From time to time I see the “What would you do if someone gave you $100,000 or $1,000,000?” posts here. I think they are a good way to get insight into how other investors move money around. I also think it would be valuable if we explained what we would do with $5,000 or $10,000 of HARD EARNED MONEY. This is money that a person may have worked for years to save. What would you do with it?
I’ll start…
What I did was FIND PROPERTY. I was a contractor at the time (1980’s) and spent money every month advertising for my business. It consistantly brought in good leads. I decided to run a small ad looking to buy houses that needed work. The first deal I ever did was a straight option. I learned about these from a seasoned investor. My risk was very low, ($1000) which was good, because I didn’t want to borrow money to buy a house I wasn’t POSITIVE I could sell.
I received a call from an elderly lady whose house needed various repairs and updates. She thought a realtor wouldn’t be interested because of that. We agreed that she would give me 30 days to bring in a buyer and for that I would give her $1000 that day if she signed an option agreement. If I didn’t have a buyer in 30 days she was on her own to do what she wanted. The home was a 3 bed ranch. At the time these houses were selling for $50,000, she wanted $25,000. I paid her $1000 for the option and brought in a buyer who was looking for a rental property. He agreed to buy it for $38,000. I simply assigned my $25,000 option to him at my attorneys office and made $13,000 on my $1000 investment and it was all done in 10 days!
I found another one 6 months later and made $10,000 the same way. I was not living on this money so it all got put in the bank. 2 deals and now I had enough to actually BUY my first home outright with OTHER PEOPLES MONEY!
I found a 3 bed Cape. Purchased for $22,000, I put $3000 into it and sold it for $55,000. Never looked back after that.
Funny how banks LOVE folks who regularly make 5 figure deposits! I sat down with a small local banker and laid out my previous investments. I think what really impressed him was the fact that I HAD NOT spent a penny of that money. I just kept rolling it over. He started me out with a $35,000 line of credit. Within 12 months that was doubled, then doubled again.
Still with that bank (and others) for over 20 years. My line of credit is a lot higher these days. I own a nice portfolio of commercial real estate, and still buy and sell houses. I got out of the residential rental business in 2003-05. Just got tired of the never ending BS.
Even in this market I can buy and sell houses. Sold one this week, 11 days on the market and 2 back up offers. Came on the market $30,000 UNDER comps, still made $70,000 on a $110,000 investment. In this type of market PRICE is the ONLY thing that gets people’s attention. If you price it well BELOW comps in a neighborhood it will go. I want to be THE LOWEST priced home in that market when it goes on MLS. IN order to do this you need to buy at HUGE discounts and be smart about where you spend your money getting the home ready to sell. There is SO MUCH inventory out there that I walk away if I can’t steal it.
It can be done.
FIND THE DEAL AND THE MONEY WILL FOLLOW!!