What is your LONG TERM Game Plan? - Posted by Mike

Real Estate Investing
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Posted by Bill K. (AZ) on March 22, 2000 at 20:02:51:

Matthew,

Our points of view are the same. I agree with your reasoning completely. However, you assume that I have credit card, or similar, debt. But, your advice is good for a great many people.

You see, I don’t have any credit card debt or car payments. The only debt I have is a mortgage. However, I still need cash now to pay for food, clothing, insurance, gas, utilities and that monthly mortgage payment. Now, when I get to the point that I’m flipping enough properties consistently to pay for those everyday things, then I’ll be looking to buy into deals that cash flow. Once a positive cash flow supports my lifestyle, it is, by definition, supporting that mortgage payment as well. After I obtain that, I’ll be looking to make extra money in order to pay off the mortgage early. Finally, when the mortgage is paid off, I’ll be making more than enough to retire comfortably.

That’s my plan. Your mileage may vary.

Bill K. (AZ)

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What is your LONG TERM Game Plan? - Posted by Mike

Posted by Mike on March 22, 2000 at 16:31:07:

I am looking for opinions and feedback on a LONG TERM plan of attack for real estate investing. Here is what I am doing now;

I am new to this business. I started about 5 months ago and will be closing on my third property soon. I started without any money to invest and have done three deals with nothing down. My current plan of attack is to purchase properties in the $35,000 to $60,000 range that I can sell on a lease/option to a tenant/buyer for a $12k to $15k profit in a short period of time. I collect $1500 to $3000 down, give a $100 monthly rent credit, and the balance becomes due within 14 months. I purchase these properties by taking out a mortgage with 5% to 10% down. I then get my down payment money back by using “decorating allowances” from the seller as well as the down payment money I recieve from my tenant/buyer. I plan on doing approximately 5 deals per year (for now).

What about the LONG TERM PLAN? I guess I am just not sure where I’ll reinvest my profits next year. I guess I have been thinking about investing in “nicer” single family homes that maybe I’ll hold onto for a longer period of time allowing for a nice cashflow and appreciation. Properties in better neighborhoods that I will research for maximum appreciation. I’m just not sure if it’s best to buy & sell for the quick (and healthy) profit or buy and hold (for long term cashflow & a higher but delayed profit).

What are your thoughts. What are some of you doing. Do you have a focused game plan for your investing? Please share your ideas and thoughts.

Thanks
Mike

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Re: What is your LONG TERM Game Plan? - Posted by Rob FL

Posted by Rob FL on March 22, 2000 at 21:43:00:

Pay my everyday bills through my “active income.” This currently includes my job at a title company, real estate commissions I generate as a real estate broker, short-term gains by flipping blue chip stocks, flips and rehabs on ugly houses.

Build my “passive income”, i.e. CASHFLOW, to surpass my everyday bills. This includes income created from rental properties, lease options on “pretty houses,” seller-financing I create on any deals, interest/dividend income from various non-RE investments.

Personally I prefer multi-family properties as rentals over single-family properties. The reason why is that single-family properties very seldom produce much of a cashflow in the beginning unless you buy very cheap or put a lot down.

Multi-family on the other hand, has multiple income streams and usually a higher net cash flow. Raising the rents on two or three units really increases your monthly cash flow compared to only raising the rents on one unit.

Those are just my thoughts for whatever they are worth.

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Re: What is your LONG TERM Game Plan? - Posted by Nancy Cason

Posted by Nancy Cason on March 22, 2000 at 19:56:39:

Mike,
Don’t be so quick to ignore building a rental portfolio. Holding properties is the only way to build net worth and equity. Keep your mind open. If a good house in a good neighborhood comes up consider keeping it. As long as someone else is paying for it i.e. tenants all you have to do is “manage”.

Your long-term plan should allow for cash flow and wealth building. It can be done and since you are already on the path, I know you can do it.

Read Matthew’s post again; notice he keeps his living expenses down. It is real easy to spend more as we make more. Read the Millionaire Next Door.

Artificial scarcity works.

HAVE FUN AND KEEP A POSITIVE MENTAL ATTITUDE
Nancy

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Hmmmmmmm… - Posted by David Alexander

Posted by David Alexander on March 22, 2000 at 19:39:18:

Sitting on the Beach, Flying to wherever to go skiing, Seeing site I’ve never seen, helping people start businesses and best of all Spending time with my daughter.

Oh, You probably mean on our of how were getting there.

Buying\selling Houses to generate cashflow (paper) and cash.

Creating lonnie deals to pay off underlying equities on a portion of my portfolio (remove some leverage, for good foundation) at 30-50 cents on the dollar.

Buying, fixing and repackaging Commercial Deals to generate upfront cash, no liability, and backend profits.

Systems, systems and more systems so that I do alot lot less than I do which isnt much, Lol.

