Realistic plan? - Posted by Rick

Posted by Rick on March 07, 2002 at 15:47:34:

I don’t know what the best way is but I’m planning on buying a CD from dataquick.

Realistic plan? - Posted by Rick

Posted by Rick on March 06, 2002 at 16:55:08:

I?m pretty much a newbie here ? you people who put your time into this site are amazing, I?ve already learned a lot.

I own a few properties as rentals ? just houses that we lived in for a while, moved and bought another one and held on. But, I?d like to add some more properties to the stable. I?ve been toying with some ideas for a while and see some of them talked about on this site so I thought I?d run this by you folks with experience and see if you?d tell me what you think.

I?m in a major metropolitan area and properties in my area run about 350k to start. My thought has been to mail to out of area landlords and offer to take on their rental and continue to provide an income to them through a L/O or installment sale or something similar. Will help them defer taxes, remove headaches, and allow me to buy something with nothing down.

Most folks here on the site seem to want to buy and flip, I want to buy and hold, but I don?t want to use my cash to accumulate a few more properties ? SFR?s, or even better, units. And I don?t want to take on a negative cash flow which seems to be necessary if you purchase through the normal channels.

My main question is: Is it realistic to start a mailing program to out of area owners and be able to put together some deals like this, or do I need to pursue another direction? Would these folks be a source of deals that I could put together, nothing down, positive cash flow rentals, especially in a high priced market like Southern California?

I did just buy Joe Kaiser?s Ultimate L/O course but haven?t received it. It seems to cover the exact type of things I was thinking of doing.

Thanks for any input!

Re: Realistic plan? - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on March 07, 2002 at 16:14:38:

Rick–(in So CA)-------

Your basic plan is good. However, in an area with such high prices, you probably will not be able to find very many properties to buy. The prices are too high relative to the rents coming in. You may need to either buy in less-expensive parts of the country or buy to quick sell. Either you do that or you accept negative cash flow. That would not be too bad if you have good appreciation and can use the tax benefits of the properties.

You will find much cheaper prices in the central valley, and possibly in the “Inland Empire” or maybe the Imperial Valley. If you investigate the Imperial Valley, I’d love to hear what you discover. I’ve never been there and haven’t checked it out.

Oh, there is another possibility–putting some downpayment up so that you can have break-even or positive cash flow.

Good Investing****Ron Starr********

Re: Realistic plan? - Posted by jim

Posted by jim on March 06, 2002 at 22:37:39:

Both of your ideas, buy and hold, and farming the out of area landlords are excellent. Here in Maryland, investors market to local “tired” landlords as well as out of area landlords.

Re: Realistic plan? - Posted by Rick

Posted by Rick on March 07, 2002 at 16:38:58:

Ron, thanks! That is exactly the kind of feedback I was looking for. Some downpayment would be ok, but coming up with 30% on some of these places requires a lot of dough! I suppose the best thing to do is just mail for a while and see what happens.

Another thought I had was equity sharing with these folks. Maybe propose buying 70-80% of the building - nothing down - and letting them keep the remainder with a stipulation that all rents go to me since I manage the place. Then refi them out or sell 10 years down the line. Is that a nutty idea?

Re: Realistic plan? - Posted by Tony in MI

Posted by Tony in MI on March 07, 2002 at 10:48:40:

What methods do you use to track down tired landlords?

Re: Realistic plan? - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on March 09, 2002 at 12:15:52:

Rick–(in So CA)--------------

I think doing mailings to test your idea is sound. I suggest you mail at least 3K postcards. Be selective in to whom you mail. Choice houses of resonable size for rentals, neighorhoods–based on ZIP, Situs City, or Assessor’s Parcel Number map book number–and so on. Mail to those who have owned for about 10 years or more.

I recommend against equity sharing. You don’t need unknown people as your partners. And your suggested approach does not seem to offer much to the current owner–you take all the rent? Doesn’t appealing to me.

Suit you investment program to yourself and to your investment environment. In expensive areas long-term hold is almost impossible. Look for rapid turn-over deals if you invest in high-priced areas.

Good Investing***Ron Starr