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*If your new to the blog, should read from my beginning blog for the full story* When going into doing the next deal I had over 100 investors anxious to make an investment. It was quite overwhelming how this was all working out. So I picked it up a bit and bought 3 properties at once. I got a 3 unit and two 2 unit properties. It was on the 3 unit property I learned once again from another mistake. Dealing with these contractors. I trusted to much and didn't feel a contract was required, handshake deal was good enough. I was paying draws as work got completed, but it seemed like the draws were much higher then the work being done for them. I kept getting told, "I need the next draw if I'm going to finish". I ended up paying out for the whole job and only half of it was completed. The contractor packed up and left, never showed up again. I was taken for nearly $25k. Now I knew as trustworthy as a contractor seemed, always have a contract in place and with specific terms on the work to be done. I ended up going through a few contractors before finding one I could work with. I was at least building my team. Had a great attorney, insurance agent, investors, now a contractor. With being taken for that much money you can imagine I was quite frustrated. Looking back at it now though, it turns out much good came from such a bad deal. Through this contractor I met my attorney, my insurance agent, other large investors, and people at the bank. All of which I still use today, and would not be anywhere without them. Losing $25k was a small price to pay for the team that was put together through knowing this contractor. I used that contractor for one other thing before he packed up and left town. I was trying to build relationships with local banks in the area. I found it to be so hard to get a branch manager to meet with me and talk about my business, my goals, and reasons for needing a relationship with the bank. Why was it so hard? I believe its because I looked like I was a 16 year old kid walking into a bank asking for a few hundred thousand dollars. They didn't want to hear what I had to say. So, I asked the contractor since he was in his late 40's if he wouldn't mind coming to the bank with me one day. When I walked in with him, it was a completely different story. Now they wanted to go in a private conference room, listen to my plans, listen to my needs, all because there was someone older with me. He was of no actual relevance to the loans I would be requesting, but it kicked off the relationship with the manager, and from that I was able to get my loans and further my business. Looking so young was always a problem. Everyone always thought they could push me around, charge more for work, charge more for the sale of a property..etc. I knew when discussing any type of business with someone, I had to overcome their thinking of me being so young by knowing what I was talking about. When they saw that I wasn't an idiot, I could get more reasonable results. With the setup I now had, this gave me the title of a cash buyer. I was starting to get known around the area as this cash buyer. Eventually, I didn't have to look for deals anymore, they just started coming to me left and right from wholesalers and real estate agents that knew I could settle fast with using cash. This was great, and I was having a good problem. By this time I had so many investments that wanted made, I couldn't keep up with them. I didn't want to do more then 3 properties at a time, that was a lot to deal with. But I also wanted to take care of all investors. This gave me the idea to start a second part of the business…hard money lending. Next up.. how I raised over $600,000 in less then a week, no banks. What a way to launch a business into orbit!

