Property purchase number 95

[Tim Hendricks]

Investment Info:

Single-family residence buy & hold investment in Clarksville.

Purchase price: $122,200
Cash invested: $3,440

Investor put up $21,000 for 20% annual cash on cash return, or $350 per month. I put up the remaining $3440 and receive $311 per month cash flow. Also received a $10,000 non refundable down payment from the lease/purchaser.

What made you interested in investing in this type of deal?

Cash flow primarily, and down payment money is a nice bonus.

How did you find this deal and how did you negotiate it?

MLS

How did you finance this deal?

Investor conventional financing.

How did you add value to the deal?

Knowledge of the area, what we could buy for, what we could lease for, lender who would do the deal with a qualified investor.

What was the outcome?

Typical of the last 94 deals.

Lessons learned? Challenges?

Just need more investors who can put up the credit statement. The properties are available if you know the numbers in a specific area.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I am a licensed real estate agent in Tennessee.
Lenders who will work with a well qualified investor should be easy to find.

[Tim Hendricks]

I have studied dozens of real estate training guru's material. Some works, and some sounds good in seminars and gets everybody hyped but doesn't work worth crap in the real world. So I got started and modified the plan as I went to meet current economic conditions, lending environments, and my preferences.

I hated all 30 jobs I ever had and just wanted enough passive income so that I did not need a job. I did not even want to do flips and make 30k and then the next week have zero income if I did not go back to work. So I decided to focus exclusively on cash flow. Over time I sold off some properties and made good capital gains. Also collect some money on down payments and late fees, but I do the deal based on the cash flow it will provide. Everything else is icing.

The overview is that I find a person with money to invest, I find a deal, sign a joint venture agreement giving me 50% ownership in the property and 100% control. I get the investor connected with the lender, the investor puts up a specific amount of money (depending on the price of the property) in return for a fixed cash on cash annual return, and then I manage it. My income will depend on how well I do my job of managing. The investor gets a check monthly even if the property is vacant. So I never have vacancies over 2 months. The next lessee down payment goes to me and covers my out of pocket for the vacancies. I do not need a property management license since I am part owner.

We do a long term lease with option to purchase. I get to keep all of the non refundable down payment from the Lessee, usually between $3,000 and $10,000, I get whatever cash flow is left over after the investor is paid, I get any late fees collected, and I get the lions share of capital gains when we eventually sell.

In the long run I make more money than the investor, but they do not care because they are getting (depending on the deal) 15% or 20% cash on cash return on their money. They pay for no repairs, maintenance, or vacancies. We have handled 95 properties and every investor has been paid the agreed upon monthly payment for 20 years. I manage my money very conservatively so that I can take care of my investors first. That keeps them coming back and also providing referrals.

So that is my niche. Single family homes on lease option. I figure that if you can only do one thing, do it well. My passive income (takes about 10 hours a week to maintain) is north of 200K. It also goes through LLC's and C-Corps and gets expensed legally to minimize the tax implications.

If you get the knowledge, there are billions of dollars out there looking for a place to invest, but they do not have the knowledge and do not have the time to get it. So if you do not have money yourself, study until you know a good deal when you see it and then you can partner with the people with the money.

In baseball terms I consider myself a good T ball player. The professional investors who play in the big leagues do houses, condo's, flipping, wholesaling, commercial, retail, office, industrial, warehouse, vacation rentals, short term, AIRBNBs, event venue's, and a hundred other strategies. I just figured out how to hit a single every at bat off a tee.

How is that for a brain picking?