Re: Random thoughts - Posted by osirus
Posted by osirus on October 05, 2003 at 13:38:47:
“”""Perhaps I should compose my thoughts so I’ll be able to write a cogent post later, for I’m out the door in about 15 minutes.
Nah, why should I start now.
OK, here are some random thoughts:
- Why spend X # of hours on a house deal that will net me X $ a year in cash flow and other benefits or X $ in a one time lump sum when I could spend maybe 4 times the hours on a bigger deal but receive 20 times the financial gain when compared to the house deal. “”""
I cannot not really comment on commercial REI since I have never done commercial REI. Suffice it to say it would be many times more difficult than residential REI. Plus the moment I most choose between business and spending time with family and friends then the point is defeated for me.
“”""- Limitations. We have only so many hours, and this SFH thing has a large component of self employment or “S Quadrant” as Kyosaki calls it. That means that I can’t really hire negotiators to get me houses for they would snap them up for themselves.
Well, I suppose buying houses or contracts from flippers is a way to do that. The point is that there seems to be no limitations in the commercial arena. “”""
This is something I thought about a lot since my “master plan” is to have my REI on auto pilot so that I could go on a month long vacation, on whim, with out REI suffering. After thinking about it, I have concluded that it depends on the nature of the your REI activities and your ability to think of ways of getting people to do the work for you.
Any type of seller financing like buying on a wrap, L/O, subject 2, seller financing, etc.; would not lend themselves automation since they are negotiation intensive and do not require must other resources outside knowledge. Thus, as you say people, your hired negotiators “would snap them up for themselves.”
Nonetheless, there are ways to prevent them from snapping them up themselves which I will get to later.
There are several REI methods that lend themselves to automation like: Landlording, Nodiscount?, using cash.
Landlords can hire a management company. Nodiscount? was designed with a lot of automation, is not negotiation intensive, and can be tweaked to be almost completely automated. “Using cash” includes any buying technique which requires upfront cash like: buying discounted mortgages, being a HML, buying with cash selling on contract, buying at auction. Being able to negotiate is just half the equation. You would still need the cash resources.
One technique which JT IN post about really lends itself to automation in my humble opinion. He researches to public records for foreclosures and buys the defaulted paper directly from the lender. Next, he continues the foreclosure and attends the auction. If the property gets bid up he can that the quick profit. If not he acquires the property way below value.
This is a method I will use myself once I have the resources and experience to do them.
Do you see how this method lends itself to automation? JT IN could document all he does during the research phase, put together a manual, then hired some one research the public records for him. He could do the some for negotiating with the banks part. If the hired help wants to snap the deal up themselves they are going to need the cash resources that JT IN has.
Anyway, this is how I might hired people and discourage them from becoming my competition. First, carefully screen the people I hire with specific attention to character references. Second PAY THEM WELL. Third, have them sign a employment contract language stating that: 1) if they quit they agree to return all materials 2) they agree not invest in real estate , in the county, for 3-5 years after they quit. Also have them sign a performance mortgage of hundreds of thousands of dollars and record. Hold a satisfaction in escrow.
If they quit and snap up your deals enforce the mortgage.