Your Money, My Deal. Sounds Good To Me.

Real estate lovers, and investing enthusiasts, it's that time of the week again!

It wouldn't be in true Jamestown Capital style if I didn't put out another deep dive tip around buying your first deal. It's just what we do.

This week we talk about money, a subject we all love, hate, and love to hate.

But should you use other people's money to get started in real estate? It's a question that I get a lot and one that has a simple answer.

So, let's take a look! And get started on this week's edition.

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But just before that, let me jump in with something important.

If you are interested in real estate and thinking about making your first investment, why do it alone? I have 1-on-1 coaching for new investors available on my website. Just click the button below!

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Their Money Is Not Your Money

There is this grand notion in real estate of "no money down", we've all seen these ads that promise the world but are they what's best for a first-time investor?

Don't get me wrong, no money down sounds great. You just get a free rental property right?

Wrong. It's all centred around leveraging other people's money.

Investing other people's money is a way to get into a property without having to commit any of your own. But there are many cons to this, what would seem, home run idea.

So what is right, and what is wrong?

Let's take a look!

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Debt, Syndicates and First-Time Buyers

Everyone knows about debt, we understand it to be bad, as that is what we are told growing up. But this is not always the case, debt can be a good thing if used properly. Debt can allow you to reach beyond your means and is usually an essential part of any deal, the mortgage for your investment property is a form of debt, but done properly, that is good debt as it allows you to create passive income every month that pays down the debt for you, it's not a liability, it's an asset.

The issues arise when you start to involve other people. Taking an investor's money and rolling it into your first deal... Now that's tricky, stressful, and risky.

Many people within real estate use other people's money to invest, some of the biggest real estate deals ever done were a syndicate of hundreds of other people's investment capital organised together to buy something that none of them could afford alone. This is great for investors and can be a very good resource for building wealth. This though is not for a first-time investor, buying your first investment property is very different to joining a large syndicate.

Within this newsletter we are focusing on first-time buyers, getting into their first property or first few properties. My advice for those people?

Use your own money. At least for the first few.

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3 Why's To Use Your Own Money

This is the most vital part of your first deal, learning and figuring things out for yourself. Not to say you shouldn't have help, you should look for all the help you can get! But the reason that all those large syndicate deals are successful is because of one thing.

The experience of the investors involved.

Gaining that experience is vital and using your own money will mean that you learn in the correct way. This is for a few reasons:

1. Spending someone else's money is easier than spending your own.

Spending other people's money can be a trap in itself, you may not look in as great detail as you would if it was your own money. With this being your first investment property you want to leave no stone unturned, use your own money. You'll manage it better.

2. Don't become over Leveraged.

With this being your first deal, borrowing someone else's money to invest can be high risk. Most first-time investors just don't have the financial backing to take on a large debt to an individual investor. If the deal goes wrong, you're on the hook for a large sum with no previous deals or cash to fall back on. Using your own money mitigates this risk. If you lose, you can take the loss and regather, no large individual debts to pay back or promised returns you have to explain are gone. It's much more simple.

3. Learning is vital on your first deal.

Using your own money allows you more opportunities to learn. You won't get everything right, and on those days when you get something wrong, you'll thank yourself that you do not have an investor looking over your shoulder and pressure at every turn. Learning about budget adjustments and money management whilst going through the process of your first property is vital. This is the knowledge that you will carry forward to be able to make your deals better and better, knowing what to and not to do.

If you do use someone else's money in the future, this allows you to confidently tell investors what you know, how the deal will likely go, and the possible risks or speedbumps along the way.

So, basically, using your own money is good for lowering risk, allowing yourself to learn, taking responsibility and a whole host of other things.

Use your own money.

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So What Can You Do?

Well, the tip for this week is simple.

When looking for your first property use your own money. It allows you to learn through the whole process and stops you from taking on large amounts of risk for your first deal.

Another thing to add is that using your own money, knowing you have worked hard for that money and it will be difficult to replace, will only add to the accomplishment of buying a successful rental property.

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Don't Forget About Next Week!

Want to know more about investing in your first rental property?

Don't worry I have you covered, next week I'll be breaking down another key part of finding and buying that first deal.

So, don't miss out!

And remember, if the process is a little daunting and you want some more hands-on help. I'm happy to guide you through the process.

Feel free to drop me a message, or take a look at my tailored coaching program for brand new investors where I help you by taking real estate investing from an idea, to reality.

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So, that's it for this week's edition!

I hope you not only enjoyed it, but learnt a little too.

See you next time!