Staying Creative when investing in Real Estate

[Angie Castro]

This is probably one of the hardest times to invest in real estate. We need to get quite creative in order to continue investing and have cash flow. The rates and home prices make it very difficult to not have negative cash flow. Right now is when we must be most creative! Making good deals happen requires thinking outside of the box. Here are some examples:

Client A: Max purchased a house for $389K, and it had 2 acres of land in the heart of Belmont. He bought the house at a time when rates had peaked and the rent would not cover the mortgage. We worked to put together a development deal for a local developer. According to the UDO, we should be able to fit 10 houses on the property, and they could each sell for $1.1 million. Now, we know that just because the UDOs say so doesn't necessarily mean the city will approve it. We are estimating we could build at least six houses for a total project value of $6.6 million. Max is talking with a developer who is looking to purchase it for $600k, less than a year after he bought it for $389k. We had to get creative in order to profit because simple cash flow no longer applies to RE investing. When Max purchased this property, it was with the idea of keeping it for longer and having it rented. After a bad tenant, he has decided to sell sooner and will still make a great profit.

Client B: Rob is currently under contract for a house for his little sister to live in. The house comes with a furnished ADU that rents for an average of $2,000 monthly on Airbnb. The total mortgage will be around $3,200ish. The rent for the single-family home would be $2,500 if the sister wouldn't live there. Between the Airbnb and the house, the potential rental could be $4,500. This is a great cash flow for our local market, and we are using a mix of STR and long-term rental to achieve the best results. Both houses will come fully furnished! The sister will rent out the rooms to help and her cost of living will be close to none!

It would be impossible to say that you can always get good deals. They come as they come, but it takes consistent searching and creativity! Stay creative!