Buy, Hold, and Rent Rut. . . - Posted by Ed Sibrel

Posted by Steve-Atl on July 21, 2000 at 08:48:56:

I love to sell on lease option for the same reasons Laure mentions. I heard another investor say, “Lease option is my favorite way to sell a house I want to keep.”

Buy, Hold, and Rent Rut. . . - Posted by Ed Sibrel

Posted by Ed Sibrel on July 20, 2000 at 15:20:36:

. . .is what I?m in danger of getting, and I?m looking for some helpful hints on how to put some life into my REI.

I?ve got the land bug, always had it, and REI has the potential for curing that ailment as well as giving a feeling of control over my life and destiny that simple wage earning could never approach. Though I make good wages for a blue-collar worker ($50K/yr), the thought of slogging through the next thirty years to retirement is a mighty bleak one.

Being fairly new to real estate investing, I want to know everything about the subject before I make a first step, but at the rate I?m going, I?ll be into middle age before I really act on REI; and it seems I?ll never know enough.

I?ve got a secure job. Some money. Good Credit (FICO?787). I?ve kept track of every house bought and sold in my neighborhood for the past two years. I know where all the rental houses are, and their rents. I gobble up REI information on this board like it was Gummi Bears. But I?m not acting, at least not to the degree I want to: I did buy a second house in May, and am renting out the first (great tenants, BTW), but I?m already getting antsy. I want to do more, but my own natural conservatism is hampering me. I could buy, hold, and rent every couple of years until the cows come home, but that system, though safe, lacks the joie de vivre permeating the more creative activities of REI.

If any of you have gone through similar circumstances, I?d sure like to hear about it.

Thanks.

Re: Buy, Hold, and Rent Rut. . . - Posted by Laure

Posted by Laure on July 21, 2000 at 01:05:34:

My opinion. I think that no matter what type of investor you want to be ie. flipper, rehabber, wholesaler, etc. Eventually, you end up renting property from time to time. I have been a buy and hold person for 13 years. Two years ago, I got the fever back and started rehabbing. Some sell fast, some I L/O out first. Sometimes the L/O fails and in all reality, I’m back to a “hold” pattern. It just happens. There is nothing wrong with buy/hold strategy. The profit comes when you buy, so the more often you buy, the more you will make in the end. Therefore, I have added rehab to my mix. Rehab is tough work, but has the highest payoff at the sale. And I enjoy working with first time home buyers… they are lots of fun ! Don’t get down on yourself for being in a holding pattern. You have to evaluate the risks involved and make choices for your own life. The more you talk about real estate, the more people will start coming to you with opportunities. Some will be just too good to pass up.

The best thing I have learned in the last two years is the L/O. Yes, I know, it’s awesome. But I am trying to get all my regular rentals on L/O’s. My original argument against them is this: I have spent 10 years getting all my rentals in really nice condition. New kitchens, roofs etc. etc… why would I want to sell one now? Well, let’s just assume you have 10 rentals. Now, L/O all of them this year. For a “down payment” if you will, of 3,000 each. 30,000 extra cash flow in one year just from 10 existing properties. Say that 30% exercise their option to buy, you do a 1031 exchange into a new property and do it all over again. The other 70% need an extention on their option… charge another fee to extend their option. In addition, they take care of the home as if they were on a bank loan and the house was deeded to them already ! It is totally awesome. So, if you do nothing else, start “selling” your houses instead of just renting them.

Laure :slight_smile:

Re: Buy, Hold, and Rent Rut. . . - Posted by dewCO

Posted by dewCO on July 20, 2000 at 21:52:46:

The simplest to start is flipping and lease/options. However, there is a better method than lease optioning (see the site at cal-equity.com) which I intend to use. Works for all but flipping and is safer than lease optioning. But first you have to know your market and values. The old saying is look at 100 houses and then you’ll feel like you know what you’r doing. Good Luck

Re: Buy, Hold, and Rent Rut. . . - Posted by Doug Pretorius

Posted by Doug Pretorius on July 20, 2000 at 15:42:55:

Well, I can’t say I’ve been in the same situation exactly, but I certainly share your distaste for working for someone else for the rest of my useful life.

I’d like to comment on two things you mention, 1) “I want to know everything about a subject before I make a first step” and 2) “it seems I?ll never know enough.”

The first is the trap and the second is true. I’m struggling with the same desire to iron out all the details before I do something. The problem with this is that you will never feel you know enough, no matter how much you learn.

The ONLY way to succeed is to do. Even if you could know everything there is to know about even one aspect of REI, just knowing it doesn’t mean you’ll have the confidence to do it. So why waste your time? Just learn the basics of one technique, then start advertising for those sellers!

What if they call though? Knowing everything about everything isn’t going to help you there, because all they want to know is whether you are going to solve their problem or not. If their problem is that they can’t afford their payments, then tell them you can take over their payments in just a few days! If they like the sound of that, run over there, look over the property and look them in the eye so they know you are there to help them.

Before long you’ll have your first signed contract on a creative offer.

As you say, you don’t find the T&T game too exciting, well, how about “subject to”? You’ll be able to buy way more properties than traditional purchasing, and you’ll make money alot faster.

Doug