Posted by SteveA (FL) on July 18, 2005 at 09:58:02:
Marie:
I’ve only been investing since last October and I studied this stuff off and on for 5 years before I did something. One of my biggest concerns was that there weren’t enough deals to go around this small town.
I too live in a hot area and since October, I’m working my 4th deal now. I have a good broker. I told her a few weeks ago I was ready for another rehab and in 5 days I had signed an offer on another rehab with huge potential.
I never would’ve thought and I’m already working a plan to do this full time. Go for it & good luck!
Will seasoned Investors please give me ideas as to what they do to “Park” their money in between Real Estate Deals?
Obviously, liquidity is very important, but so is safety. If you park your money in CD’s, you lose money after inflation and taxes, and unless you invest in a “no risk CD” which makes even less in interest, you also will have a penalty to pay if you must withdraw early.
The returns on money you “park” while finding the next investment will be low if you keep the money liquid, so that low earning will offset any good returns you get by investing.
Posted by Natalie-VA on July 19, 2005 at 08:21:38:
Hi Marie,
Instead of having a standard mortgage loan on my house, I have a HELOC. I draw the money from the HELOC to buy houses. When I get it back I pay my house back down. I’m only paying for the money when I’m using it, and living mortgage free when I’m not.
One of the things I do is Lonnie deals. My returns are usually 50%-100% and I sell partials on my notes from sellers. I give my investors from 9%-50% interest on these partials. When I get extra money, I pay off a high interest rate note, thus my return on my money is the interest rate of the note.
Perhaps you should work on reducing the period between deals so that where you park the money becomes the least of your problems.
By the way, if your returns are high enough on your real estate deals, where you park money is not going to reduce your returns significantly at all. For instance, let’s say I buy a property undermarket with my cash. Assume I then resell for a 20% profit over the next 60 days. Now I park the money for a week at 0%. Now I find another property that I turn for 20%. How did that 0% affect me at all?
Very good. I get the concept.
Is it truly reasonable to think that you will be generating deals this quickly?
I am new, so I will take a while to get up to speed.
While the rate isn’t my biggest problem, nor my primary focus, I live in a red-hot area, so deep discounts are very difficult to find, and take time.
Do Investors in red-hot areas turn over deals that quickly as a rule? If you crank out a deal every 60 days, that about 6 per year, right?
I don’t think I’ll be that fast, at least not in the beginning.
Thanks for the info.
Marie
Minus the cost of living. Minus the irs interest payments. Minus the cost of maintaining the account (monthly fees). Yes you are making a minus. I am lending my stuff out at a rate of 12-15%… interest only. Guaranteed by first mortgage. If they default I get it all.