Google
  Web shaunsre.blogspot.com   

Monday, November 08, 2004

How To Get Started In REI For Under $400

I often see messages from people who have decided they want to get involved in real estate investing but they don't have any money, or don't have much money. They don’t know where to start. Here are my suggestions for getting started in real estate for under $400.

(Note: This post was originally written in 2004. It is now 2008 and I've gone and updated the prices. The new total works out to just over $400.)

1. Make a commitment to invest your time. This is the most important step! Educate yourself. Read books and websites. I spent over a year reading the discussion boards almost daily at www.richdad.com before I bought my first rental property. I still made some mistakes, but I felt much more confident and less scared. If you become active on the boards, they also double as a support group. Cost: $0.00

2. Read Rich Dad, Poor Dad, by Robert Kiyosaki. This is NOT a how-to book. Treat it as an inspirational book and you'll get much more out of it. Cost: $11.86 $16.95

3. Read The Richest Man In Babylon by George S. Clason. This is the classic book for money management. Entertaining and educational, it's a small book that contains invaluable lessons. For example, one recommendation it gives is to always set aside 10% of your income for investing purposes, before any other bills are paid. I've been doing this ever since I read the book and it's amazing how fast the money accumulates. You'll also be surprised on how little you miss that 10%. (This book also makes a great gift for grads.) Cost: $6.99

4. Read Rich Dad's Guide To Investing by Robert Kiyosaki. This book provides the basis for becoming a successful investor, from the terminology to strategies. Cost: $13.97 $19.95

5. Read Who Took My Money? by Robert Kiyosaki. If you needed any more reason to stop parking your money in a mutual fund and hoping it will increase, this is the book for you. It explains how to keep your money moving to generate higher returns. Cost: $11.87 $16.95

6. Buy CashFlow 101. This is the ultimate game of investing and will teach you tons about accounting, finance, and investing. The board game version is $195 and the electronic version is $99 (but for multi-player on-line games, you'll need a subscription, which runs around $100 a year). I recommend starting with the board game first because you are forced to write down figures and do your own calculations. You also have to play face-to-face with other people, which encourages discussion. Play this game AT LEAST 50 times. Play with different people. Play until you can win using any of the supplied professions. Finally, play the game using YOUR real life profession and YOUR real life paycheck and savings. See how you can get out of the rat race using your very own real life data. The board version includes a video tape and several audio tapes. The electronic version features these in electronic format. Cost: $195.

7. After you've mastered CashFlow 101, buy CashFlow 202 and play it many times. This expands the world of CashFlow 101 and teaches you how to handle all kinds of market conditions, how to use options and is much harder (but teaches you more). Again, this comes in a board version ($95) and an electronic version ($49). Both versions require the purchase of the corresponding version of CashFlow 101. It also includes 4 new audio tapes. Cost: $95.

8. Read Flipping Properties: Generate Instant Cash Profits in Real Estate by William Bronchick. "Flipping" has gotten a bad rap lately due to many people illegally and artificially raising housing prices (and as a result, the term "quick turning houses" is starting to replace "flipping houses"). Bronchick distinguishes between legal and illegal flipping and gives detailed instructions on how to get into this area of investing, including how to get started with no or very little money. This is the book where you will find some detailed instructions on what to do. Cost: $13.27 $12.89

9. Read The Millionaire Next Door by Thomas Stanley. This book was written based on interviews with many millionaires and talks about how they made their money and how they live life. The results are surprisingly mundane and show that becoming a millionaire is within anyone's grasp. The book is a bit heavy on statistics, but the analysis backs up the conclusions and is worth wading through. Cost: $10.50 $10.20

10. Buy 50 sheets of Avery printer postcards, 4 x 6 inches, two per sheet, and one 100-stamp roll of postcard stamps. Perhaps the quickest way to get the cash needed to buy rental properties is to start by flipping properties, or being a "bird dog." And one way to do that is to buy houses that are about to be foreclosed. Your county recorder publishes a list of such properties, probably daily. Find out how to locate them (and many offices have internet sites where you can search for this data from the comfort of your home). Learn to identify good candidates, and mail them a postcard. The Bronchick book has samples, or you can see the ones I used here and here and here. Response is generally low, so this is a numbers game. Don't get discouraged. Cost: $43.67 $41.55.

Total cost: $402.13 $415.48 (OK, it’s not under $400, but it’s pretty close. Skip eating out one or two meals and you'll have saved the difference.)


As you can see, I put a fair amount of emphasis on Robert Kiyosaki. It's important to realize that he does not provide you with step-by-step instructions on what to do. Rather, he teaches you to think in new ways - like the rich think - and he details the advantages of real estate over many other types of investments. Changing the way you think is the most important part of being successful. You need to train your mind to think differently and to stop listening to the noise of others around you telling you why what you are doing will never work. (Are they rich? Then why listen to them?) The other items in the list follow this theme, with the exception of the last one, which is needed for taking your first steps towards actual investing. And that is an important step! Don’t fall into the trap of “analysis paralysis!” You will never know everything there is to know about real estate investing, so at some point you need to stop reading and start doing! Then your education continues!

