Knowledge is Power… I've said it before and I’ll keep saying it!!!
~You can make more money with your mind, then you can ever make with your hands~
We all have heard the saying…. As the Rich gets Richer: The Poor Gets Poorer
Well … I can sum up what I’ve learned in the last 5 years in 3 short sentences:
~The Rich buys Assets
~The Middle Class buys Liabilities that they think are assets
~The Poor only have expenses
My Story...
I graduated college (Temple University) in 2007. After graduating, I had about $75,000 in student loans (and you thought your $25,000 was a lot. HA!)
That was about 5 years ago…. As of now, after interest and deferring payments, let’s just say they are well in the six figures... Especially sense I’m doing my masters program.
See, doing my undergrad years, I did a lot of stupid things!
Like take out way more money that I needed. You know, that refund check! Yea, I lived for that refund check. I actually bought my first car with it one year. Crazy, right! Well, back then I didn’t know any better. I wasn’t thinking about paying anything back, nor did I care!
After graduating, I started reading a lot of books about paying down my debt and getting rid of student loans!
It wasn’t until I read: Rich Dad, Poor Dad by Robert Kiyosaki that my mind on money began to CHANGE… like I literally had a paradigm shift!!!
To sum up the book:
Robert Kiyosaki tells a story about how he grew up with 2 dads.
His real dad (Poor One) and his best friend’s dad (Rich One)
He goes on to talk about how his poor dad told him to go to school, get a good paying job, buy a house and invest in mutual funds. While his rich dad said to work hard at buying income producing assets.
In the book he breaks down:
~ The importance of your personal financial statement and how to read one
~The difference between an asset and a liability
~The difference between how the middle-class thinks about money and how the rich think about money
~ How to invest for cash flow instead of capital gains
According to Kiyosaki, An asset is something that puts money into your pocket whether you work or not.
In the book he gives examples of why the financial statements look different for the rich, middle-class and the poor!
He states the poor work for a paycheck through their job. When they get paid, they use their (income) to buy expenses~ things that have no value. For example: clothes, shoes, T.V.’s etc
The middle class work for income also, but they use their income to buy liabilities~ they think are assets. Things that take money out their pocket. For example: a house with a mortgage, a car with a car note, family vacations etc
The rich however may also work for income, but use their income to buy assets ~things that put money in their pockets whether they work or not. For example: businesses, rental income, royalties etc
Fast forward to 2012 …
Some people may know the real estate market went bust in 2007. A lot of people started losing their homes to foreclosures and for-sale signs started popping up everywhere!!!
From 2007 – 2009 all I did was learn about real estate investing. I read book after book, went to investing seminars, church classes and even volunteered at an investing school- American Real Estate Investors Institute.
My goal during this time was to pay down all my “BAD DEBT” so I can focus on buying “GOOD DEBT"
In Jan 2010, I went back to school to work on getting my masters degree. Here’s the thing though, I only went back to get in- school deferment.
In May of 2010 I bought my first house- a 1 bedroom condo, with a den (that I use as a second room) for $65,000 (despite my large student loan amount). I only put $500 down out my pocket! I also realize now in 2012, that I paid like way to much b/c the real estate market hit rock bottom around the end of 2011. I could have gotten a really nice condo for around $45,000 - $50,000.
But I did get the Obama tax credit for $8,000. (A special program that Obama started for all 1st time home buyers) So I used that money to pay off my car and fix up my condo a little.
While in school I started getting refund checks again, BUT this time I started saving them. In about 1 ½ years I had stacked almost $20,000.
I have learned in real estate you have to THINK outside the BOX!!!
So, now in 2012 with the market still being pretty bad, I started looking again. I had a little bit of money, so I felt confident. Well, every place I went to, turned me down… Why?!
My debt to income ratio was way too high… too much student loans was all I kept hearing, even though my credit score was good. (I always made sure to keep good credit) Some people don’t care what their credit looks like, I do… I need my credit!
Another thing, I never really used credit cards. I had a total of 6, but the total balance was about $3000, which I paid off.
Tip: Never close your credit cards b/c it can hurt your credit score!
Every mortgage place I went to said no.... So now what, just turn around and walk away... Never!!
Thinking outside the box, I started looking at other ways to get in the game and came across SELLER FINANCING. Seller financing is where the seller of the property holds the mortgage (like the bank). You still go to closing and the seller still may require you to put money down.
I found two properties that were marketing seller financing. So I put an offer on one of them, offering 10% down. Well, the seller came back with a counter offer at 30%. Mind you, the price of the triplex house – (3units) was 129,999 and the seller wanted 30% down.
Needless to say, I walked away (heart-broken)… I mean really, who has that type of cash just lying around… I started to get frustrated b/c I felt like I was trying so hard and all the doors kept closing in my face!!
A couple months later I found a duplex (2 units) , in the decent neighborhood for $60,000 and the place had a renter already in it! I felt like I hit the lottery….
