Foreclosure | 4closureflipping.com

Everybody says you can get rich in real estate…. starting with nothing.

Do you really believe that?

Or do you think it takes money to make money?

How many books or gurus tell you to just get a cash advance on your credit card to get started?

Yeah. Great idea. In 2004.

But now? If you are lucky enough to still have credit, do you want to risk it?

Debt is a tool. A hammer can drive a nail or split a skull. It all depends on the experience and intentions of the person wielding the tool.

Debt is usually a horrible tool in the hands of a beginner. The leverage that can make you rich can also make you bankrupt. The idea that you should use credit cards to make your initial investment? Insane. A bank loan for investing? Good luck with that.

So how do you get started?

Partner. Your uncle has an IRA. Your Mom has a savings account. Your mechanic has a little cash but no time. Your local Real Estate Investor’s club has at least one person who has money, but is looking for the right deal. Find the deal, then find the money. Do the work and split the profit.

Bird-dog. Sniff around. Run all over the place. Find a deal. Then find someone who wants the deal. You are the wholesaler, they are the retailer. You make a little. They make a lot. Find the deal, then find the money. Find enough good deals, and you can move from occasional bird-dog to a full time Wholesaler. Lots of Wholesalers decide that is their favorite niche, and they never go into Retail.

If you don’t have money, you have to be willing to do the work. You have to do the searching, screening, driving and talking. Don’t expect the guy with the money to do any heavy lifting.

I can’t count the number of times I’ve had a Noob ask to partner, but they didn’t have money. Or experience. Or a deal. Why would they think anybody would waste time partnering with them, when they brought nothing to the table? What they were really asking was for me to take them by the hand, do everything, and let them make money. Really? Is that how YOUR world works?

So it is simple. Find a deal.

But just because it is simple, doesn’t mean it is easy.

It is really a lot of work. If you think you have found the right deal after looking at 10 houses, you are either very lucky…. or just wrong about whether it’s the right deal.

Be prepared to find 100 deals and pick the best one. Yeah… that’s a lot of work, isn’t it?

Better to do the work than go into debt to get started.

Walking from a deposit is tough. It is a sunk cost. But pride keeps us from cutting our losses and moving on.

Today I bid on a house I should not have bid on. I did it to mess around with a process server who was bidding for a lawyer who didn’t show up. Funny how many of my learning experiences start with me trying to teach somebody else a lesson. The auction ended and I was high bid. I paid the deposit in cash…. knowing it was probably lost money. Luckily it was only $600. In this county, you pay a deposit equal to 5% of the bid amount… cash or cashiers check. The bid was a bit over $10k. The balance is due the next day.

I had no business bidding on this particular case. I had not done a title search on that property- in fact I did not even read the judgment. I just knew it was a crappy lot with a crappy mobile…. and I’ll gladly pay $10k for a crappy lot and a crappy mobile. Turns out the foreclosing plaintiff only had a lien on the lot…the mobile home was a separate loan. So that means just a crappy lot. And the lot isn’t worth $10k. I know better. You just don’t bid when you are ignorant. And I was ignorant.

We spent all day scheming ways to make it work. Short-term rental, short the mobile loan, reset the sale, check on the taxes. And lots of other low-return ideas. But I finally realized I didn’t give a damn about the mobile or making a profit… I just didn’t want to lose the $600. I wanted to prove we could pull out of the death spiral, even if I threw another good $10k after the bad $600. That’s just stupid.

I know we could have made it work. But why? Pride. That’s not a good enough reason for a real investor to make a buy.

So we let the Clerk of Court know I was defaulting on the bid. Luckily we just lose the deposit– some places ban you from bidding for a few months when you pull a stunt like that.

Walking from deposits is part of the foreclosure game. You are always rolling the dice and hoping the house turns out the way you expect. I’ve walked from deposits on houses that looked great on the outside, but had no wiring inside. Foundation issues… asbestos… mold. These are all things that can be fixed. But sometimes the smarter decision is to cut your losses… and walk from the deposit.

So. Another lesson learned. $600 tuition.

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Real Estate Investing on a shoestring budget?

Walking from the deposit