Another Burning Question Answered...

I am sitting downtown right now, Salem, waiting for my daughter to finish up with her Church's Christmas Play practice.

This groovy little dig I'm at is the Governor's Cup.

If you're ever in Salem, cool place. They roast their own coffee, it's a retro-atmosphere, etc. And, great coffee. It's sort of Bohemian, which for a non-Bohemian like me, it's good to go hang out where I am not normally...

Anyway, enough about me...Another Burning Question...

Here's a question from Dr. Bill:

"What do you do about cash flow when you can't sell?"

Bill, there's a couple ways I can answer this question:

1) the way I buy, cash flow is covered. Richard Roop and Dan Doran call a way to do this, even in areas of higher priced homes where rent is not covering the monthly pymt, The "California Secret." In a later post, I will get into the gist of this.

2) i teach folks to buy houses or other properties using OPTIONS so you have no risk whatsoever, until your exit strategy is clear. Rather than taking the house under contract with a Standard Purchase and Sales Agreement, I use an Option Agreement. I have no monthly cash flow needs...only MARKETING.

The other issue here is you should NOT ignore formulas when you buy. And, if you don't make promises you can't possibly keep in a "worst case scenario" then you have nothing to worry about.

If you don't write BIG CHECK, you can't LOSE BIG CHECK (Famous words of my mentor Ron LeGrand(R).)

Lastly, when using a formula such as MAO=ARVx70%-Repairs. ARV = after repaired value. MAO = maximum allowable offer (ALL courtesy of Ron LeGrand(R).)

So, if you are buying a house at 70 cents on the dollar of it's current value LESS repairs, you are in at price that allows you to sell quickly, no matter the market (you're the lowest priced house out there - who's going to get the attention?). And, by offering owner carry or owner financing of some kind, you'll sell even faster.

I don't target a lot of homes in the upper end of the market. They are more difficult to sell in my area since there are not a lot of fish in that pond (upper end homes in Salem could be anything above $300,000...). I like mid-market or lower-end market homes...NOT junkers, but just properties that are easier for the average person to get into.

Plus, this of course all depends on your exit strategy!

Bill, get to a training event as soon as you can. You'll quickly realize that your question is a good one, but easily answered with the right approach (as low of risk as possible going in on a property) and with the right exit strategy in mind.

Have a good rest of the weekend everyone...

Project 'X' is getting closer to being done by the day!

Best, Jerry


Real Estate Education & FREE Information for Busy Dentists - For more information visit http://www.RealEstateForBusyDentists.com