Good luck! I’m always interested in following people’s progress, so feel free to leave comments sharing your experiences!

23 comments:

Steve said...

Thanks for your tips, Shaun. I have a couple of comments ...

1. Have you read The Weekend Millionairs Secrets to Real Estate Investing? It kind of goes against the grain a little in regards to other REI's, but has a lot of good information, nonetheless.

2. Your links don't seem to be working in your post. I get some kind of indexing error. :-/

3. As mentioned on Rich Dad and elsewhere, there is a ton of information at our dispense on the web. Using just one example, I found a post on Dealmaker's Cafe where someone mentioned a place to get 250 business cards Free!

Happy investing, and thanks again for a great blog!

Shaun said...

Hmm.. The links work for me. The do open a new window, so if you have software that blocks that, it may be the problem. Email me at shaunjstu at hotmail dot com if you still have problems.

I have not read the book you mentioned, but I'll check it out.

I have also found some free business card places, but it seems that they all put an ad for themselves on the back of your card. Personally, I find that to be a bit tacky, so I think it's worth it to spend the bucks and pay for them.

Steve said...

Very interesting. The links in question were the "here" links at the end of your post. I still get them, but I'm using the Firefox web browser. If I use Internet Explorer, all is well. I'll sent the Mozilla Foundation people a note about that one.

I haven't ordered the biz cards I'm referring to, so they may indeed have their logo on it somewhere (although they don't specify anywhere). And as for Free - they are except you have to pay shipping.

I just came across your blog today after seeing your sig line in a post at Rich Dad. Very good reading. I am a newbie myself with only about three months of gaining knowledge. Lots of inpiration here and elsewhere in the community.

Keep up the good work!

Regards,
Steve

Shaun said...

Ah. When I use Firefox, I get the same error. It looks like Firefox changes the first part of the URL from http://forum.richdad.com/forums/m.asp to http://forum.richdad.com/forums/tm.asp. Not sure why. It even does this when you manually enter the URL in the address box. Well, you can always get the ieview Firefox extension. It allows you to right click a link and choose "Open Link In IE."

Thanks for the kind words!

Steve said...

Good catch! FYI ... I heard the new Netscape browser based on Firefox has an internal IE switcher - it allows one to navigate both in Firefox and IE at the same time (in different tabs, I presume) - much like the extension.

Anonymous said...

Hi!

Shaun, i`ve got a question for you: whats the best way to get in touch w/ bird doggers?
I live in NYC and I intend to buy a fixer-upper in Philadelphia, PA. Do you know someone who could be useful for me?
I`ll greatly appreciate your help!

thank you in advance,
vito2004 (on richdad.com)
bce_tyt@yahoo.com

Shaun said...

I'll let you know in a week or two :-) I plan to put out the call myself at that time. Try looking through your newspaper ads for "I buy houses" ads or "investors wanted" (perhaps Philadelphia newspapers would be a better place to look than NYC papers). You can try posting on richdad.com too.

Denise said...

Hi Shaun! A friend gave me the Rich Dad book for Christmas and I devoured it!! Of course, Robert IS very inspiring, but you're definitely right about him not giving a step-by-step guide. You, on the other hand, HAVE giving a wonderful "getting starting with gathering your knowledge" guide. Bravo and thank you for sharing with us newbies. I can't wait to get started. I'll see you on richdad.com and check back with you here also. Best!

Shaun said...

Thanks for the kind words, Denise! Good luck on your journey and have fun! I do!

Shaun said...

Someone asked about my thoughts on a real estate "investor" whose initials are JTR. The comment included links to his website. The fact that I deleted the comment and don't mention his name should tell you all you need to know about my opinion of him.

Shaun said...

FYI, many people were having problems with the links to the sample postcard images. I made a new post with them that can be found here.

Roseann said...

Hi Shaun
I live in Sydney, Australia and wondered if you have any advice on where to look for good real estate deals etc.over here? I have just read Rich Dad, Poor Dad and want to get financially intelligent. I want to buy my first house when I'm a bit more clued up but don't know where to look for bargains etc. in Sydney. Any ideas?
Thanks so much and good luck to you for the future.

Shaun said...

Sorry Roseann, I'm not familiar with the Australian market. I could only suggest looking the in the same places I would look in the U.S. - notices of impending bank foreclosures, motivated sellers, etc. You can scan newspaper ads for phrases indicating motivation - "moving", "transferred", "must sell", "divorce", "fixer-upper", etc. and try calling them.

Anonymous said...

Relative the the Internet Explorer, vs. Firefox issue, you merely have to look at the URL.
It is an ASP file, which most likely includes another ASP, however it didn't detect that you were using a Microsoft browser, and so choked.
Remember, Microsoft pages are not required to work on all systems, like all web pages will not always work with all browsers!

Anonymous said...

