All Forum Posts by: Preston C.

I had a guy tell me the other day that Contract for Deed was the way to go with properties over renting. Keep in mind I am from a small town where property values average around $50,000 or so. He said you can get a $10,000 down payment this way and if they miss a payment on time or violate the contract in any way by not paying, you can kick them out and keep the $10,000 they paid for down payment and do it again with the next person. Seemed to me that there may be legal issues with doing this, not to mention it just seems very unethical, and outrageous that someone would be willing to agree to a deal like that anyways on a $20-30k house.

Any ideas on that strategy or how that would work?

Thanks for the response @Barry H.. I know this is a late reply but I am now about 4 months into renting my first property, and everything has been going well. Tenants drop a check off at my bank every first of the month, sometimes a day early. I am now looking at possibly taking out a HELOC on the property and trying to learn more about how I can begin to finance more deals.

There is definitely an overwhelming amount of information on real estate investing. I've been looking at different ways of making deals with properties (renting, flipping, lease options, contract for deed, seller financing, etc.) trying to evaluate which is the best route to take with properties. From what I've learned it really depends on the area you're in and what you like to do. With my particular deal, after insurance and taxes, assuming minimal major repairs, I can come out with about $6700 a year with very little work. If I were to flip it, which I am still considering after the year lease (my tenants say they are looking at possibly buying), I could probably sell the property for somewhere in the 50-60k range for about $20-30K profit.

Ultimately, I rented the property so I could recover some of the cash that I invested into the property quickly. I am currently still trying to decide whether or not it would be better to sell after a year of renting, or just take out a HELOC to fund another property. If I sold, then found another great deal, I think that could be better since I would then have a more valuable property for the HELOC, which could fund more deals. Either way, I am still in the process of learning and trying to figure out what strategy would be best for me. I know a lot of money can be made through leveraging with mortgages, but I just don't know that all of the extra delays and paperwork would be worth it. I like the idea of private financing and that might be something that I would like to get involved in after I gain more experience in finding deals. But for right now, I am thinking that I can flip my first property after a year, and try to build something through all equity while I learn the business.

Hi, just joined the site. Been reading through some of the forums here and looks like there is a lot to learn. A post about ROI earned on rental properties recently caught my eye, so I spent some time reading through it and decided to join. This one >>>https://www.biggerpockets.com/forums/52/topics/143...

After reading it, it made me feel pretty good about a deal I recently came across.

So a little introduction, I'm from a small town in Kansas and also a full time MBA student. I just recently finished up my first rental property and found my first tenants that are set to move in next week. I've had a lot of questions through the process, so it would have been nice to find this site sooner. 

My family has investments in rental property, so I've always figured I would get into it too at some point. So, I found a property that had been foreclosed on last September that needed some work. Pretty solid house overall, about 1050 sq. ft., just needed a new furnace and AC, water heater, new floors, a lot of painting and touch up work, and several other minor things. It may not sound like much work, but as a full time student, it was a lot to handle on weekends off and on.

So I purchased the property with cash at $23,000. It had sold previously for $85,500 and before that $63,000. My dad actually had a house in the same town that was very similar in size that he rented for $650/mo, so I figured I could rent this for about the same. I just recently showed the house to some people and found a good applicant that is set to sign a contract soon and move in for $650/mo. Renovations on the property totaled my investment to roughly $28,000, so after deducting taxes, I'm looking at about a 24% return on an all equity purchase (I haven't yet gotten insurance on the property, so that isn't figured in). I actually bounced back and forth on just flipping the property before I rented it.

I never really looked into doing a leveraged deal, mostly because I didn't want to deal with a bank for a mortgage since I was able to pay cash. I figured I'd gotten a good deal, but didn't realize til reading through this forum how good it was, as a lot of posters aren't even getting that return with a leveraged investment.

I was just curious what you guys thought about it. And I know every market is different, but what kind of ROIs are you all looking at with all equity purchases? Or is it even worth doing all equity purchases, if you could receive a higher ROI with a mortgage? Also, what kinds of things do you guys look at when deciding whether to flip or rent (ROI, long-term vs short-term profit)?