Expert: Dennis Herman - 1/19/2010

Question
dennis,
we need a few things... we live in NY, have little to no money, and no experience in buying/selling/flipping/investing in real estate/apt bldgs or strip malls, we have the desire, but no guidance. we want to know IF there is a way to buy RE with NO money? and how would we find a mentor to guide us through our first deal? are we dreaming or is it possible? any suggestions? FEAR is our biggest obstacle. we WANT it sooooo bad.  

Answer
The first thing you will need to become an investor is money.  Talk to a few local lenders.  Most will require a down payment of 20-25%.  You will also need about $2000 for closing costs and make sure you have enough saved up for repairs.  In my estimation, at least half the properties that have been foreclosed were owned by investors who had not planned ahead.  

As far as suggestions.  Have a local agent put you on an automatic search.  This will you to track prices.  Don't expect to find the perfect property at a rock bottom price.  The lower the price the larger the problems.  Many of the less expensive properties have been gutted.  No plumbing or electrical wiring.  Check the roof and foundation.  The agents who list these properties have sold hundreds of these for the best price they can get for the seller.  They are professionals, they know what they are doing.  

Look for foreclosures in a neighborhood with the fewest number.  No think of this.  You are looking for a property.  What are you going to do?  Look for the property in the best condition at the lowest price.  

So you buy a property with 12 other foreclosures in the area, put thousands of dollars in it and put it on the market hoping to make $50,000.  Every buyer looking at the property has the same idea you had.  Find the best property at the lowest price.  You still have to compete with the price of the foreclosed properties.  

The smart investors will try and make $5000 to $10,000 per property.  The name of the game is sell quick at the market price.  Those who understand it, make some money but not enough to retire on.  Players who try and make their own rules usually wind up loosing everything.