Good Morning MONEYTALKS,
In re your post ( thanks for your previous posts, as well)
“I hope you do not mind if I ask you to explain in more detail, some of your statements and then compliment
others.”
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** we closed our first deal today,
Your comment: But if you buy right, you should be able to sell the next day (Including any buying & selling cost) and make something from the deal.
Answer: Yes, One lesson that is been firmly planted is that you do indeed make your money on the way in.
Although this triplex was bought for cash flow AND appreciation, we bought well below market AND well below sellers asking price.
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** and already stand to make ( hopefully) over 30% profit on the parcel.
Q- You used ALREADY and HOPEFULLY.
Which is it? Do your comps show that the 30% profit is there, if you sold today?
Or at some future date you hope to be able to sell at a 30% profit?
Answer: Glad you posed this one. I’ve heard some say that they harder AND smarter they work they luckier they get.
And, “You have to be in it, to win it”
We’d checked out several of the land properties in this developement from afar, only to see them sold. We were in our early learning stages then, so didn’t ‘jump’
The very same day we submitted out offer, the owner/ developers issued their new price sheet for the land, showing an increase of 8k for our piece. Having previously met with them was a great aid; they honored the old price. 2 days later, a nearly identical lot raised their asking price to 14 k over what we’d paid!
Using the developers ‘list price’, we could sell it tomorrow for a handsome net into pocket profit of over 22 %.
Not bad for a days work, but this was a cash deal, so we will wait up to a month to field offers.
And yes, we are a little guilty of being emotional with land. We buy land that we love ( and I must LOVE the price, too!! LOL ), seeking out the best available for the price in high demand areas. THIS one we’ll sell, for sure, but always feel an attachment. REALLY will be a fantastic homesite.
3 properties in 2 weeks is a darn good start, I agree, but we put a lot of time and research into them and had a lot of FUN so far, too!
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There is an interested buyer for the modular, but we would only make 2 or 3 thousand.
Q- Why only 2 or 3 thousand? What is determining this amount of gain?
Answer: Another buyer offfered asking price to the seller 2 days after they’d accepted our offer at $4700 less.
There is a comp ( a little larger, though ) just up the road asking 12k more than I am paying.
If I ask, (and get ) 8k over my price and factor in closing costs to buy and closing costs to sell, I’d net out appx. 3- 4 k. Again, not bad for a days (sic) work, but the area IS growing and I have several options open.
a) HUGE rental demand in the area; I’d cash flow about $130 per month initially.
b) Sell in 2 years for estimated net gain of 45-50 %.
b) Lease/ option the property and ’ be the bank’ would allow BETTER cash flow , better return on my investment.( but longer)and less headaches. I’ve not yet thouroughly studied this subject ,and even just heard of another technique called ’ land contracting’, that seemed to be a still BETTER way of proffiting for this poroperty.
Will research and seek counsel on this , but regardless will cash in whichever way we go.
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So, we will consider it, but will keep the two as rentals & for cash flow and resale within 3 years.
C- That a boy, 4 of 5 are self supporting units. Not a strain on your beginning budget. Does not have to be self supporting at first, but it helps. It still must have value over the debt and you must be able to service it.
Answer: Well, the wife and I are a good team and we have sufficient reserves and a good growth plan.
Part of the initial process involves having sufficient cash flow from our rentals to cover all the carrying costs for three other parcels of land that was our first ‘contract’ in May.( land is in now in final developement stages )
This was BEFORE I made a FULL committment to become educated about investing. These properties, too are ‘prime’ , and could be sold for a modest profit immediately, but as homes are built, as the ponds and parks are completed and the road paving is finished,
they will dramactically rise in value. Phase III is being plated now; a full 16- 18 months ahead of schedule.
We still plan to build here and sell the other lot(s)
If we find an exsiting home that we really like , we sell all three ( two are side by side corner lots)
Well, much of your ’ MONEYTALKS’ “basic qualifier”’ stuff below is already ingrained; I’ve still much to learn and new techiques to try and develop.
Thanks again for all the thoughful insight
"Apply, the basic qualifiers and you can grow as fast as you want.
- Buy something that others want / Do not buy, what you can not sell.
*Equitable value from day one. Before the purchase, apply the deal to your financial statement. Did your financial picture improve?
*Your ability to service the debt is not dependant on rental income. / If the inflow of rents stopped, you could still service the debt.
*Leave a way out of the contract, incase new information surfaces before you close.
*Never deposit more than you can afford to lose. ( I never did put down more than a $100 on the first 80 homes that I bought ) Obviously, I have to put up more for the properties that I do now. (On a $600K purchase / $3 to 10K usually. They often want more but, I do not care, I’m the one writing the offers.
*Anything that is not in writing, isn’t anything.
*Insist on inspecting everything, before closing. ( property, leases, warranties, etc.)
*Sellers are liars. ( “That is my final counter offer”, is one of the common ones )
*I think, always negotiate more than one deal at a time. Then choose the best.
*The deal of a life time is available everyday, it is up to you to find it.
*Do not be bashful with your offers. You can not buy 30% below value or better, if you do not start lower.
I do not care how much you are asking, it does not play into my equation.
(Value – desired profits, expenses, negotiation room and then a little lower in case you were real desperate or do not know the value )
I like submitting offers, through others, I do not like to hear whining. Just give me the facts. I know that I am only going to get a small percentage of my offers accepted and I do not care. I ask enough people, I will hit one out of the field. It is simple, I ask 10 times as often and I get ten times more deals. I am a professional offer maker.