Although my wife is a hard money transactional lender. I sometime use OPM, (Other People’s Money) whenever possible. Leverage allows me to do far more transactions than I ever could on my own. Remember, it’s always better to have a piece of the pie than none of the pie.
I structure my transactions so that if I have money in the deal I get all of it back in the quickest possible time. Remember, one of the major keys to money is to have it work for you and once you have your initial investment back your money is working for you at the rate of return of infinity. On most of my transactions I have all my money back within the first few years.
Don’t Wanters: I buy from people who really do not want their property.
This means that I generally buy properties from highly motivated sellers (trustees of deceased estates or bankruptcies, liquidators, vacant houses, mortgages in possession, trustee sales, subject to, foreclosures, etc.).
If someone does not want their property they are much more likely to be flexible on their price or terms to dispose of it. You are entering the market on Wholesale Price and/or Wholesale Terms which will allow you to easily determine your Profit at Purchase.
In any market, no matter how good, somewhere between 2-5% of sellers are highly motivated to sell. However, in a sellers’ market like (2018), it may take more digging to find them. But they are there.
Although I often acquire properties solely to turn them around for a capital gain, I prefer to make as much of my profit as I can in the form of Cash Flow. Note that I NEVER do negative cash flow. The property, regardless of price range, must make money the first year.
When it comes to Real Estate I prefer to invest in single family homes that meet my criteria. My wife and I like mail box money! and will often seller finance the home and become the bank. I also like notes for the same reason. Did I mention I like mailbox money? We do not like the mailman to past our house without leaving a check.
When I invest, my primary concern is the Return on Investment after taxes. The only thing that matters is the Bottom Line. I don’t care what color the carpet is or about the pretty garden. Just give me the numbers. When it comes to investing, the numbers are the most important thing. Emotions play a very small part. Don’t get emotionally involved. Get Rich instead. Remember the key to investing is focusing on “The Money and The Numbers”.
JC Underwood is a director at the Metrolina Real Estate Investors Association, which provides education, mentoring, and networking for real estate investing in the Charlotte region. He can be contacted at jcu@MetrolinaREIA.org. For more information, visit www.MetrolinaREIA.org.