Cash Flow

[N/A N/A]

Hi- Just wanted know what investors are experiencing in terms of cash flow while using 50% of gross rents. Are you TRULY finding properties that produce gross rents equal to 2% of the properties purchase price??? Does anyone have a minimum amount of cash flow they require for each new property??? And is anyone really buying below 70% of FMV without becoming a foreclosure expert??? Is this reality would love to hear from some seasoned vets, THANKS!!!!!!!!!!!!!!!!!!

Chaz...

[Frank Adams]

While I'll agree that in many (most) areas it's darn near impossible to get positive cash flow. There is one unalterable fact, even MikeOH cannot get PCF if he buys at "market".

Reread Mike's post about what may (or statistically may not) be Mike's next purchase. It's from a "tired" landlord. This is how you buy below market. If you see any of the following words; "owner motivated", "owner desperate", "must sell now", "price reduced", "price reduced-again", you may think you have found a potential below market deal. But the fact that you're reading those words means it's not going to be "below market".

However, the fact that these houses are being advertised means that by definition they are being sold "at market". While it may be at the lower end of "the market", it's still "market".

Deals are (almost) never found in "the market". They are found by you "creating the market". In your farm area there are people who meet all the criteria in the imaginary ads that I wrote above. But they're not advertising the fact. They are in "brain freeze" mode.

Brain freeze occurs when a normally ratonal person encounters a situation where he "knows" what he should do, he just can't because it's HIM.

Anyone who has ever been in sales of any kind knows that you can't sell anything to anyone unless the buyer recognizes that he has a problem that you can overcome.

I spent my career selling maintenance supplies to plants, factories, garages, anything that used nuts, bolts, electrical and hydraulic connectors etc. Because these are items that maintenance people use every day, everyone already had a supplier when I called on him. If everyone is already doing business with my competitior how did I survive?

I survived the same way that everyone who ever sold anything survived, by "implying", politely, that there were services and products that I could provide that my competitor couldn't. I had to point out to the customer that good as my competitor was (and trust me, they were all darn good), that sometime; "you've had it happen that......., haven't you?"

Find the people that have problems but have not yet had the fortitude to admit that problem to themselves. Show them that as "good" as their current situation is, you can make it better. You have to be in there "pitching" to the tired landlord, the owner facing forelcosure, the stale or expired listing that had an agent that could not recognize the probloms that are keeping the house from selling.

And by the way, you make sales by listening, not by talking. Ask open ended questions; "how has your overall experience as a landlord been". Then listen and let them ramble. Listen closely and they'll tell you where to go with your next question.

Then focus in on closing" "have you ever considered that your evenings could be better spent playing ball with your kids than playing landlord to a bunch of deadbeats who keep trashing the house you love so much?"

Then listen.

Then you have to sell them that you are the solution to the problem that they didn't even know they had; "I think I could come up with $10,000, and I'll do all of the cleaning, painting, landscaping and all the other stuff that the house looks like it'll need in the next two years, if you'll sell it to and let me pay your payments instead of you worrying about them".

Because by the time you're done listening to them you know all of what it needs now and is likely to need in the next few years and you know what kind of money is going to make them happy.

As usual, no short stories when I'm writing them.

all cash