The answer to this question depends on your entrance goal and exit strategy. I had a great chat with a fellow professional investor here in Memphis who is convinced that houses are not the lucrative market it once was. I agree that it is not what it once was. But the analogy that I like to use is this. The medical field is not what it used to be, right? Health insurance is squeezing doctors, more and more claims are denied by insurance. Health Insurance policys will now begin refusing to cover the cost of doctor negligence. This will certainly cause more doctors to leave the practice because those claims which were previously covered by the patients health insurance will now need to paid from the doctor's malpractice carrier exclusively. Does that mean that there will be fewer doctors and fewer medical procedures? Not at all. The industry will just have to be more careful and cost efficient resulting in a cost savings and fewer malpractice claims. By the same rationale, this downturn in the investing climate will mean that the weak investors will leave the market and giving a larger share to the true professionals. Every house on the market is a potential money maker. I was looking at certain listings that have been slashed in HALF IN 6 MONTHS. If these houses are even habitable, someone will live in them. If you could scoop up 10 houses for $15,000 each. Even if you had to spend $5000 to make them livable, then you would have $200,000 invested in 10 houses. I would expect the the payment on these properties to be around $1800 per month PITI. As people are forced out of ownership, they need rentals. You rent each house for $400 per month with a $400 deposit. $4000 per month income, $1800 per month expenses. That is what we need to look for. Find that house that in June of 2007 was listed for $60,000 now $30,000. Offer $15,000 and see what happens. It won't cost you a much to throw in that low bid. Let your tenants pay for these houses for you and you depreciate them gaining a tax advantage and building equity. Once rented you then offer a "portfolio" of 10 rented properties for $375,000 with tenants and leased to some other investor, realizing a $175,000 profit. I say buy, then sell, then run like hell.
Friday, February 15, 2008
Buy, Sell or Run Like Hell?
The answer to this question depends on your entrance goal and exit strategy. I had a great chat with a fellow professional investor here in Memphis who is convinced that houses are not the lucrative market it once was. I agree that it is not what it once was. But the analogy that I like to use is this. The medical field is not what it used to be, right? Health insurance is squeezing doctors, more and more claims are denied by insurance. Health Insurance policys will now begin refusing to cover the cost of doctor negligence. This will certainly cause more doctors to leave the practice because those claims which were previously covered by the patients health insurance will now need to paid from the doctor's malpractice carrier exclusively. Does that mean that there will be fewer doctors and fewer medical procedures? Not at all. The industry will just have to be more careful and cost efficient resulting in a cost savings and fewer malpractice claims. By the same rationale, this downturn in the investing climate will mean that the weak investors will leave the market and giving a larger share to the true professionals. Every house on the market is a potential money maker. I was looking at certain listings that have been slashed in HALF IN 6 MONTHS. If these houses are even habitable, someone will live in them. If you could scoop up 10 houses for $15,000 each. Even if you had to spend $5000 to make them livable, then you would have $200,000 invested in 10 houses. I would expect the the payment on these properties to be around $1800 per month PITI. As people are forced out of ownership, they need rentals. You rent each house for $400 per month with a $400 deposit. $4000 per month income, $1800 per month expenses. That is what we need to look for. Find that house that in June of 2007 was listed for $60,000 now $30,000. Offer $15,000 and see what happens. It won't cost you a much to throw in that low bid. Let your tenants pay for these houses for you and you depreciate them gaining a tax advantage and building equity. Once rented you then offer a "portfolio" of 10 rented properties for $375,000 with tenants and leased to some other investor, realizing a $175,000 profit. I say buy, then sell, then run like hell.
