How to GET a Much Better Return than the Bank Gives You for Your Money

It’s no secret banks aren’t giving very much for returns on your money these days, but the truth of the matter is your money is “pretty” safe by being federally insured and not putting it at risk.

Now, you could “invest” it in many different things and try to make an above average return on your money, but if you’re like me and feeling a bit skeptical with what’s going on, and aren’t looking to let someone else take your money and tell you “it’s just the risk you take when you invest” :flush It’s true, there is risk, but why is it that the odds seem to always be in my favor of losing money? Of course there are many variables to this, but as Rookie has said “don’t bet money you can’t afford to lose” True words to the wise.

So what’s the alternative if you can’t invest in RE due to lack of big money and have little experience? Well, it’s the simplest form of making money and people have been doing it since the dawn of time…buying low and and selling higher. With the advent of the internet, and more specifically craigslist and ebay, you can can some times DOUBLE your money once you get good at determining what the market will pay for an item. It is down right simple Econ 101 supply and demand.

Now, in all fairness fdjake mentioned a bit about this method to hoosier in a recent post, but I wanted to expand on this a bit more because I agree with him this is a fantastic way of building up in doing RE flipping and making some fast, good money IF you are willing to put some effort in to it. You won’t get rich doing smaller items, but you will learn so much about a seller’s mentality, a buyer’s mentality, negotiating, establishing value and even some good marketing lessons. And the beautiful part about it is, you will see returns on your money that puts to shame what you will make with just having it sit in a savings account.

My favorite items to buy and sell is laptops. The reason is, most people don’t know how to fix the issues and I can fix them pretty easily and sell them on the hungry buyers looking for a slight discount over new models.

But it’s not the only thing you can do it with, you can buy/sell furniture, tools, equipment, cars, boats, big and small seasonal items, musical equipment, exercising equipment (think of all those new years resolutions) and on and on. Where else can you make up to 50% or more on your money in a matter of days? Ask your banker if he can match that and see how hard he’ll laugh while almost choking on that super sized meat ball grinder he’s trying to swallow. Good luck Kemo Sabe!

With online tools such as ebay, it’s never been easier to gauge the demand in a market place and getting the item for the right price that makes you money!!

Now go laugh at your banker while eating your sub and don’t choke on it. :biggrin

Very good post.

I actually kind of did what your talking about right here.

There was a guy in my town that I know that bought a really good guitar a few years ago. I noticed he hadnt played this $900 guitar (what they sell for) in a long time because I noticed it never moved.

Since this guy was desperate for college money, I offered to buy his guitar for $400 RIGHT NOW, cash in my wallet. He was hesitant but ended up agreeing. 2 days later I go to the local music center and traded it in for $700.

So… on a $400 dollar investment… I made $300. Honestly, I kind of wish I kept the guitar though because I really hate my little $350 dollar guitar, and want another one. :flush

Now… If I could do something like this (houses) and play with BIGGER numbers… ide be rollin’

While I agree, the money your making is chump change. Wouldn’t your time be better spent buying RE to resell? If you don’t have the $$$$, well get the required deposit by working your as## off at your day job and eating taco bell every night until you have a few thousand. At least that is what I did.

REIER, This is one of the top ten posts I’ve read on this site. :beer

Think about what REIER has said here…

A BANK currently pays about 2% interest on a 3 YEAR C/D…THREE YEARS!!! :shocked :shocked

So if you had say $100,000 sitting there ROTTING in their bank your make a WHOPPING $2000!!

Or…

You could BUY a Motorcycle, Car, Boat, Motorhome or any other item for say $2000 and EASILY turn that money into ANOTHER $2000 on a WEEKEND. Do that every other month or MORE, and your sitting on REAL MONEY…And you LEARNED something NO ONE teaches you in any college coarse on EARTH…How to take ONE DOLLAR and turn it into TWO!!!

The Value of LEARNING to do this is PRICELESS…You’ll use these skills everyday in real estate investing and you can STILL make yourself and extra $20K/year just having FUN. I buy and sell EVERYTHING…Boats, Cars, Motor homes, Furniture, collectables, ANYTHING people have…
Last week while looking at a property I was standing in a bedroom with the owner. The house had been vacated and on the floor was a Vintage Wilson A2000 baseball glove in PERFECT CONDITION…I picked it up off the floor and asked the owner if she wanted it…She asked if I could get rid of “this junk” for her… I grabbed the glove, some newspapers and put everything in a trash bag and threw it in the back of my truck. She thanked me and I took that Vintage Wilson A2000 home, put in on EBAY and sold it for $200.

How did I know that glove was worth money???

When I was 14 I purchased a brand new Made in America Wilson A2000 from a local sporting goods store. I put $20 down on it and WALKED 3 miles every week to add another $20 to the lay away until I had paid the $60 the glove cost. 30 years later those gloves are BIG TIME Collectable…I still have my original… One night I started looking at them on Ebay and was blown away by their now $200+ price tags.

Would YOU pass by $200 if it was laying on the floor???

There’s MONEY everywhere in this Country…Most people are just too LAZY to pick it up!!!