Tags: Real Estate Goals Hopes Dreams Investing

So what happened that was so terrible I almost gave up?? I was trying to save costs anywhere I could to provide a larger return on my investment. I had cancelled the insurance policy early on this property, knowing that it would be picked up under the new name when being transferred for doing the refinance. It was only a few days before it would have insurance again, but kept me from paying another months bill. During one of those few days, I got a midnight phone call from the tenant saying the house was on fire. I quickly drove down to the property and it was a disaster. Flames coming out of the windows, fire trucks everywhere, tenants were a wreck, I was a wreck. The tenants were only in there for a week and lost everything. The property had a large amount of fire and water damage. Was nearly $20,000 in damage. Knowing I had just cancelled the insurance, I was a complete mess. I thought to myself I probably won't get another property again, its over. I called my mother to give her the bad news. It was her words that kept my head up, she said, " If one is going to burn down, we'll find a way to get 10 more". It was a single moment of inspiration that was all I needed to not quit. We still went through with the refinance a few days later, and of course I kept to my word and paid off all the investors with their huge 80% return. I ended up with no money out of the refinance, and a property that needed another $20,000 in renovating. It was keeping my word, and doing that return even though I lost everything on this place that kept it going. This property sat for almost a year before we were able to rent it out again. We could only work on it ourselves, to save cost, since it was all out of pocket now. In the meantime, I continued with moving forward on the next property. Lesson learned, never cancel insurance policy without the next being in place first! This high rate of a return spread pretty quick around the net. By the time I was ready to do the next project, I had enough investors lined up to handle funding a few projects! At this point I thought it was a good idea to get an attorney involved. Contracts became more safe for the investors with more of a legal protection on their investment. The attorney setup the company structure the way it should be when owning properties. I decided to have my mother as 50% owner of the company that would own these properties since her credit was good. This would help with doing our refinancing on these properties. It was a move I needed to make if I was going to keep buying properties this way. Just a note to those that are curious, if my mother didn't have good credit, I would have found a partner that did. One thing I learned quickly was to use the people that have the resources you need to grow, that you don't have yourself. I think this is a major key to any business that wants to grow or start. There is no such thing as a "self made millionaire". You bring me someone that says they are and I can 100% guarantee that I can prove them wrong. We all need the help of others to succeed. I chose my parents because the credit was there which was a much needed resource when going to the banks, and I didn't have it. I knew I could also trust my parents with owning the other 50% of the business, choosing the right partners is critical to the business growing. Now that the company structure was setup right, and of course I had my insurance together now, I was ready for the next deal. The 3rd project went great. After posting the details to the site, I had the funds needed from investors over night! Again, I returned a nice profit within 3 months, I believe it was roughly 70%. This 3rd house my girlfriend and I decided to live in, and still are to this day. It was nice to have my own house at the age of 24. My girlfriend and I were engaged, soon to be married and felt it was the right thing to do. She had never left her parents house since her college was only a few miles away, and I was tired of moving around so much. I lived in the first two places while I was working on them, and before that I moved 4 times that year. So it was a great feeling for the both of us to have our own place. Next... another mistake quickly learned from dealing with contractors, this time costing nearly $25,000!

Tags: Goals Hopes Dreams Real Estate Investing

*Note that if your new to the blog, to read from the beginning blog or the story won't make much sense!*

The next property I found was only a few houses down from my first one. This was great because I definitely knew what the after repaired value would be since the house was the same layout as the first one. It was also the same purchase price of $20,000. I put the details of this house on my website to see if anyone would be interested in funding the project. I wasn't expecting much of a response the first time around, but to my complete surprise, there was quite a few people responding to it. It only took 3 days to raise the money I needed to buy the house and money for repair costs. I had people from around the country sending $500 up to $10,000 dollar checks in to me!

There return was based on the appraised value of the property. My formula for the return was simple, their percentage of their investment into the total project cost, is the percentage they would receive of 80% of the appraised value. I used a simple promissory note as the contract for the promise to repay the loan.

The note probably wouldn't have been sufficient to hold up in court if I decided to just take the money and run, it was that simple of a note. However, I knew I had to stick to my word to make this work, and I did. It only took two months to finish the repairs on the property, and do the return. It appraised at the same value as the first one, $65,000. 80% of that is $52,000. This was the amount we pulled out with an equity loan. To give an example of the return the investors got, the investors that made a $10,000 investment, this was 34% of the $30,000 that was needed to buy and fix up the place. 34% of $52,000 is roughly $17,400. I actually returned 80% on all investments with this first property, like a bonus for being the first ones involved. So the 10,000 investor received a check for $18,000 in less then 3 months of his investment. Same went for the rest. You can imagine how that kind of return spread around…that was what I wanted.

Now, I have to back track a little bit and tell you some behind the scenes of what happened with this first project. This is where I learned from a few mistakes, one was huge! While working on the property, there was always people walking by asking if I could use their help and pay them. I thought it might not be a bad idea to let someone else do the work that could complete it much faster then doing it myself, and I had enough funds left over from our first deal to pay a contractor. I told him what all I was looking to have done and he said it wasn't a problem, he has the crew that can handle it all and gave me a price. I said it's a done deal, get to work!

