Put Some Spice and Profit Into Your Real Estate Business
Add some "spice" and profit to your real estate business
I ran into a CTREIA member at the gym the other day. He has been investing
for 9 years and has 25 rental units. "John" told me that he is getting
frustrated because he is hardly making any money with his real estate. He is
getting "killed" with major increases with property taxes and water/sewer
bills.
If you are an experienced real estate investor who has been in the market for
a while, John's situation may ring true for you. How can you add some
"spice" to your real estate business?
First, I asked him some questions. Here are his concerns. He wants to:
Increase his cash flow
Buy more real estate but in his target area good areas
Quit his J.O.B.
Spend more time with his 2 year old daughter
I asked him a few more questions. And this is what we came up with this
challenge:
He really likes real estate and has made quite a bit of money in it.
o So he wants to get back into it.
But he does not have much cash.
o And banks won't lend to him because he has more than 4 mortgages.
So what would you do in his situation?
Upon further questioning, I discovered that he has some opportunities:
He owns a rental single family house free and clear. And... it was
appraised for $570,000 earlier this year.
He is actually cash flowing a "little" bit to the tune of 2 to 3000
per month that is an average of $30,000 per year! That is about half of
the median income in Connecticut and he does not work 40 hours a week to
earn that.
Plus he is getting incredible tax benefits from the depreciation of his
buildings. In fact, he does not have any federal taxes taken out of his
paycheck each week. He gets the full benefit of his salary.
Here's the plan:
Change your mindset: John discovered that he wasn't doing so badly
after all!
Determine your geographical area: Given current market prices, he can
invest in "better" areas and still have a positive cash flow
Market to the right people: who would be willing to hold the mortgage.
Did you know that 30% of properties are owned free-and-clear? And many more
have enough equity to make owner-financing workable?
Put a line of credit on the free-and-clear rental property and reinvest
that money in real estate
Get back into the real estate game by attending his real estate investor
association meetings. There he can meet potential partners, get re-motivated,
and get coaching in the current market strategies.
Find a mentor or coach who can hold him accountable for his progress as
well as hold a candle to the opportunities that are right in front of him
How about you? What is your current situation?
Even if you have negative equity or negative cash flow, you have
opportunities in front of you. How can you turn around your situation to
increase cash flow, equity, and long term wealth?
Put Some Spice and Profit Into Your Real Estate Business
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