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Posted about 9 years ago

One of These Deals is Not Like the Other. Three will Make You Rich!


Normal 1450315194 100 Million Dollars

One of These Deals is Not Like the Other.  

Three will Make You Rich. One Makes You Cry.

Property Investment is not gambling. Set yourself up to know the outcome before you buy.

I’ve done all four.

1) Only you know about this apartment/land deal. 

Imagine this: there is an apartment building close to where you live. It’s for sale and no one knows about the deal except you. It’s for sale unit by unit and each unit costs $1,000 to buy. You don’t have to buy them all at once. Whenever you have the cash you go to the owner and he sells you a unit. All the units are rented for $500.00 a month to the best tenants in the world. They never complain or need anything. They are on auto-pay so the money is deposited every single month. In fact they don’t even live there. You get your investment back after two months and all the future payments are profit.

Eventually you buy all the units. You have a ton of cash coming in every month and quit your job. You spend your days looking for another deal like that one.

Now imagine you are buying unwanted rural vacant land, not apartment units but the deal is exactly the same and there are limitless parcels available. You buy 15,000 of them.

2) Super Great Apartment Note Deal: You go on google and search for something like “Real Estate Notes for sale.” You find a few sites where people are selling the paper associated with a property. Most are junk but you are still learning so you call a few sellers. Notes = mortgages.

The deal you called on was sold last week. But the seller informs you that he just got a deal in and he would like to flip it quick so he doesn’t have to go through the hassle of investigating the property and posting it on the internet etc. (which can take weeks, seriously).

It’s a non performing note on an eight unit apartment building in Southern California. The property is worth about $325,000 or so he says. He bought the note from a huge group of non performing mortgages that were foreclosed on by a mega bank. And step by step they were put in groups until the groups got smaller and smaller and this one reached him. You can get the note for $85,000 cash if you close by next Thursday. So you say “yes” pending your review (you have no idea what you are doing, but you say yes anyway).

Between that day and the closing date, you find out the property is fantastic inside and out. It’s fully occupied and the tenants “just don’t know where to send the rent each month.” The former owner just went dark on them and they want to pay back rent. In reality, the owner passed away with no heirs.

You find a partner who knows about these types of deals, it passes his tests and you close the deal together (40/60).

You own 40% of a $325,000 cash flowing asset with an experienced partner in less than a few weeks. You created a quarter of a million dollars in equity by signing your name a few times with no cash in the deal and you are beginning to get rent checks on the 15th of the month for about $3,500.00.

All this is because your talent is locating undervalued real estate. Not being a real estate investor or landlord.


3) Foreclose able Tax Lien (what the heck is that?):

You go to taxsalelists.com (I have no affiliation) and start poking around at tax liens. You don’t really know what they are but you’ve heard good things. You buy a few used books on the topic in Amazon. You find out that when a person doesn’t pay their taxes (usually for years) the county issues a tax lien. What the heck is that? It’s a bill that needs to get paid by the owner or eventually the county will foreclose on the property and the owners will lose it. Well why can I buy one then? I have nothing to do with the property.

The tax is owed to the county. They just want their money. The county does not care who pays it. You can buy the lien(s) which pay the tax amount directly to the county and they are happy because they got their money.

Time goes by…

The property owner has two choices. 1) Pay you (you own the lien) and continue to own the real estate or 2) walk away from owning the property in which case, you own it for the amount of back taxes plus the costs associated these types of transactions.

So you get to thinking… What if you contact the owner of this property by mail long before this mess starts say something like this: “You’re headed for a silly crazy paperwork mess. How about I pay you $1,000 next week (I’ll send a notary over to your house with a cashier’s check on Thursday at 6:30 pm) and this whole thing will disappear.” Instead of paying to get out of this, you’re going to get paid on Thursday.

Most people would rather receive a check than pay a check for something they don’t want anymore.

So you’re all in for $3,500. $1,000 to the seller, $2,500 in back taxes including lien fees and interest and other costs.

You own 186 - 1.25 acre lots in Northern Arizona free and clear worth about 3,000 each if you sell them on the internet on landandfarm.com (no affiliation) or some site like that. You clear more than a half a million dollars on the deal in about six months.

All this is because your talent is locating undervalued real estate. Not being a real estate investor or landlord.


4) House for Sale in the MLS. Flip it and collect.

You are completely new to real estate investment. You hate your job and you’re in a real hurry to find another source of income so you don’t have to go there anymore. You’re parents made several hundred thousand dollars on your childhood home when they sold it. Problem was, they owned it for 25 years. You need to find one and buy it and then sell it fast for more.

You call your real estate agent friend and she says there’s thousands of properties for sale. All you have to do is find the best one. Then she will do the rest while you take it easy.

You find a good property, get a $800 a month loan. With insurance and other costs like management fees, it totals a thousand dollars a month. Yikes.

By the time you are ready to rent the house the real estate agents, their brokers, the mortgage broker and mortgage company, the inspector, the insurance agent, the management company and the contractors have all make their money. You have made nothing. Crickets.

You rent it out for $1,200 a month. Not bad. You get $200 a month. After six months the tenant stops paying and vacates the property six months later, trashed. You find another tenant and a different version of the same thing happens.

Wait a minute, you want to collect money, not pay it. Why are all these people who own real estate driving Porsches, and you’re still in the crummy job?

Your talent in this deal was not locating undervalued real estate. It was being a real estate investor or landlord in the SFR niche.

In the same deal, if you skip the MLS and send out a well planned and executed direct mail campaign to owners who don’t want their property any longer, buy it with a flipper or rehabber for cash, you don’t get stung.

When you have tons of money coming in, you pay cash for rental property if you are still interested in that at all (you won’t be).

I’ve done all of these deals.

The first one is the most consistent and yields the highest returns year after year after year.



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