A few days before the house was to be completed I went down to the property to check the progress of his work. He stopped me on the sidewalk and said to me , "Ryan, you don't want to go in there right now, we are cleaning up a big mess." Well, that threw a major red flag up in my mind and so naturally I wanted to go in and see what he was talking about. It was a mess alright. Someone had broke in and threw over 20 gallons of roofing tar all over the new kitchen and bathroom work. The cupboards, countertops, new flooring, walls, appliances, toilets, bathtub, mirrors. Everything was coated in roofing tar. I'll keep this as PG as possible and just say, I was extremely upset.

I became even more upset when I found out the reason why it happened. The contractor wasn't paying his workers and telling them that I wasn't paying him. Of course, that was not true, I paid every time it was asked for, he just kept it all to himself and didn't pay his workers, blaming me behind my back for it. The workers decided as an act of revenge to destroy the work they had done by tarring everything. Well, I had words with everyone and made sure they knew the real reason that they weren't getting paid, their boss was keeping it all. I told him it was best to fix the damage that was caused immediately and at his own cost if he wanted to keep from charges being filed against him. They got it cleaned up and eventually finished the place, and of course I knew to never use him again.

Now…if that was the only problem I had with this place, I would have been happy! What happened next was so bad that to know I am still doing this business today, after what happened that night, proves to myself that I can overcome anything this business throws at me. Most people in this situation would have given up right then and there.

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Tags: Real Estate Money Investing Goals Hopes Dreams

So after reading some tips in this book, I thought I would take that idea of using other people to get started, my knowledge of designing web pages, combine the two and take it to the world wide web. I figured since most other businesses grow through the help of the internet, it could work for me too. The concept was simple, I find a property in need of repair at much lower cost then its after repaired value. I'll use other peoples money to buy it and fix it up in cash, and then once finished it would be worth twice as much if not more. Now, I would have a property owned in full, no mortgage, making it easier to just take out an equity loan against the house, to pay back the people that pitched in with some interest. So I went to work on designing the site and only taking about a week to finish it, making it ready for the internet. Before I started accepting money from other people I didn't know through the internet, I wanted to at least test the concept of what I was planning to do first. My girlfriend at the time (now my wife) had great credit, a good job, high limits on her credit cards available and money saved up. She was willing to help me get the first property. We found a foreclosed property in need of repair, that seemed like a great first time property. With her help, I bought the property for $20,000. It was a semi-detached 5 bedroom single family house. I did my research in the area, and new it could be worth at least $55,000 after being renovated. We used the money she had saved up, and her credit card to buy the materials I needed to do the repairs. I was so proud of getting my first place, that I lived in it while I did the work myself. It was a bit like camping out. I had no hot water, I slept on an air mattress, it was the middle of October 2005 getting colder out every day and I had no heat. But I couldn't be happier! I felt completely free, I was working at my own pace, I had no boss, no specific hours of when to arrive and leave. I knew this is what I wanted to do. My girlfriend paid me with her savings, just enough to get by. We knew that once the place was finished, we could do a cash out refinance from the equity that would be in the property, and pay her back. After about two months, I finished the place with the help of a few friends and had it appraised. It came back at $65,000! We did an 80% refinance, giving us $52,000. Was enough to pay her back, and for me to live off of for awhile. I quickly rented the place to a section 8 tenant. I got $750.00 a month, and only paid the water, sewer, and trash. The mortgage was $528.00 a month, so we had a small positive cash flow as well. I was happy with the results, and was ready to get the next property by using other investors through my website. What happened with this next property... my first property used with investors, was completely unexpected and a disaster that nearly kept me from continuing business. Make sure to subscribe to read about it in the next blog post!

Tags: Real Estate Investing Money Goals Hopes Dreams

Meanwhile back home, my parents had picked up a few more rental properties since the first one turned out to be good, only made sense to pick up some more. My father had his on contracting business, so he was able to do his own work on the properties saving a lot of cost. During that year, my father's twin sister had passed away from heart problems. Being a twin, they thought it was a good idea to check him out as well. They found the same problem. His aorta was splitting, which is what killed his sister instantly. They immediately had to perform heart surgery or there was not much time left for him to live. The heart surgery went well, but because of the weak tissue disorder, he was practically forced into retirement, and had to give up a lot of things that he used to be able to do. He couldn't put any stress on his heart, and was told to do nothing but rest for a long period of time.

