Keep Hangin’ in There - Posted by Bill K. (AZ)
Posted by Bill K. (AZ) on April 01, 2000 at 15:51:13:
Carleton Sheets’ program is a great primer for this business. However, if you’re struggling to put food on the table, you should look into areas of the business that can pay today’s bills first.
Carleton’s basic program advocates “buying and holding” (ie: income-producing properties with appreciation). While that sounds great, if you don’t buy right, or the market turns sour (depreciation), or you have extra maintenance, or you have an unexpected vacancy, you may quickly find that a small positive cash flow has turned into a negative cash flow. And, it may take some time to recover from this.
For folks in your situation, I highly recommend that you consider lease/options or flipping. Both of these strategies can get you into, and out of, properties fairly quickly with very little of your own money invested. And, they can literally put thousands in your pocket in short order.
For example, with lease/options, if you find an owner who is willing to consider this strategy (motivated seller), you can make money 3 ways…
- By collecting $3-5,000 in option consideration from your tenant/buyer, up front, for each $100,000 in value of the home.
- By collecting a “monthly spread” between what you’re paying the seller for the property, and what your buyer is paying you in rent.
- By collecting a “back end” profit. This is the difference between what you negotiated to buy the property for, and what you sold it for.
With flipping, I’d recommend you start with wholesale flipping. I wouldn’t put any money into fixing up these places. Find motivated sellers that will work with you on their price. Add $3,000 to $5,000 to the price (your profit), and flip it to an owner-occupant (which is actually a “retail” flip) or another investor. But, keep in mind, if you flip to another investor, there must be room for his profit, repairs and holding costs in order for it to be attractive to him to retail it.
That’s just a quick rundown, and I’ve simplied many things, but you get the idea.
You can find courses on Lease/Options and flipping by clicking on the “Books/Courses” link at the top left of this newsgroup page.
I hope this helps.
Bill K. (AZ)