So immediately I go to look at it, HORRIBLE. I don’t even know how somebody was living in it, but there was a renter, paying $600/month.
I suspected the place needed about $15,000-$20,000 worth of work. I didn’t have that kind of cash, plus the money to buy the place, so I went to a hard money lender. (Supposedly hard money lenders are more lenient than conventional banks) But they also denied me… lol
At this point, I was getting pissed. These stupid student loans are messing my life up! But me being me, kept pressing on! That's when I found a partner/ family member. Someone I could trust. My partner got approved for a loan called 203k (where the government actually gives you money to fix up a house) You can use the loan on anything up to 4 units and that’s how we were able to acquire the property.
My long term goal now is to start paying off my students loans, while acquiring more rental properties!!!
I'm sharing my story b/c I want people to know that anything is possible!!!!
Set goals and work toward them!!
GOD put a purpose in us all… an idea... a dream… We were all meant to prosper!!
All you have to do is take action!!!!
“If your dreams don’t scare you, then their not big enough” ~ Ellen Johnson Sirleaf
From 2007 – 2009 all I did was learn about real estate investing. I read book after book, went to investing seminars, church classes and even volunteered at an investing school- American Real Estate Investors Institute.
My goal during this time was to pay down all my “BAD DEBT” so I can focus on buying “GOOD DEBT"
In Jan 2010, I went back to school to work on getting my masters degree. Here’s the thing though, I only went back to get in- school deferment.
In May of 2010 I bought my first house- a 1 bedroom condo, with a den (that I use as a second room) for $65,000 (despite my large student loan amount). I only put $500 down out my pocket! I also realize now in 2012, that I paid like way to much b/c the real estate market hit rock bottom around the end of 2011. I could have gotten a really nice condo for around $45,000 - $50,000.
But I did get the Obama tax credit for $8,000. (A special program that Obama started for all 1st time home buyers) So I used that money to pay off my car and fix up my condo a little.
While in school I started getting refund checks again, BUT this time I started saving them. In about 1 ½ years I had stacked almost $20,000.
I have learned in real estate you have to THINK outside the BOX!!!
So, now in 2012 with the market still being pretty bad, I started looking again. I had a little bit of money, so I felt confident. Well, every place I went to, turned me down… Why?!
My debt to income ratio was way too high… too much student loans was all I kept hearing, even though my credit score was good. (I always made sure to keep good credit) Some people don’t care what their credit looks like, I do… I need my credit!
Another thing, I never really used credit cards. I had a total of 6, but the total balance was about $3000, which I paid off.
Tip: Never close your credit cards b/c it can hurt your credit score!
Every mortgage place I went to said no.... So now what, just turn around and walk away... Never!!
Thinking outside the box, I started looking at other ways to get in the game and came across SELLER FINANCING. Seller financing is where the seller of the property holds the mortgage (like the bank). You still go to closing and the seller still may require you to put money down.
I found two properties that were marketing seller financing. So I put an offer on one of them, offering 10% down. Well, the seller came back with a counter offer at 30%. Mind you, the price of the triplex house – (3units) was 129,999 and the seller wanted 30% down.
Needless to say, I walked away (heart-broken)… I mean really, who has that type of cash just lying around… I started to get frustrated b/c I felt like I was trying so hard and all the doors kept closing in my face!!
A couple months later I found a duplex (2 units) , in the decent neighborhood for $60,000 and the place had a renter already in it! I felt like I hit the lottery….
So immediately I go to look at it, HORRIBLE. I don’t even know how somebody was living in it, but there was a renter, paying $600/month.
I suspected the place needed about $15,000-$20,000 worth of work. I didn’t have that kind of cash, plus the money to buy the place, so I went to a hard money lender. (Supposedly hard money lenders are more lenient than conventional banks) But they also denied me… lol
At this point, I was getting pissed. These stupid student loans are messing my life up! But me being me, kept pressing on! That's when I found a partner/ family member. Someone I could trust. My partner got approved for a loan called 203k (where the government actually gives you money to fix up a house) You can use the loan on anything up to 4 units and that’s how we were able to acquire the property.
My long term goal now is to start paying off my students loans, while acquiring more rental properties!!!
I'm sharing my story b/c I want people to know that anything is possible!!!!
Set goals and work toward them!!
GOD put a purpose in us all… an idea... a dream… We were all meant to prosper!!
All you have to do is take action!!!!
Educate yourself..... then educate someone else!!!
“If your dreams don’t scare you, then their not big enough” ~ Ellen Johnson Sirleaf
1 comment:
This was really inspiring Bukola! I bought my first property right out of college by myself and saw it as a huge success. I planned on converting it to a rental property until I realized how much I OVERPAID for it. Spare you the details but I felt so played. Just wanted to say however that I got a spark of that original ambition and drive I had when I read your story. Thanks for the motivation.
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