L/O vs Lonnie, fastest way to self employment... - Posted by Kevin(OK)

Posted by Tyler on April 28, 1999 at 01:05:54:


I think your logic is correct. L/O will create large sums of cash upfront, with a small (or big) monthly cash flow on the spread. You also get the nice back end payday.

Lonnie deals are a great way to build up your passive income fast. When you get the big lump sums of cash from, say, a L/O or wholesale flip, put some back into Lonnie deals.

Do this several times, and you will find that before long, you have a nice monthly income…for as much work as it takes to open your mail.

Good luck.


L/O vs Lonnie, fastest way to self employment… - Posted by Kevin(OK)

Posted by Kevin(OK) on April 26, 1999 at 13:41:34:

I recently read Joe K.'s L/O course and Lonnie’s Deals on Wheels. Then I sat down and computed which method would allow me to quit my #!# job the quickest. This is considering one major factor. I must borrow cash on revolving debt(credit card)to fund any deals.

First, I computed the Lonnie deals. Using revolving debt, buying at half price($3,000), selling at double the price($6,000) and funding the deal, it would take me three years before I would have enough $$ to replace my income and have enough to purchase at least one mobile every month. Also, I would have to keep a large debt ($17,000) revolving for those three years, in order to fund the deals. Furthermore, this doesn’t include tax’s, which would be several thousand dollars per year.

Next, I computed Joe’s L/O’s. Using $100,000 as the average priced home, $1000 as the average 1st mos. rent and option consideration, selling at $110,000, $1,100 per month and a $3,500 option consideration, it would take me one deal to replace my monthly income (of course I would want to do a few deals before I would jump in full time). Furthermore, I wouldn’t have that large debt looming over me. If I could do this same thing every month, I could quickly rid myself of my job, and have an extra nice bonus when the buyers exercised their option. Also, the tax’s are a fraction of the Lonnie deals.

My choice is to work on L/O deals.

Now, let me say, that both of these courses/books have great learning tools, and I highly recommend them to anyone. And if I had cash, Lonnie’s would be more attractive, but I do not.

You make the choice for yourself.



Re: L/O vs Lonnie, fastest way to self employment… - Posted by Bud Branstetter

Posted by Bud Branstetter on April 30, 1999 at 11:25:25:

How’s things going Kevin?

I am in some agreement with your assessment. Lonnie deals are great returns with little up front investments. They do, however, take some time. It is just a note. L/O take some time also. Not every L/O offers up front cash oportunities. Do you turn down a deal where the seller wants as much cash upfront as you are likely to get but there is monthly net and a back end? Or what do you do with the deal that they will take nothing down, defer their equity but the repairs may exceed the option/down. What if there is 15K on the back end.

Much of the things that you do,advertising and phone calls you would do whether you are looking for L/O, owner financing, or all cash steals. The more comfortable you get with learning how to structure and motivated seller and their situation the sooner you can quit that job.

I have a friend that will call 500 FSBO’s to get one L/O deal. He prefers to leave a message that if they are interested in L/O their house to call him. How many owner finance or cash steals is he missing?

I have another friend that gets calls and naturally gravitates to cash deals. How many owner financing or L/O deals is he missing?

How many of the calls that take all cash could be flipped. What if they searched out vacant houses?
What if they worked with a home owner to teach them how to sell, l/o, or owner finance their house?

I think you get my point not to limit yourself or the type of deals that come along.

Re: L/O vs Lonnie, fastest way to self employment… - Posted by Baltimore BirdDog

Posted by Baltimore BirdDog on April 29, 1999 at 14:38:56:


I don’t quite understand your post. Maybe you can enlighten me.

How is it that one L/O will allow you to quit your job? From your example, it seems like you would net $2,500 up front with $100/mo positive cash flow plus $10,000 at the back end (assuming you don’t give your tenant/buyer credit for their option consideration). Seems like you’d have $2,500 plus $1,200 plus $10,000 equals $13,700 profit from your L/O deal, all of which you’d have to pay taxes on in a year.

I can’t compare this to the Lonnie deals since you gave prices but not interest rates, and I don’t know where you arrived at the $17,000 figure. With regard to the taxes, if you were classified as a dealer, it seems as if you would have to pay taxes today on Lonnie deal profits even though you’re receiving them over time in the form of note payments. Is this what you mean when you say that the Lonnie deal taxes would be worse? In addition, I think you might be able to deduct the interest on the credit cards as a business expense since it’s money borrowed to fund your deals.

I’d appreciate your help in figuring this out. I’d like to pursue Lonnie deals and/or L/O’s at some point and would like to hear your viewpoint. To me, Lonnie deals seem like a quick and easy way to get your REI career rolling and L/O’s sound like the next step since they’re a little more complicated. Looking forward to your response.