Tips and Standards for Real Estate Investing

[moellerryan 0]

First and Foremost when investing in real estate, you must find great deals. Not good deals, great deals with plenty of equity, cashflow and multiple exit strategies. These types of deals can withstand worst case scenarios such as the bust recently where home values dropped approximately 40% in some areas and financing became extremely tight.

 

Industry Standards

1. Max 70% - Total cost of purchase, fees and any repairs must be a maximum of 70% of the value of the property
   
2. Rents are 1% of purchase - A property that rents for $1000/mth should be purchased for no more then $100,000 or rents are 1% of purchase
   
3. Multiple exit strategies - With equity, cashflow and flexible financing you can sell at retail, sell to an investor, wholesale, seller finance a sale, lease option, rent and hold, refinance, possibly sell the note, sell the entity holding title to the property, quick claim deed the property to transfer title, etc, etc.
   

Real Return Real Estate™ Criteria

1. Approx 50% LTV - we buy properties fully remodeled at half the value
   
2. Rents are 1.5-3% of purchase - We usually pay around $50,000 for homes that rent for $1000, sometimes rents are 3% of purchase and twice Payment+Tax+Insurance. How do you like that positive cashflow!?
   
3. Multiple exit strategies - with 50% equity, tremendous cashflow and flexible financing we have unlimited options to make our deals successful and can withstand worst case scenarios. We only do deals we are certain are ‘SLAM DUNK’ or ‘HOME RUN’ deals.
   

[jhanson8 0]

Great tips and strategies! I never knew success in real estate investing was all about finding completely unrealistic deals! The market must be full of people with tons of equity begging to sell their home for pennies on the dollar! Hmmm...I'll bet it gets lonely there in your own little world...

[moellerryan 0]

Great tips and strategies! I never knew success in real estate investing was all about finding completely unrealistic deals! The market must be full of people with tons of equity begging to sell their home for pennies on the dollar! Hmmm...I'll bet it gets lonely there in your own little world...

 

 

Thanks for the comment JHanson. I've been getting all positive feedback on all my articles and have been dying for someone to step up and be my nemisis. Maybe you? Based on your response, I initially assumed you live in CA and I was correct. Maybe even you would be surprised to find some great LTV and great cash flow deals outside of CA. I don't get the whole speculate in CA thing or areas overhyped by the media. I avoid those areas, media stories are garbage and most of the time useless in making good informed business decisions. Some will kill it in CA if they have good exit strategies, others will have a miserable experience. Usually they are beginners who follow, buy close to retail and speculate for appreciation on properties that barely or do not cash flow. I'd be interested to hear about what you do. You can find illustrations and numbers of current and past deals on my website. Look forward to your next response.

[jhanson8 0]

I'm not interested in being anyone's nemesis. If your business model works for you, great. More power to you. I've visited your site and you're obviously successful. You've done many more deals than I have. Who knows, we may work together sometime.

 

I just take issue with your implications that these deals are commonplace. Those of us who use this forum are experienced and savvy, and we know that's not the case. Any newbie investor would jump on a 50% LTV deal with cash flow and multiple exit strategies. You give the impression of talking down to people, as if we had never thought about it before. It's like going into a golf forum and offering "tips" like "All you have to do is hit the ball in the hole!" By your logic, if investors should only go after these "slam dunk" deals, then they will cease to be sure things due to the competition alone. More investors = greater demand = higher prices and less favorable terms.

 

Is your point that these deals are out there, we just don't know where to look? Are you implying that you know where to find them and you know which markets will be the next best thing? Would you care to pass on this information? So far, your only response post has been to answer my criticism. Your few other topics have been vague, providing mostly common knowledge. If you want to engage further in this forum we will welcome you. If your goal is to simply direct people to your site and brand, then no thanks.

[<Steve> 82]

That's why I like Lease Options. It's a win-win for everyone; and the home owner doesn't have to give up 50% of their equity. Needed is a seller willing to flex a-bit, a tenant/buyer as an exit strategy, and I'm off to the bank. Simple really.

[jhanson8 0]

Exactly <Steve>. There's no need to complicate things. There are lots of deals out there with merit, even if they don't have huge paydays. If you hold out for the perfect deal to come along you'll be waiting a while.