JLS944:
When you say ‘only,’ you are boxing yourself into a mold and eliminating opportunities that might become available…in other words, no, I do not do L/P’s only. If I did, I would not have been able to do 400 transactions including cash deals, private investor funded deals, subject to deals, etc.
L/P’s, however, give you the opportunity to take over a piece of property for little or no cash and control it. In this market, however, I teach my students to be cautious and line up a tenant/buyer first so that you don’t end up paying on an empty home.
I’ve have much more profitable deals with ‘subject to’ however…many of which the seller paid me money to take over their ‘bad situation.’ If you know what you are doing, you can get a paycheck from the seller, then another from the buyer as a down payment, and another when the buyer refinances or defaults.
Lastly, the 44 cents reference was postage for a 1st class piece of mail (with your rent check enclosed). So…let’s say you live in Oklahoma City and the market is depressed. You look around and find that in Tulsa (a short couple hours of driving away) they are building a new auto manufacturing plant for a billion dollars and they have numerous other big employers. The economy might be smaller there but it is stable (I’m only using Okla City and Tulsa as an arbitrary example as I have not researched those markets…just an example) due to the many large employers or large new factories. You can find lower cost deals there, buy them, rent them, manage them, and receive your checks (either direct from tenant/buyer or from a property manager) for 44 cents, to deliver those income checks to you. In other words, you can invest anywhere and receive a check…find the areas near you city if you have a depressed market and go invest (for now) where there is a viable market.
When I coach my students for R.E. Investing, it is important to know what to do as well as what not to do!! I recently saved one of my students in N.Y. from 2 terrible choices he wanted to make on deals he brought to me. I convinced him to walk away. This saved him $40k in deposits, aggrevation, and save his credit from being damaged. Keep your greed out of deals and get another opinion from someone who is well experienced. This will hedge your bets on R.E. and allow you to shorten your learning curves to make profits quicker in this crazy business.
Hope this helps.
Rob in Atlanta
Real Estate Investment Coach