks like easy or impossible over the short term. Don’t get in it unless you are in it for the long run.
Real estate is a vast field with many exciting opportunities to achieve extraordinary financial goals. Like any other business, success in real estate investing takes diligence, persistence, and luck.
John T. Reed
As you can see by reading the above statements, real-estate is a multi facet business. Once you decide to go into this type of business, you must now determine what your specialty is and also be in it for the long haul just like building a blog and building your body. There are no short cuts to instant gratification like others would have you believe. I decided what area of investing I will be focusing on and how to go about financing it. John T. Reed has a large library of books, which he is constantly updating, on all things real estate. I plan to purchase everything to further my knowledge and apply everything I am learning from his courses. I also decided just to focus on his material and expertise. This will help cut through the sea of information out there that basically is not applicable. Here is a list of books john sells from his website.
REAL ESTATE BOOK CHECK LIST
1) How to Get Started in Real Estate by John T. Reed $29.95
2) Checklists for Buying Residential Houses and
Apartment Buildings by John T. Reed $39.95
3) How to Buy Real Estate for at Least 20% Below Market Value by John T. Reed $29.95
4) Best Practices for the Intelligent Real Estate Investor by John T. Reed $29.95
5) Distressed Real Estate Times by John T. Reed $29.95
6) Aggressive Tax Avoidance for
Real Estate Investors by John T. Reed $39.95
7) How to Manage Residential Property for Maximum Cash Flow and Resale Value by John T. Reed $39.95
8) How to Buy Real Estate for Little or No Money Down by John T. Reed $29.95
9) How to Increase the Value of Real Estate by John T. Reed $39.95
10) Deals That Make Sense by John T. Reed $29.95
11)Fixers by John T. Reed $29.95
12) Fundamentals of Real Estate Finance by John T. Reed $29.95
13) How to Do a Delayed Exchange by John T. Reed $29.95
14) How to Structure Your Mortgage by John T. Reed $29.95
15)Real Estate Investment Strategy, Volume 1 of 3 by John T. Reed $39.95
16) Real Estate Investment Strategy, Volume 2 by John T. Reed $29.95
17) Real Estate Investment Strategy, Volume 3 by John T. Reed $29.95
18) Real Estate Finance Techniques by John T. Reed $29.95
19) Single-Family Lease Options by John T. Reed $29.95
20)John T. Reed’s Real Estate Investor’s Monthly Newsletter Subscribe 1 year (12 issues) $125
One Book I would also recommend, which has also helped me is
Real Estate Investing For Dummies
My goal here at the intense apex alpha male website is to supply you with information that will make you a winner and in touch with the realities of the world. We must be informed on the realities of things and not pie in the sky crap. By doing this, you will be able to approach your goals with more confidence. The stuff you see being sold on T.V. for the most part is crap, whether its real estate information, fitness gadgets, diet pills and get rich quick business opportunities. Remember that we are adults and we are men. We should start acting like it and learn to read critically, and not fall for deceptive stuff or let our emotions rule our sense of thinking. Have you ever seen the program? The Biggest Loser, all of those contestants have one thing in common; they have allowed their emotions get the better of them. That is the reason why they have allowed them selves to become fatsos. When we let our emotions get the better of us we become paralyzed and non productive. Don’t be that way. Also, sign up for our emails. We never give away your email plus I will be sending you some really great information in e-book format that you will be able to use immediately.
Until next time
4 thoughts on “How to Invest in Real estate with no money down”
Yes sir! Real estate investing is not as easy people make it out to be! I know my Dad owned a multi-family house and i remember him collecting the rent and handling tenant issues good or bad. I know one thing is that being a Land Lord is a 24 hour job watching tenants and making sure they follow the rules you set forth before they moved in. Know the laws in the state you have rental property in. In NY its very hard to kick out a tenant for any reason especially if the tenant get getting Gov subsidies.
Make sure everything you and the tenant agree to is written down and filed away! Always do credit checks regardless who they are! You never know if these people are rent jumpers and if they are it will show in their credit reports. Always have an extra set of keys for those apartments and do not let them change the locks. This is because in case a pipe burst and we need to get in there to fix it. And there is so much more and at times i would help my Dad in collecting rents and fixing up the apartments that previous tenants lived in new carpets and a fresh coat of paint. The dealing with these slick ass RE agents is part of the business
If you instead decided to deal with a property management company make sure that you look over their bill make sure the numbers add up as they tend to hit you with bullshit fees hoping that you do not see them. Make sure you pass by your property at least two to three times a month just to see that shit is running smoothly. Trust i have a cousin who had a property manager running his property who was charging for work that was not done because he did not pass by his property to look and see if it was done or if the work was needed.
Still though when things were good they were good. Money came in and was put back into the property in case of some late night boiler acting up or hot water heater breaking. You know what they say more money more problems and that what dealing with real estate is about! But if you are not so easily bothered with dealing with tenants then you can make money slowly. Remember though unlike those guys that flip houses on TV paying waaayy too much for a crappy property and flipping it for more is crazy! They never tell you how long the house is sitting without being sold and stuff like that!.Nope! at the end of the show they sell the crappy property they bought for $500,000 and flipped for $700,000! Really??
Listen to what Intense is talking about as he knows! Real Estate is not a get rich quick scheme as making money in this field is a slow process. A process with lots of risk and a lot of payoffs i learned quite a bit from doing it with my Dad and watching other family members do their business!
Great Post Intense! Will have to check out John Reed!
All good and excellent points Jose.
I’m a landlord myself and found this post to be very interesting. Buying with money down has it’s reward but there are risks involved. Thanks for the book recommendations, I’ve bookmarked it for future reference.
Ok Adam. Let me know how it works out for you.