I love your blog. I check daily for updates and I have gained much insight from your post. I bought the books you recommend and I have a question for you.

Do you receive a commission from the author of richdad? I did not find the book or the mantra he sells to be that great and you recommend over 300$ worth of rich dad stuff between the books and the games. I guess the RichDad merchandise is good to get you hyped about making money but allot of what he says sounds good in theory but in reality it does not work. For the record, making money requires more than just having a plan as he teaches. Especially if this plan does not include a job. The truth is (for regular people) you cannot invest without money and you cant get credit without a job. The book was high on good sounding cliché like one-liners, repitition, and advertisements for his other merchandise. I was very much disappointed.

I love your blog and the fact that I bought this book blindly on the strength of your recommendation is testament to that. I am just glad that I didn’t like your blog enough to buy the board games and other products he sells.

His real dad must be turning in his grave that his son tells millions of people that his father is a looser.

Keep up with the good blog. I have learned much from you.

Shaun said...

I do not get a commission from the Rich Dad books I recommend. I glad you trusted me enough to follow my advice and buy the books, but I am sorry you did not get as much out of them as I did. I believe I made it plain that they are not how-to books and do not give step-by-step instructions. I clearly say "Treat it as an inspirational book." It's too bad you don't want to buy the games. In my opinion, they teach more than the books. You actually get to perform deals and see how things work (in a simplified way, of course). As for your statement "(for regular people) you cannot invest without money" all I can say is, if you want to be one of the "regular people", that's your choice. But remember that "regular people" are not rich and never will be rich, so believe what you will. When you change your attitude and ways of thinking, take another look at the stuff Kiyosaki says.

Coupons said...

Shaun, I'm a newbie in RE and have found your blog through the RichDad forum. I too am a Kiyosaki inspired person. I find your blog inspirational for a newbie like me. Keep up the good work.

Luke Gunderson said...

That's a lot of reading!
I guess I had better start soon. Thanks for the list.

Anonymous said...

I am proud that I have actually read about everything on the list. I would like to suggest we read "The Richest Man Who Ever Lived" based on the teachings of King Solomon = based on Proverbs


Also we get all our and our bird dogs cards through www.PrintThru.com they give us 2,500 business cards with front and back color and UV coat for $150.00 the best we found for a 12pt stock card and they had (haven't looked at the site in a minute they gave us a link for our designs) and the designs they have are free to use.

check them out we love them.

Anonymous said...

Hey Shaun,

Just found your blog while doing research. I've read every book you mentioned and can testify all are inspiring.

Connie said...

Great article~ exactly the way we started, right up to #8... then we diverged a bit :)

*Love* your blog~

bill or puss_n_boots_owner@yahoo.com said...

YO SHAUN where are ur most recents posts by readers (other than mine.)most of the stuff i am reading is over 2 years old except this thread. also i am having trouble following ur story ...i see blerbs house one and i see them for house 11 but where are 2-10. also have some issues i would like to discuss with re house 11 and are u still looking for birddogs... i am experieced and I think i can find some great buys for u. which email addy is your current one ... my posting name includes my email addy

i would comment about your typing skills after you downed les' typing skills but my suck as bad or worse so i wont lol.

will probably send anoter blog or comment or w/e you call as i have been reading for quite some time and it is 340 am damn it .. tomorrow will be another late start... damn u for having such interesting reading :)

Shaun said...

Bill - this blog, like all blogs, is organized reverse chronologically, with the latest entry being the first to display. Click on the title at top of the page to see my latest entry. Readers can comment on past posts at any time and there isn't really a way to sort by last comment date. Since blogs are organized in reverse chronological order, it can be difficult for a new reader to follow stories as they progress. I suggest using the Archive links on the left, starting with the oldest, and read the posts from the bottom of the page up. That will let you follow them in chronological order. I have been toying with the idea of rearranging the posts into an ebook that is easier to read and maybe selling it for a buck or so. Not sure about the demand for that and I am not sure when I would find the time to do it.

I admit my numbering system got a bit confused.. For a while, I was assigning a number to every property I made an offer on. I decided that would get too confusing, since most of the offers never panned out, so I switched to only numbering the properties I own. My first rental, which I wrote about in "The Long Story Of How I Got Started", is not numbered. My next rental (in Tulsa) I called Rental #1. I'm now using a system that numbers based on what type of property it is. For example, "Rental x" will be houses I am renting, "House x" will be houses I am rehabbing, "Commercial x" are commercial properties I am invested in, and (soon to come) "Multi x" will be multiunit properties I am invested in. A couple years into my blog, Blogger started offering the Labels feature. Since that has become available, I have been labeling my posts with the property number. So if you want to see all posts about my Tulsa rental, either use the Google search box at the top of the blog to search for "Rental #1" or click the "Rental #1" label at the end of any post about the Tulsa property. That will show you all posts relating to that topic.

I am not currently looking for birddogs, as my investors for rehabbing have decided to get out of the market for a while.

Thanks for reading!

© 2006 Shaun | Site Feed | Back to top