John,

Yes I agree with everything you said, the money is chump change in comparison to RE. RE is the the big leagues, it’s where you will get wealthy IF done correctly. But RE, when starting out, is much more risky. Sure you get a property to wholesale to another investor, but what if you can’t close on it with the flaky investor? (lots of those around these days.) Then you are stuck with a property you have to make good on and go find another investor. Now, what if you don’t have the cash to make good on the deal while you find another investor and on top of it, you were using transactional funding to flip the deal with? You’re not going to be able to close on it, while potentially losing a good deal and not looking good. This happens to new and even experienced investors more than one would think. Of course the experienced investor can easily over come this, the new guy is going to look bad and could possibly even get sued.

The method I outlined is more of the beginning rather than the end goal. RE is the end goal, that’s where you can make life changing $$$$$ :beer

Nice job hoosier, why not just do it again? What you just did can be done over and over. Just think, that car you may need could be paid for by spending a little time buying low and selling higher. After some time doing this, RE will look much easier and you will be much more confident, you could easily become Hoosier THE RE Pimp. LOL

REIER, This is one of the top ten posts I've read on this site.

Thanks for the kind words FDjake, but I can easily pick out ten of your posts that have had an impact on my thinking. :beer I’m just trying to give back what’s worked for me and it just may help out someone else who needs a little push in the right direction.

A BANK currently pays about 2% interest on a 3 YEAR C/D.......THREE YEARS!!! Shocked Shocked

So if you had say $100,000 sitting there ROTTING in their bank your make a WHOPPING $2000!!

Or…

You could BUY a Motorcycle, Car, Boat, Motorhome or any other item for say $2000 and EASILY turn that money into ANOTHER $2000 on a WEEKEND. Do that every other month or MORE, and your sitting on REAL MONEY…And you LEARNED something NO ONE teaches you in any college coarse on EARTH…How to take ONE DOLLAR and turn it into TWO!!!

This is exactly my point. Make an extra few grand here and there, while learning valuable skills that will help you the rest of your life. I’m all for multiple streams of income.

By the way, three years ago I saw your post about every beginning investor should save 30k before thinking of trying RE. Well, I was one of the guys that decided to try that challenge. I had already done RE and made money in other ways, but I wanted to see if I could do it. I decided to save as much as I could from JUST my job’s salary, no other income streams. I have to tell you it was harder than I had expected and it took me a bit over 2 years to do it. Ever since then, my entire outlook on money changed. I’ve used that money to make more money and I still have it. Having multiple ways of making money just makes it so much easier than trying to save up from just one. Thank you sir for that great lesson. :beer

Last week while looking at a property I was standing in a bedroom with the owner. The house had been vacated and on the floor was a Vintage Wilson A2000 baseball glove in PERFECT CONDITION...I picked it up off the floor and asked the owner if she wanted it....She asked if I could get rid of "this junk" for her... I grabbed the glove, some newspapers and put everything in a trash bag and threw it in the back of my truck. She thanked me and I took that Vintage Wilson A2000 home, put in on EBAY and sold it for $200.

How did I know that glove was worth money???

When I was 14 I purchased a brand new Made in America Wilson A2000 from a local sporting goods store. I put $20 down on it and WALKED 3 miles every week to add another $20 to the lay away until I had paid the $60 the glove cost. 30 years later those gloves are BIG TIME Collectable…I still have my original… One night I started looking at them on Ebay and was blown away by their now $200+ price tags.

Would YOU pass by $200 if it was laying on the floor???

Nice score and that’s exactly my point…it’s money sitting there for someone to pick up. 200 bucks isn’t much in the grand scheme of things, but I bet for most people that money can come in handy. How about using it to take your family out to dinner? How about using it to buy your kid a nice birthday present? How about picking up tickets for a concert, or a baseball game? That little 200 bucks can make a difference for many people. But the most important thing is, your eyes start seeing and your mind starts believing and that is where ideas come from.

There's MONEY everywhere in this Country....Most people are just too LAZY to pick it up!!!

Man, truer words have never been spoken. It is AMAZING how many opportunities are out there. Even with all the political BS we have going in, this is STILL the best country in-the-world to make $$ and have a great life!!

My neighbor 3 doors down (I’d never met) had a sofa, love seat and 3 tables outside on the curb a few Saturday’s ago. I pulled up nextto them and looked at them. They seemed too nice to be trash so I walked away. As I turned I heard “You can have them if you want them…free” from inside the house. I met my neighbor who said they just received new furniture that day and this was “junk”.

I pushed the sofas to my house and another neighbor helped me with a cool opening line: “I can’t watch a man struggle. I’ll help.” Once in the garage I set up the furniture like a living room and wiped off the tables. I used some reddish cherry stain and wiped it on. I never even vaccines the dog hair off the sofas. I took 4 pictures and put it on craigslist. I went to Australia for a few weeks and when I returned I had 3 messages from one lady. She bought it all for $400.

I saw my neighbor again, waived and smiled. Thanks for the “junk”. I made $400 with 10 minutes of labor and one bloodied toe nail (dropped it on my foot). The best part is I “helped” her out by removing her problem. She was thrilled and so was I. Win win.

