InstantInvestor.com is a premier online resource providing cash-flow and wealth-building tools, education, and investment opportunities for both beginning and experienced real estate investors.
Meet Our Managing Editor, Bill Guting, in His Own Words …
I wish I could say my path was easy and that I was hitting homeruns right from the beginning, but that’s really far from the truth.
Instead, most of my experience and success was gained by going through multiple setbacks and an extended stay in the “School of Hard Knocks”. Can you relate?
Let me tell you a little about my story, just so you know where I’m coming from, ok?
I got started in real estate investing over 20 years ago. I was always a believer in education, so that’s how I got introduced to this business.
I was still in college at the time, and I was up late one night doing some channel surfing and I run across a “No Money Down” real estate infomercial. It was pitching a weekend seminar by the real estate guru of the day – Ed Beckley … a tall, 6 foot 3 guy with a squeaky voice who had actually done a lot of his deals right here in my local area.
I was hooked … and excited. So I signed up!
I remember paying $500 to go, which probably doesn’t sound like a lot of money compared to what people are paying for seminars today, but for a broke college student living on hamburgers and Top Ramen, it felt like a fortune!
So there I am in a crowded hotel room with probably 150-175 other students. Within the first couple of hours I remember thinking to myself … “I can’t believe I paid for this, I can’t afford this, maybe I can still get a refund”. But for some reason, I decided to stick it out.
I don’t know why, because basically EVERYTHING he said was over my head. Honestly. I mean, I didn’t even understand what “equity” was!
A Credit Line of $100,000!
The only real thing I learned was when some guy went up to the microphone and talked about how he bought homes with a credit card. That stuck. That, I could understand.
So you can probably guess what I did, right? Now, it still took me several months to jump in the real estate game, because I was still stuck in fear and uncertainty, but what I did do right after the seminar was start applying for a bunch of credit cards.
A ton of’em. And within a few months, I had acquired between 20-30 credit cards and credit lines of almost $100,000!
Anyway, that’s how I bought my first 3 properties. I took the down payments right off one of my credit cards.
So that’s how I got started. Then, I eventually gravitated towards doing “fix & flip” rehab projects almost exclusively – which is a big mistake that I’ll explain in a minute.
You see, at the time, I looked around and saw that many of the successful investors I knew were doing the fix & flip thing. So that’s what I started doing also.
And the first few that I did went well. Probably too well. Because it got me seduced and had me believing … “Man, this is a pretty nice way to make a good chunk of money, and it’s not that difficult!”
So I bulldozed ahead with my one formula, and doing real estate in one specific way. At one point, I had half a dozen rehabs going, mortgages extended on each one, lines of credit on top of that to fund the rehabs, and then …
I got caught.
The music stopped, and I got caught in a market where I could not resell quickly anymore. Remember the real estate downturn in the early 1990’s? That’s when I got caught.
So you can probably guess what happened, right? Yup, I got wiped out, and eventually got hit with a couple of foreclosures.
So there I am now with no cash, no credit, and no bank willing to finance me.
But I still believed in real estate. And I wanted to continue investing.
So what did I do? The only thing I could at the time – embrace creative financing. So I sort of went back to school and learned everything I possibly could about it.
Things like lease options … sandwich leases … “subject to” financing … owner financing … wrap-around mortgages … private money … joint ventures, etc.
It became my specialty. Not out of inspiration, but from DESPERATION! I had no other choice.
The good news? After embracing this whole new world of creative financing, I went on to buy way more properties in the next 4 years, than I ever did in my previous 4 years!!!
I think there’s a couple of lessons in my story …
First off, if you’re in a tough situation right now – no cash, no job, about to lose your job, bad credit, whatever – nothing can stop you from creating wealth in real estate, as long as you’re committed and willing to learn some creative and non-traditional ways of doing things.
The second lesson? Never get tied to doing things just one specific way. I got trapped into doing only fix & flip rehabs. Big mistake.
If you want to become a more successful real estate investor, I think, at minimum, you should become well-versed in the following 4 areas:
- Wholesaling
- Rehabs
- Creative Financing
- Lease Options
You may not be fully familiar with all these strategies yet, but just take my word for it right now, mastering these 4 areas will allow you to become a TRANSACTION WIZARD, where you can create a solution for almost every buying opportunity you come across.
So rather than trying to force-feed one strategy for every potential deal (which is what I was doing), you can fit a strategy to fit the circumstances. A much smarter way of doing things!
Oh, and one more thing: I think one of your main long-term objectives should be to eventually create as much passive income from real estate as possible.
Here’s my opinion on the best way to go about it …
“Pump & Dump”
What does that conjure up for you when you hear that term?
A new kind of workout maybe? Or an illegal business practice? Or maybe even the latest, greatest sexual manuever?
Nope … none of the above.
It’s simply my own personal real estate investment philosophy, where the formula is: flip 3 ("pump"), hold 1 ("dump" your money from your profits into a long-term buy & hold, which could be a 1-4 unit property … or even a passive commercial investment opportunity).
You see, before you even consider holding real estate, I think you should first generate some walking around cash. How much? In my opinion, I think you should have at least $50k - $100k in cash before you start holding. Or whatever amount gives you some peace of mind.
On top of that, I also think you should have some kind of cash reserve for every rental you acquire. Like maybe 2-5k per property.
Why? I don’t think you want to be in a situation where you own a bunch of properties … but can’t pay the utility bill! Been there, done that. Not fun.
[NOTE: This $2-5k reserve is not as critical if you’re investing long-term into a passive commercial investment, rather than 1-4 unit properties.]So what’s the best way to generate the $50-100k in cash? With the 4 flipping methods I mentioned above. Hands down!
So you flip 3 properties with those methods, and you then take all or a portion of your profits and ‘dump’ right back into real estate that you hold long-term for ongoing cash flow.
What type of property should you invest in long-term? That’s up to you.
It can certainly be 1-4 unit properties, if that’s your preference. But these days, I prefer apartment and commercial buildings with professional management in place.
That way, your investment is truly passive, and 100% of your money is working for you. There’s no ‘dead equity’ … you’re getting a return on your entire investment.
”You’re Lucky!”
So anyway, that’s a little about my path as well as my overall philosophy and approach to real estate investing. Not a lot of smooth sailing, but lots of bumps and bruises and getting roughed up in the “school of hard knocks”.
A few months ago, someone came up to me and told me something that cracked me up. He said something like: “You know, you’re lucky. Things seem to come so easy for you.”
Isn’t that funny?!?
To have things ‘come so easy’ to me, here’s the price I had to pay:
- 2 foreclosures
- 2 business failures (and these are just the big, glaring failures … there were several other failed business ventures in the beginning)
- Bankruptcy
- And the big “D” … Divorce
You tell me, does that look like “easy street” to you?
Anyway, let’s fast-forward to today …
I’ve now been personally involved in over 450 transactions, and my investment team and I still buy or control between 3-5 properties per month, both locally and also in high profit, high potential pockets throughout the country.
Our focus is still on 1-4 unit residential properties, as well as apartment and commercial repositioning opportunities.
I’m truly looking forward to building a great long-term relationship … and sharing all the insights, tips, and even specific opportunities my team and I come across – every single day!
More About the Managing Editor …
