Posted by Brent_IL on August 25, 2003 at 24:14:07:
In general, a lower-priced, entry-level house will generate more net operating income per acquisition dollar than will a higher priced house.
A plan of action for RE investing is a collection of more specific plans that deal with different areas. L/O is an exit plan. The marketing plan is settled in your mind.
Subject-to isn?t a plan. Subject-to is only a part of a purchase technique; but what of the part that the subject-to doesn’t encompass? That’s what you need to concentrate on because this is where the deal is made or lost.
I haven?t read the ABC?s, so I don?t know what they are suggesting, but I would think that to pull this off you would need to develop some kind of potential buyers list so you could divest quickly. Recall that newer houses have no equity. If the seller had equity, he would have taken the easy way out and listed it with a REALTOR®. High closing costs plus an unexpected extra couple of months to locate a L/O?r could add up to three years worth of profits. If you live in a well-populated city, you may not need a list for the lower-end property. In my area of greater Chicagoland, there are probably 300,000 people looking for L/O opportunities, so I don’t worry about it.
I?m not knocking L/O?s, but it?s for those with staying power. If you have cash to back you up, and you know how to frame good offers that sellers will accept, go for it. You can never succeed if you never try.