I had a similar experience several years ago. My father-in-law had 2 or 3 pin ball machines and 2 old video game machines in his basement and he called to ask if I would help him get them out and to the dump. I convinced him to wait a few days. Called several ads in the local paper from dealers selling pin ball machines and had one there the next day. He removed all the machines and paid us $1200 for his efforts.

You have to invest within your comfort level,and your financial means…Laptops,RE,cars…Whatever your area of expertise is stick to it…

2011 my portfolio is up around %16-%18…
2010 my portfolio was up around %16…

My portfolio consists of Hard Money loans,Business notes,RE,default business…

16% TO 18% for the amount of money you have in play is impressive. To some extent, the game gets harder as the numbers get larger. It becomes a double edged sword…Preserving what is already there along with growing it in a limited or controlled risk manner.

Hard money is a beautiful business these days.

I’ve been doing a lot of lending to contractors. I get an upfront “fee” for funding the loan. Paid to me by the contractor the day of the closing. This ensures two things…Number one, a built in profit for me on DAY ONE…and second, the contractor has some “skin” in the game. I also get a spilt of the profit on the back end when the property is sold. The benefit for the contractor is his outlay is a FRACTION of the total investment. So his ROI is high for the finished deal. And for me, I make money on a property literally for doing NOTHING, Just going to the closing. I have penalty clauses in the loan agreement that must be paid from an escrow account (funded with the contractors money) if the contractor misses deadlines, My attorney cuts me a check from the escrow account as a penalty. If the deadlines are met, his money is returned upon completion of the project. I’m also in the first position on the loan.
If he drops dead or takes off with a stripper…I own the deal, the property, and the PROFITS! The penalty/escrow account REALLY motivates your “partner.”

The KEY to these deals is having excellent legal advice/contracts, making SURE there’s plenty of profit on the back end of the deal and hand picking your contractor/borrowers. These things are CASH COWS.

fdjake,
That is a good plan considering your background in construction and you have the ability to follow these projects through to the end…Oh and by the way that firm you asked me about never responded to one of my associates continuous emails…

Yes being a private lender affords me many more rights than an institutional lender…Dodd-Frank exempts me as well…But all the same we make sure to provide tremendous documentation prior to the loan funding and we make sure to have the client represented and they sign a Truth in Lending document…

Hard Money is only %1 of all mortgages being funded currently but all the same its ramapant with fraud…Need to screen potential borrowers and also do history searches on how the title changed hands prior to your funding…

Business Notes are a huge cash cow also…I run ads for owner operators and the turn out is immense considering the unemployment rate…I put these people into business and they have notes for 10-15 years…This has been %30 of my 2011 salary…I heavily screen these people also because as any business owner knows you cant be lazy…If you are a backyard,ballgame and BBQ type guy I dont want you…I want the workaholic ex route driver…

I have also expanded my owner finance RE business…What happens with Hard Money is that the borrowers refinance a few times before they default…This makes for enormous profits, after they default I market the property with owner financing…Currently I have 4 properties with owner financing…One large commerical property in North Miami Beach on West Dixie ,a high end residential home in an affluent neighborhood in Queens NY…2 other income properties in NY as well…All of these mortgages are at %11.99 with short term calls …Like 36 months or less…Dont forget that on top of the mortgage profit I am capturing the arbitrage between the remaining equity in the property and what I can sell it for…

Using your own funds vs borrowing money plays a huge benefit with this business…It also eliminates a tremendous amount of competition…

I have done about 30-33 Hard Money loans (started in 2008) and about 41 business note deals since 2006…Its turned out to be a big business…The reason for the success of the lending business is making sure you are getting a ton of skin in the game…Anyone that wants to borrow on ARV ,the email gets deleted…I like free and clear cash out refinances or purchases where the borrower puts %50 into the purchase…Yes they are rare but you get a few where you can put a decent amount of money to work in the loan…

My ROI is much higher than the %16-%18 I quoted but my lending business is what I mean…The business note business the returns can be off the charts…You can routinely make %30 annually on the business notes…I caution anyone to do it unless you have extensive knowledge of the business.

Fantastic stuff FDjake and Rookie, thanks for sharing.

These aren’t the kind of posts you just glance over and forget about in a few days, these are posts you print out or save to look at frequently.

What you guys laid out here is the true definition of making your money work for you!! :beer

Hi,

I am glad to see that others are making money during these trying economic times!


        GR

[i]Hi,

I am glad to see that others are making money during these trying economic times!


        GR[/i]

GR,
I enjoy reading your posts and value your insight…Are you getting the same feeling as me that the economic climate is the new normal for a while…?

I know its taboo to say but if we as business men and women are not in the default business where is the money being made during these times…Nobody wants to have egg on their face but I just dont see this country coming out of this mess anytime soon…

I follow car prices pretty closely and it paid off.

Wednesday: met a seller of a 2002 Black Black leather Jetta Auto with 98k and a major engine problem.
Thursday : paid $1,000
Saturday: Car was delivered on a flatbed to me courtesy of seller as part of deal
Sunday: Car was towed away by the new owner for $1,900.

I made $900 in a few hours and I never touched the car. Good old Craigslist.