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Here's The Real Estate Strategy That Works Best
Here's The Real Estate Strategy That Works Best
Let's get right to it, and discuss a strategy that you can "take to the bank"...
You and I live in the *real world* - not the ivory towers that the infomercial gurus speak
from.
And in the real world, nobody has an unlimited amount of cash and credit. I know I didn't
when I started out.
And quite frankly, it wouldn't have mattered if I had fifty million dollars in the bank and
a sky-high credit rating. The fact is, it just doesn't make sense to use up your own
personal resources to invest in real estate, since there is definitely a better way.
I figured out a great strategy that doesn't require any of my cash or credit, yet still makes
serious, consistent cash flow. Here's how it works -
This system is fundamentally simple. All I do is find houses that I can buy without using
my own cash or credit (more about that later) and I simultaneously find a buyer who
wants to buy that property from me. I buy from one, sell to the other, and I keep the
difference.
Sometimes the buyer I'm selling to can get a loan immediately. When that happens, I get
to put all of the cash in my pocket RIGHT AWAY, and I get a nice, fat CA$H profit
immediately.
And if the buyer can't get a loan immediately, but will be able to do so sometime soon,
I'll sell the house to the buyer using a lease/option (more about that later ) which
is actually a very good thing for three reasons:
• When selling with a lease/option, I make money FAST because I'll get a big down
payment from my buyer
• Lease/Options also allow me to make money each and every month - without any
real additional effort from me.
• A few months down the road, my Lease/Option buyer will probably be able to get
a mortgage, and when that happens I will get paid again!
In case you're wondering: NO, I DON'T FIX TOILETS or do other property
maintenance, even though I sell property via lease/option. I demand simplicity, and doing
property repairs isn't part of the equation.
EXAMPLE:
A motivated seller will respond to my marketing. I discover that the seller has a home
worth $130,000 with a remaining mortgage balance of $105,000 and a monthly payment
of $825. I'll buy the property by just taking over the monthly payments.
I immediately attempt to re-sell the property using a lease option. I set the sales price at
$135,000 (yes, I know that's "too high" - I'll tell you why that's O.K. in a future lesson)
with a monthly rental rate of $1,100. I'll also require a down payment from my
"tenant/buyer" of about 3-5% of the purchase price. We'll use 4% in this example - so the
down payment is $5,400.00.
That means my up-front income is $5,400. My monthly cash flow is $275 (I'm collecting
$1,100 per month and paying out $825 per month). And I'll make a whopping $24,600
when the tenant/buyer gets a loan (that comes from the sales price of $135,000 minus the
down payment of $5,400 minus the mortgage balance of $105,000).
So, all totaled, I'll make $33,300 on this deal (assuming 12 months of cash flow). All in
all, not a bad deal!