With him not able to work anymore they were having a hard time getting by. I decided to leave my management position in the company, move back home and help my parents with their properties since they were now a main source of income. They didn't have to pay me near as much as they would to have someone else manage the properties. I became much happier working on these properties, biggest reason was not having a boss and scheduled hours. I started to get very interested in getting more involved in the real estate business.

I helped my parents for that entire summer until my father was able to start working again. He taught my older brother the nature of his business, until he was able to take it over. My father continued to work with the construction business, and started to pick up more rental properties again. I was now hooked on doing real estate full time, but really did not have much knowledge in how it all worked.

What I did know was that I had no credit, no money, and no chance of getting a loan to pick up my first rental property. I didn't want to rely entirely on my parents to get started, I wanted to try and do it on my own. I was 23 years old, I knew of a great area to buy properties, and I happened to have a wonderful girlfriend that understood what I wanted to do. I didn't ever buy a real estate book to learn how people got started, but I did go to the bookstore once and picked out a book, sat in the isle and read a few pages. One of the things it mentioned was to use friends and family to help get started, everyone pitch in and share the profits. Made sense to me.

Make sure to subscribe to stay caught up on the story and see what move I made next that launched my business in no time at all, and also a complete unexpected disaster!

Tags: Real Estate Investing Goals Hopes Dreams Money Happiness

I decided to post blogs on how I started in Real Estate since so many people are always asking. It will be a book in the making so check back for the next part of the story every week. If your interested in the real estate business..you may learn something from it. If your not interested in Real Estate, its still a good story and lessons to be learned that can be applied to anyone's life.

So here we go... Chapter One: Prior to starting the business.

480 and less then $100.00. That was my credit score and the amount of money I had to my name when I was 23 years old and decided to start in the real estate business. However, this is not going to be a story on how to succeed in real estate, it's simply my story of what I believe is a road to success, being written as it happens. I'm already starting three years late, so I will have to get you caught up until now. Also, expect grammar errors, I never did that well in English class!

After high school, I went straight into college. I was studying computer programming and networking. My parents and I decided to buy a house with a few rooms, one for me to live in, and rent the others out rather then living in an expensive dorm room on campus. It was a good move, we had 6 rooms, I lived in one and we had no problem renting the other 5 out. It was free living for me, and a nice investment for my parents. I wasn't necessarily interested in the real estate business at that time, was just a way to get through school, cheaper. While going through school, I worked at an electronics store making good money on commission.

I was 3 years into what was supposed to be a 2 year program, struggling to get through two more classes that I needed to get my degree. One was a class that had no similarity to my field, ironically, the other was a business management class. I had failed them twice, and would only have one more shot. I figured it wasn't worth the money to try again right away, I should take a break and continue to work for awhile. Besides, I was making great money at my job, I was the number one sales person in my district, and figured I would make more money doing what I was doing, then getting a job in the field I went to school for. So I dropped out of school and worked full time.

Not long after I dropped out, the company I was working for decided to change their pay structure from commission to hourly. Their was a mass layoff of employees that were making to much on commission to be compensated for hourly. I was one of those people. They didn't even give a days notice, I was let go and had to collect unemployment compensation for a year. That was the year my credit was destroyed. Unemployment was only a fraction of what I was making when I worked, and so I was unable to make a lot of payments during that year. It was also a bad medical year for me as well. I was in the hospital numerous times, had pleurisy twice and eventually was diagnosed with a gastroperesis problem that was causing me a lot of pain. I racked up quite a bit in medical bills, and without health insurance or a job, I was not able to pay for it, another credit killer.

I was just about at the end of my unemployment compensation and was still searching for a job that was reasonable. I found out that after being laid off for a year from the company, I was able to come back. A good friend of mine at the time became a store manager, and asked if I would like to come back to the company and get right into the management training. I really didn't have anything else going for me, so I took him up on the offer. It was hard going back to the company after what they did to me, but it was the best option at the time, so I tried to forget about it. I couldn't, I was working much harder going through management and making a lot less then what I was before on commission. I was constantly miserable while working there again, always thinking it wasn't fair. It was a grudge I couldn't let go of.

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Tags: Real Estate Money Investing Dreams Goals Hopes Happiness