David Alexander

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Re: What is your LONG TERM Game Plan? - Posted by Matthew Chan

Posted by Matthew Chan on March 22, 2000 at 19:17:25:

Continuous CASHFLOW is the long-term goal for me. You generate some minimal cash to meet your immediate living needs, plow the rest of it into generating an income producing asset.

I personally have no desire or feel there is a need to turn over or own a hundred houses. I only want to turn enough to get into a couple of larger properties. A relative of mine has about $50K worth of equity in just 1 rental house after 5 years of ownership. She cashes out of the house today, it is a nice down payment for a $500,000 to $600,000 income property. With her monthly expenses so low, I believe she could be out of the “rat race” in the next year or 2.

Or if you don’t have that, maybe do 6-8 deals generating $10-15K profit each, and you got a nice tidy sum to get into a $1 million income property. You might have to do an extra deal or so or make a little more per deal so that you can pay your monthly expenses. I keep my expenses so low living an “average” humdrum lifestyle, it really isn’t going to be a big deal. I will worry about being flashy later.

Do 1 deal a month, and in under a year, you are in a position to stop “grinding” for the next house.

I figure if I play my cards right, I will be out of the rat race in one or 2 years doing something different.

I look at Real Estate and Notes as a vehicle to where I want to go. The person that gives a great “big picture” model to follow is Robert Kiyosaki through his books and games.

Robert Kiyosaki’s favorite quote is “Mind your own business” meaning be conscious of your financial position, ensuring you take care of your own financial well-being, and filtering out the noise.

A lot of things discussed here are great techniques and tools to get to where you want. There are so many, it is mind-boggling.

My plan may be a little simplistic but it seems to be the fastest way to get where I want to go and very achievable. I am certain other people have better long-term plans than this so I, too, am interested in hearing what others have to say.

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Here’s Mine in a Nutshell - Posted by Bill K. (AZ)

Posted by Bill K. (AZ) on March 22, 2000 at 18:00:22:

Mike,

I need to pay today’s bills first. Hence, I’m into flipping properties for fast cash. I’m holding no properties at present.

As I put some distance between me and the bill collectors (about 1-2 years worth of distance-I’m conservative), I expect to slowly switch to the “buy and hold” strategy for monthly cash flow.

Bill K. (AZ)

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Re: Hmmmmmmm… - Posted by Nate Tyler

Posted by Nate Tyler on March 25, 2000 at 01:41:57:

Hey, man…

What do you know about systems??

LOL

I NEVER thought I’d hear you say that word. Makes me feel proud like a daddy!

Good man.

I didn’t see any mobile home parks or conduit loans in there…what’s up with that??

Nate

PS. You might want to put “buying a new calculator” on your long term goal list. LOL (tell Saxon hi for me)

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Sign me up… - Posted by DanM(OR)

Posted by DanM(OR) on March 23, 2000 at 10:09:03:

I’m with you all the way buddy!

Your friend in the not as warm place up north,

Dan Matejsek

P.S. Thanks for the call yesterday.

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Re: What is your LONG TERM Game Plan? - Posted by Doug Pretorius

Posted by Doug Pretorius on March 22, 2000 at 20:17:37:

I’m with you Matthew. If all you do is flip and spend doesn’t that just amount to a high-paying job?

My plan is to flip (either fix and sell or sell to owner-rehabbers) and use every cent to buy paper, or create it through Lonnie deals. I’m coming from the position of having virtually no expenses and no debt at all, and I plan to keep it that way for as long as possible. I’ll do just as Rob Kiyosaki did, spend passive and portfolio income when the time warrents, NOT spend any of my ‘commission.’

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Re: Here’s Mine in a Nutshell - Posted by Matthew Chan

Posted by Matthew Chan on March 22, 2000 at 19:37:50:

We have somewhat different points of view here. I am not really interested in paying off my debts immediately but I might pay some down a little to give myself more cushion. The reason for that has to do with the leverage of consumer debt. If you can come up with only 2.5% as a monthly payment, the other 97.5% is for you to use as you please. Yeah, I know at 2.5% very little principal will be paid down on the outstanding amount but if that money is being placed into something that spits out more, wouldn’t it be worth it?

So, a $10,000 credit card debt requires you to pay about $200-$250/month (interest+principal). Now if you use that $10K to control/buy/lease-option a property that at least makes that much back per month in cashflow (after expenses) but you knew it would make $15-$25K after you got cashed out (3-6 months later), would it be worth it then? (I deliberately used tight numbers to illustrate a point. If it works with tight deals, it will work with nice deals.)

And since money used from a credit card is not your money, doesn’t that make it a no money down deal? The return would then be infinity, no?

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Bill I Like Your Plan - Posted by phil fernandez

Posted by phil fernandez on March 22, 2000 at 18:34:23:

Hi Bill,

Great seeing you at the convention. I would agree with you. When starting out you want to get some cash quick to pay off high rate credit card bills and other consumer items that were purchased on credit. Once you have your financial house in order, then you go out and buy some income producing rentals for monthly cashflow and future appreciation while your tenants are in the process of paying off your mortgage.