Where would you start? - Posted by Chris in CO

Posted by Doug Pretorius on April 18, 2000 at 17:08:00:

How about this:

Take your $8,000 and dig around for 8 $1,000 MH deals. Sell them for $1,000 down and a $5,000 note at 12.75% for 3 years ($167.87/month)

You will still have your $8,000 (thanks to the down payments) and you’ll have $167.87 * 8 = $1,342.96/month cashflow for the next 3 years.

That’s getting awfully close to your $2,000 goal, but I wouldn’t quit your job at that. You will officially be ‘financially independent’ of your job, which means all your job income can go into more deals.

Where would you start? - Posted by Chris in CO

Posted by Chris in CO on April 18, 2000 at 16:47:59:

Hi, everyone. I have spent many days reading the posts on this site. Fabulous and informative. I am a student of Ron LeGrand. I think his material is thorough and well done. I have studied all of his cash flow albums several times and have a good grasp of the material. I also have studied his small cash flow album backwards and forwards several times.

I have done my own prospecting for junkers. Found a few and made some offers. None got accepted. In the Denver market even junkers are getting close to retail. I have had realtors find me listings and I have spent a lot of time going to look at them. By the time I get there, the good deals are LONG gone. I just can’t get the jump on agents who comb the MLS a couple of times a day. I can’t afford to hire any ants right now. So my work in junkers never quite got off the ground.

I also called FSBOs in the paper for a few weeks trying to determine if they would sell wholesale, do seller financing or lease options. I talked to A LOT of unmotivated sellers and found it very discouraging.

I placed an ad in the daily paper for 60 days and did not get any deals I could work with. I postered and put up business cards everywhere for a couple of months. When nothing came together for me in those two months, I backed off from trying to make something happen because I am on the verge of bankruptcy. I had hoped that I could work Ron’s system to avoid it but it just did not work out that way. So right now I am about to file bankruptcy. I have to wait about two weeks before filing and then about 90 days after that my case will be discharged. Right now, if I got a real estate deal it would complicate my filing so I have to mark time until about August.

So I am using this time to learn as much as I can.
As I have been reading through the archives online here, I find that I am getting more informed but also a little confused. From what I have experienced and read here, I realize going after motivated sellers a la Joe Kaiser (I just got his lease option course in the mail) is the name of the game. I also like the idea of dealing in paper because of no tenants. With no credit and little money, mobile homes look like I could get some cash flow going soon. There are lots of mobile homes in the area where I live and I do have access to about $8000 cash. Then there is Stephen Cook’s method of offering 70% of FMV minus repairs or FMV minus 25K minus repairs. I could probably put together a deal or two with the $8k plus a hard money loan.

With all these possibilies and options, my question is “What would be the best place to start? Mobile homes a la Lonnie? Paper buying? Lease options? Stephen Cook’s method?” I need to make about $2000 per month to be able to quit my present job (which I hate). What does everyone think? Thanks ahead of time for your thoughts.

Re: Where would you start? - Posted by Eric

Posted by Eric on April 18, 2000 at 22:42:58:

I am a student of Ron LeGrand - By the time I get there, the good deals are LONG gone:

One of my favorite Ron sayings is, “you can’t steal in slow motion”. Why are you even going there? Make your offers sight unseen, with $500 earnest money to make yourself look serious, contingent only to inspection. If you get a bite, THEN go look.

. I just can’t get the jump on agents who comb the MLS a couple of times a day

You’re right, you can’t. That’s why I got my license. Plus, when you tell people you’re an agent yourself, they are less likely to try and BS you.

In the Denver market even junkers are getting close to retail.

That is because Denver and Phoenix are probably the two hottest markets in the country, in the hottest economy EVER.

With all these possibilies and options, my question is “What would be the best place to start? Mobile homes a la Lonnie? Paper buying? Lease options? Stephen Cook’s method?”

You answered your own question:

I realize going after motivated sellers a la Joe Kaiser (I just got his lease option course in the mail) is the name of the game.

Here is what I would do if I were you: Stop looking for properties. Start looking for sellers. Sellers with problems that you can solve - solve them with money, creativity, however you can - and view yourself as a consultant, who, like all consultants, is paid to solve a problem. This is your second job, until it pays enough to remove the first one, the one that you hate. Second, do what I did - BUY A HOUSE. Do you own your own home? I am of the mind that any “Real Estate Investor” should obviously be a homeowner themselves. This is the first investment you should make - the bedrock of your foundation. Where is that $8000 right now? In the stock market? In bonds? Cash? There is no way any of these would net you the kind of return that owning a house, especially in your market, would. Remember, in addition to equity buildup, you also get tax shelter on your payment - that’s really important if you still have a job, that takes out taxes, each and every week. If you do already own - then take a look at your equity (is that the cash you were referring to, perhaps) and BUY ANOTHER HOUSE. Pay retail. You live in a hot market - people will rent it from you, and while they pay the mortgage, that house will increase in value. Rents will go up - but your payment won’t. Eventually, it will bring in lot’s of monthly cash flow. Then, take the equity that got built up, and do it again. What if the economy goes south, and the houses don’t appreciate? GREAT - NOW cash in that equity, and start looking for LeGrand deals. They’ll be out there, and in much greater number, if things go wrong. And if you have cash reserves built up, while everyone else is bleeding out, I don’t think I have to tell you what will happen then…

Re: Where would you start? - Posted by Dennis in FL

Posted by Dennis in FL on April 18, 2000 at 19:34:20:

Hey Chris,

My suggestions have to do with your intention to succeed. Is it there?

Since you have found that by the time you get there the good deals are gone, why don’t you change the way you go after the deals.
With all of your education in investing please put one into action.
Why choose bankruptcy over taking a chance? If you are going to file, take a chance; the other guy is going to take the fall if it is bad, and if it is good you win.

Why use all of the questions to prevent yourself from touching the gold, instead of using your studies and nerve to step out and through?

OK, OK,OK…so this is not advice in the sense that I offer a roadmap of what to do; just a hint of what not to do to yourself and your greatness.

I have been where you are, and managed to step through with the support of my wife. Surround yourself with supporters and shun the “what if?” people.

WHAT IF YOU DO WELL?

What if you do nothing?

Go get 'em! Step through the fear and doubt.!#!

Let me hear how you do. lkhoward@ithink.net

Re: Where would you start? - Posted by Mark (SDCA)

Posted by Mark (SDCA) on April 18, 2000 at 18:11:05:

WEll… this is probably not the answer you were expecting but I would start by canceling the BK. That is going to be an albatross for many years (7?? 10??). I assume you have thought long and hard about it… I would think longer and harder…

You obviously have the will to get out there and do stuff. Sometimes it takes time, especially in a market like this. If it is anything like mine, jobs are plentiful so distress sales are far fewer. People are hungry for houses… Multiple offers at or above asking price so the MLS is a waste.
Its a tough buy… I think that people who tell you that it isn’t are kidding themselves. You just have to dig deeper. Call up a title co. Have them make you a farm list of out of state owners. I found 2 deals that way. They will do me very well in the long run. That is one way anyway… What you are looking for are houses that are not yet for sale or that no one knows are for sale…

Hope this helps,

Mark