Posted by Dave Mckee on March 23, 2001 at 22:04:12:
Zack,
If you do this with fixers the update will make the value (and equity) gain faster as well as the rents. I have been doing that modification of the idea. It works! You will be managing rentals, so learn how…
Dave
New idea. What do you think? - Posted by Zack
Posted by Zack on March 23, 2001 at 19:08:48:
CRE,
I work closely w/ a very intelligent successful real easte agent who owns property himself. He has an MBA in busi adm and comp science, these are not easily obtained. Anyway he has presented an investment plan to me that I would like some feedback on.
Plan: Buy 6 100k or higher properties a year for 5 years w/ no money down. These properties must pay for themselves while earning a small cash flow as well. Starting in the 6th year we will re-fi the 1st 6 we bought in the first year and pull ot TAX FREE cash. This will be done every year w/ the next set of properties. Using the TAX FREE cash we will buy a 30 [or larger] unit free and clear and pay off a personal residence. This provides huge cash flow and security w/ owning a personal residence in case disaster would arise. This is a bare bones outline of the plan, but I’m sure some of you heard this one before and I would like some feedback. Basicly we buy right, never sell, re-fi every 5, and eventually pay off 2 properties [income and personal].
Thanks,
Zack
Re: New idea. What do you think? - Posted by Wayne-NC
Posted by Wayne-NC on March 24, 2001 at 08:23:13:
My father told me this some time ago and it will always hold true in any day in age. We strive for perfection but only come out average. Somehow it always turns out that way.
Re: New idea. What do you think? - Posted by phil fernandez
Posted by phil fernandez on March 24, 2001 at 06:15:14:
Zack,
This idea or plan as you call it, is straight out of Robert Allen’s “Nothing Down” best seller. As others have said on paper it is a great plan, but here’s the flaw. The plan depends on consistent appreciation of values. Values normally don’t follow a nice even upward curve.
Appreciation goes up and then often levels off for a couple of years or so. Appreciation is not dependable. To me appreciation is just the icing on the cake. I never make my investing decisions based on appreciation.
Another flaw I see is with the uncertainty of what interest rates will look like five years down the road. If they jump up to 12 - 15%, and they have before, your properties that you refi will probably not cashflow.
Thirdly don’t let the glitter of MBA’s and computer science degrees blind you to the fact that they are not necessary for success in real estate investing.