New Investor... - Posted by Eric

Posted by Ben (Ohio) on July 03, 2003 at 09:34:11:

Are you living in that condo? When you say “you’ve been thinking about RE investing… should you look at short-term profit or long-term cash flow.” Well, as a consultant, here’s my answer: it depends.
I think that a good place to start is to research the possible ways to get into real estate investing, pick one you like, learn and apply it. One deal does not make you an investor, but knowledge and plans might.
Do you want to move? My house has appreciated nicely, but it’s all on paper until I sell it–but I don’t want to move and all houses in my area have appreciated, so I don’t get anything but sore muscles and change of address forms for my troubles. So, do you really want to move?
Anyway, I chose lease option as my first “niche” and it offers money up front, cash flow, and money at the end. Example lease option scenario, with guestimates:
Mortgage payments with insurance and taxes: $1750.
Market rent in the area: $1900.
Run a test ad: Rent to own! $1950/month with $250 rent credited to purchase price. 555-555-1212
See who calls, qualify them for money and timing, and if they are serious, invite them to check it out.
Ask for 3% down (securing the option to purchase) and $280k purchase price and a one year lease at $1950/month.

You could get $8000 up front, non-refundable and positive cash flow of $200/month. Your condo, after one year, could be bought for $269,000 (and you pocket the difference). Or, more likely, they might renew or move out–rinse, repeat. For the same tenant, if you want to keep them, ask for $3000 down to renew at the same terms–and they can buy at $263,000 (all option $ credited to purch price, plus rent credit).

It’s just one way. You can list it, try to sell yourself or whatever if you want it all up front, but it will probably be less profitable unless you are in more of a seller’s market than I am.

If you want more info on how to do this, where to go to learn more, email me.

New Investor… - Posted by Eric

Posted by Eric on July 02, 2003 at 17:16:17:

I bought my first condo a year ago in Orange County, CA for $225k. Today I see identical floorplans in my complex selling for between $265k and $275k! Given my total cash-to -close and 1 year payments, that equals a 1-year ROIC of between 105% and 132%! I’ve been thinking about getting into real estate investment, but I don’t know where to start. Should I be looking at short-term profit or long-term cashflow? Can I cash in on the added value of my house, or is it better to raise new capital for a down payment?

I need to put together a solid business plan that will provide maximum growth in the short term and sustained positive cash flow in the long term. Ultimately I would like to achieve financial independence. Any advice would be extremely helpful… -Eric