From small deals to big deals? - Posted by Sam Ashford

Posted by Ronald * Starr(in No CA) on September 06, 2003 at 20:03:36:

Sam Ashford----------

Nice to talk to you. You are probably getting pretty good at what you do.

I’d find it a lot easier to respond if you said I want to do “X” and what do you think about it. You open-ended question makes it harder, since I don’t know you.

But, I like your question so I’m going to spin out some ideas.

One thing would to get more efficient at what you are doing and do more small deals each year. You might train more people to work for you so you do less of the direct work and more of the directing work.

You might, as you suggest, move up to larger residential properties. Whether to resell soon for profit or hold for the long term is up to you. William Nickerson?s ?How I turned One Thousand into 5 Million in my Spare Time? suggests this type of approach. Buy small, fix up. Hold until the rent roll is stabilized, then exchange up into a larger fixer property. Then do the same again. At some point you will a large property providing you with all the money that you desire. Then you just live the good life. When he died, he owned, as far as I can tell, just one property. It was the ?La Peralta? apartment complex a block from the Alameda County administration building here in Oakland, CA. It was five stories high and had about 95 apartments. He h ad owned it since at least 1968, so you can imagine the great cash flow he had.

You might start moving into other categories of properties that are typically more valuable than are the single family houses. This could be commercial properties or industrial properties. Again, you could fix for quick resale or for longer-term holding.

Good Investing***************Ron Starr***************

From small deals to big deals? - Posted by Sam Ashford

Posted by Sam Ashford on September 06, 2003 at 18:45:19:

I’ve done 11 rehabs/flips so far this year, and as I get better and better at it I see myself making some relatively serious money in the coming months/years. I’m trying to start thinking about what the “next step” should be for me. People always say to start out doing small deals, save up some money, work on your credit, etc. etc. and then move on to “big deals”. Well I have saved up 6 figures, my FICO is about 720, and I think I’m getting to the point where I need to start doing some bigger deals, but I’m not sure what that is. Would the next logical step be to start looking for small apartment buildings I can buy from motivated sellers, rehab them, hold on to them for a few years then sell and double up on a bigger property, etc.? What is the next step from here??

Re: From small deals to big deals? - Posted by M. Martin

Posted by M. Martin on September 09, 2003 at 21:46:05:

One path could be to increase the size of your rehab projects. You may try some higher end residential rehabs for larger profits. The projects are more difficult and complex but the profits are far greater. One of the successful investors in my area started with small low income rehabs on section 8 type rentals. He then went to nice residential rehabs in the 200k to 500k range and now he is doing multi million dollar condo conversions. His last one was a 52 unit deal where he converted an old apartment building into high end condos that sell for $150 to $200 per sq ft. I heard his profits were in the 3 million range.

I am about where you are now in my career and I have also been contemplating the next step. I have done 9 deals so far that have all involved substantial rehab. I have kept 6 as rentals and I plan to continue holding properties. I am looking into doing a 1031 exchange to move up to a larger bulding now.

Good Luck

How about - Posted by rm

Posted by rm on September 08, 2003 at 08:33:11:

selling the homes on L/O as opposed to cashing them out?

The rate of buyers who actually cash out on L/O’s is very low.

Thus, you could buy a house, fix it up, get paid, then get paid again.

It’s tempting to want to move on to new challenges, but making serious money is about boredom, in some ways. You build a little money machine, but it only pays if you operate it in the same way, over and over again.