Posted by Bud Branstetter on November 02, 1998 at 13:00:51:
The capitalization rate is supposedly what return a cash investor would want. Irrespective of what you paid for the property or the return your getting on the money you have invested,determine what you truly could sell the property for owner financed. If that is less than what you could invest your money in notes then why not change. From another asppect, we know you would not discount your mortgage for cash but other people will. While you can find mortgages to buy at a decent return the amazing thing is increasing the return after you own it.
You comment on the hassles of owning rentals. If you are doing any of the hands on management or maintenance be sure to factor the costs of hiring that done. Remember you would be working for the labor rate of someone you hire if you do it yourself.
And what is wrong working as a broker to ferret out great deals if you are the one that can take advantage of them. Your competition is out there paying 9-12% for notes. You don’t want to invest for that return so you have to figure out how to find them before the others or how to get them to go with you before they find a better price. A passive investor will never make the returns that a proactive investor can find.