Re: How do you figure? - Posted by Lou Pohl
Posted by Lou Pohl on September 28, 2003 at 19:26:47:
“So let me get this straight … once you do 10 or so you won’t buy ANY others until all 10 are sold? Cuz if you do then you’ll end up holding (at any given time) 10-20 properties.”
No that’s not what I said. What I mean is that every time a property is sold you simply replace it with another one. Once you get going you will have properties being sold on a regular basis, and you just keep replacing them with new ones.
To keep it simple, let’s say that if the T/B doesn’t excercise their option after 1 year, you’ve decided you will just sell the property retail. So bottom line you are only holding on to a particular property for about 1 year no matter what (add a few months if you need to sell retail, etc). Thus you should be able to do about 10 per year without ever holding more than 10 at a time. Make sense?
“Also you consider 10-20% equity? That is slim and can disappear very quickly. That’s no equity at all.”
20% is equity yes. I don’t recall saying anything about 10%. How is 20% going to disappear very quickly?
If FMV is 200k, and I find a motivated seller who is willing to sell to me right now for 160K, then I turn around and sell it on a L/O for 210k (a measly 5% over what it’s worth now), that’s at least 40-50k in profit for me in about a year depending on how quickly I get a t/b in place, whether they excercise their option or I sell it retail and have other selling costs, etc.
Are you saying that this 40-50k in potential profits could somehow be reduced to the point where doing this type of deal wouldn’t make sense? If so I’d like to hear about it.
I’m not trying to be argumentative, and I would really love to hear your comments …