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
that to be true also. I assume that since you’ve shown you
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
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
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
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
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
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
money, I haven’t even mentioned your ability to depreciate
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.
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,
won’t be able to do that.” Besides, I want to leave
more fun examples for some other newsletters – you
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.