Investor Insights

The current market has allowed me to evaluate and re-evaluate my long and short term goals. A few things needed to be “tweaked”, I’m sure you’ve found that to be true also. I assume that since you’ve shown you have an interest in real estate investing, then you must also be serious about your financial and time freedoms. When we originally started investing, we bought and sold everything we could get our hands on. But today’s climate might indicate a change in strategies. While I love to turn properties quickly, true wealth in real estate cannot be achieved by selling everything you can get your hands on. Now, don’t misunderstand what I’m saying. You need to cover your monthly cash flow needs first. Have you sat down and made a list of your monthly expenses? First jot down the ones that are basically the same every month, then add in a figure for food, gas and entertainment. This is the number, you need just to break even, survive. How many houses will you need to wholesale at an average profit of $5,000 each in order to cove r your expenses? Remember, wholesaling is when you find a good deal and sell it to a bargain hunter – you won’t be fixing these up, you’ll want to be in and out of the deal quickly.

Often, you’ll find deals you can wholesale for higher profits. Looking back on some of the deals we’ve done, we purchased an older house for $80,000 and then wholesaled it for $115,000. After closing costs, that was a nice quick paycheck!

But, after your monthly expenses are met, you need to think long term. The current economic climate is ideal for purchasing at bargain prices, holding long term and cashing out for huge profits a little farther down the road. We’ve got some properties right now that cash flow and will be very profitable in a few years. Let me give you an example of one. We purchased a duplex for $58,000 and put about $8,500 into it for repair costs making a total of $66,500 in costs. We have a private mortgage of $75,000 on it (more about that in a later issue). This allowed us to purchase, repair and still have money for any additional upfront costs and expenditures and acquisition fees. The property has tenants and cash flows (after all expenses) $300 per month.

So, we get income up front ($75,000 - $66,500 = $8,500), cash flow monthly during the hold ($300) and we still own the property with the right to sell it at anytime! Real Estate is cyclical and like a pendulum, it will go back up, we just have to wait and be patient to get the huge reward at the next upswing of the pendulum. By the way, while you’re collecting this money, I haven’t even mentioned your ability to depreciate the property to save on your taxes, as well as a number of extra goodies and bonuses you can get from owning rental property. Now, multiply this by additional properties, and you have a very profitable business.

Now, let me tell you, this is not our best deal – not by any stretch of the imagination. So, why do I give you this example? I want you to realize the possibilities. If I give you the best possible deal as an example, you’d say “yeah, but that’s not typical, I won’t be able to do that.” Besides, I want to leave some more fun examples for some other newsletters – you wouldn’t want me to give everything away now, would you?

Come and join us, we’d love to have you on the journey to financial freedom. Be in the place to learn all you can, hang out with like-minded people and be in a position to rub shoulders with some of the movers and shakers of the world. Remember, wealth rewards action.