I remember years ago when I wanted to buy a house and get cash flow off of it, I had absolutely no idea where to start. I didn't know who to call or who to trust. I spent countless hours researching the internet and reading real estate books, but later on found out that you can't learn to swim by reading a book. So needless to say, I dove right in. I'm here to see if I can write enough blogs to help that somebody who was me 7 years ago. I sure as heck don't know everything, but I think I have enough knowledge to maybe help beginners to make a buck or two here and there.
I started a new company a few months ago with 2 partners. The goal of our company is to identify properties in the marketplace that would make a profit after acquiring it, putting money to fix it up and reselling it. Most people will call this "flipping houses" which I guess is OK, but the way I like to look at it is the following; We try to use our money to buy properties that 99% of the population are terrified of, spend the time, energy and money to bring it back to life, and sell it at an affordable price for a family to move into. Yes, we make a profit, but most importantly, we've just helped a new family obtain what most people would call the biggest investment of their lives. Personally, I don't think your own home should be your biggest investment, but that is a different story.
Aside from the personal investing that I've done in the past, as a company, we just closed our first transaction a few months ago. (You'll notice that I will purposely not go into detail of the actual numbers, but I will do my best to give you clarification as to what kind of profits are possible.) We bought it at a really low price. We were lucky because this unit needed almost little to no work. We put no more than $400 into this property. That $400 went to a new light fixture in the dining room, both master bedroom closets, shower curtains, cleaning and professional photography. Not much right? All that took about a week to complete. We decided to roll how banks do and put it back on the market at such a low price that it would cause a bidding war. It worked like a charm. We ended up selling it for 17% OVER the asking price made a return of 28%+. Not too shabby compared to the what the bank is giving you to save your money with them right? For those who don't see the benefit of those numbers, let me give you a quick rundown.
Assume you have $10,000 to invest. You either do a deal like I described above or you put it into an awesome blossom CD account your bank is offering you for a 2% return.
$10,000 @ 2% for 12 months = $200.
That means you'd have to leave your money with your bank in the CD account for 12 months in order to make $200. If you want to make 28% just like in the scenario I just wrote above, you'd have to let your money sit there for about 14 years. Do you want to wait 14 years to make $2,800 bucks? I didn't think so!
Hopefully this initial blog entry wasn't too much for you to handle. One of our bigger projects right now is a horrible house that's costing us almost $20,000 to fix which I'll update later on when I have the time. It was involved in a flood, vandalized and sat vacant for almost 2 years - blah!
