Foreclosure/subject to/flip - Posted by Chris Sullivan

Posted by Scott on October 19, 2003 at 08:58:20:


Good answer … good answer!

Actually, that is what I thought. There wouldn’t be so many people doing it if it wasn’t profitable.

I’ve been putting together my 2004 goals. How is managing the 5 existing properties now. Do you have a maximum number as a target before you are stretched too thin.

Any advice would be welcome …



Foreclosure/subject to/flip - Posted by Chris Sullivan

Posted by Chris Sullivan on October 17, 2003 at 17:11:13:

Hello All,

I am an investor with 5 rental properties. I decided to run a +we buy houses+ ad with the hopes of finding a possibility for a flip to pad my reserve account. While I didn’t get much in the way of motivated sellers, I did get the following: A gentleman who lives in a home with his parents that is in foreclosure. They would like to stay in the home and would be willing to lease back the property. This sounds like a chance to maybe help these folks and make a couple of bucks. Would any of the seasoned investors here mind giving me some idea of the best way to proceed?


John Reed’s negative cash flow - Posted by Scott

Posted by Scott on October 19, 2003 at 08:27:23:

Hey Chris,

A side question for you if I may … are you trying to “pad my reserve account” because your reserve account is being depleted each month because of negative cash flow on each of the 5 properties. I was reading John Reed’s site and he says that it is rare to find a positive cash flow rental property.

I just figured he was trying to say that it isn’t as easy as most new people think. Is he correct?


Re: Foreclosure/subject to/flip - Posted by rm

Posted by rm on October 18, 2003 at 09:09:57:


If you OVER-disclose and assume that you’ll have to evict at some point and price that into the deal, then maybe it’s something to consider.

I just don’t see how this deal accomplishes your stated goal of “finding a possibility for a flip to pad my reserve account.”

And if you think you could flip this deal to someone without some seasoning, my guess is that you’d be wrong.

Given time, the ad may pull in better leads. It doesn’t happen overnight.
Good luck.

Re: Foreclosure/subject to/flip - Posted by chris-atl

Posted by chris-atl on October 17, 2003 at 19:32:38:

I would never lease back to the owners. You can get into a very sticky situation when you do that. As much as you try to CYA, they could still come back and say you didn’t explain it all to them well enough and they really didn’t know they were actually selling their house to you. So if you are going to buy it, they have to leave.

Re: John Reed’s negative cash flow - Posted by Sean

Posted by Sean on October 19, 2003 at 22:28:05:

John Reed’s a cynic, and he does say some common sense things and some of his reviews of some GURU’s are spot on… but believe me, you can make money on investment property… you don’t have to take NEGATIVE cashflow.

Its all a matter of how and where you are buying. If you pay full retail price for a property and pay bank rates on the money, you probably will have a difficult time getting positive cashflow in many markets.

However in other markets you can get cashflow from day one even if you pay 100% and bank rates. I would never recommend a beginner pay retail on an investment property… just because it limits your exit strategy if you find out you don’t want to be a landlord or that REI is not for you.

Remember, last I heard Reed lost his shirt in REI years ago, and hasn’t been an active investor in a long time… if that has changed someone please let me know… and its not that I don’t think you can learn from someone who has failed, its just that I wouldn’t take their word as the be all end all on how to succeed… knowing how/why you failed is good… knowing how to succeed is better.

Oh and his analysis of Russ Whitney being a scam artist are indeed spot on.

John Reed’s negative mind flow - Posted by Hank FL

Posted by Hank FL on October 19, 2003 at 21:21:54:

I’m pretty sure Reed has never done single family house real estate investing.

Therefore he would not be the logical person to go to to find out about SFH REI.

Right ?

Re: John Reed’s negative cash flow - Posted by Kristine-CA

Posted by Kristine-CA on October 19, 2003 at 12:36:49:

Positive cash flow rentals are NOT rare. And they are possible to find, even in CA. Of course, there are current markets where neutral to positive are difficult or impossible. But the country is full of property owners getting positive cash flow.

You might want to ask other investors in your area about their requirements for rentals to get an idea of what other buy-n-holders are doing in your area.

Sincerely, Kristine

Re: John Reed’s negative cash flow - Posted by Chris Sullivan

Posted by Chris Sullivan on October 19, 2003 at 08:41:05:


Absolutely not. Each of my properties is consintently producing a positive cash flow of 125-200/month. I would like to build my reserves with the sole intent of purchasing more properties. Far be it from me to second guess anyone, but I have found the exact opposite of what John said to be true…