Investing For Biggest And Fastest Return

I can tell you from experience, very few plans or strategies are available for broke investors and newbies without much experience!

After teaching real estate investing for over 30 years, the most common characteristic shared by most of my students – they’re generally broke! Most have day jobs, but very little money saved up. They have the desire and willingness, but not much else! This pretty much describes my situation more than 50 years ago when I started. Over the years I’ve watched my investor students either take off and get started, or keep struggling along searching for a better investment plan. I can tell you from experience, very few plans or strategies are available for broke investors and newbies without much experience; it’s almost an impossible dream! My decision over 50 years ago was; that with my limited resources, I’d pretty much have to search for properties no one else wanted. Ugly rundown properties were generally passed over by most start-out investors back then, and I can assure you, not much has changed today! Ugliness drives buyers away. 

If you have a vision and the willingness to clean up ugly messes that others are afraid to tackle, you can often buy very cheaply – sometimes by trading your old pickup truck, an unused boat & trailer or unwanted stuff (junk) in your garage for at least part of the down payment. Broke investors can level the playing field by being creative! Instead of an all cash down payment, think about trading stuff – or some combination of stuff with a few dollars sprinkled in to sweet’n the deal! You’ll learn more in my new book; “SWEAT EQUITY” in the chapter called; “Money Stretcher Techniques”.

Finding the right properties with good potential for profits and cash flow is always the first step in developing a successful investment plan. Once again, be as creative as you can! It’s important to break away from traditional thinking, meaning doing what most investors do. Serious money is made by those who study the marketplace and develop the ability to spot bargains that others are unable to see. 

You don’t need to buy pig farms in the slums, but you do need to develop good investment eyes. It’s a whole lot better to buy and fix up real estate, than try and fix cash flow problems caused by paying too much. That’s why you must be selective and buy only properties that show a good potential for developing cash flow and profits. It helps if you’ll think about your properties as custom vehicles acquired solely for the purpose of taking you to where you’d like to end up financially!

It would be naïve for me to suggest that every start-out investor can follow my plan and become successful. Everyone has their own thoughts and ideas about investing and many don’t want the same risk that I’m willing to take. That said, there’s still nothing worse than being unable to sleep at night because you worry about a property that won’t produce cash flow because you paid too much. Also very important, I would never advise anyone to start out cold! That means without any education under your belt. You should always invest in yourself before you purchase a property. 

A good seminar or two, perhaps join your local investment club or even consider hiring a mentor you trust who specializes in the kind of investing you’re trying to learn. I can assure you that spending a few dollars upfront on your education will seem like peanuts compared to acquiring a property that’s beyond your abilities. Read this paragraph twice; I want you to make sure it sinks all the way in! Ya got it?

When I first started out buying inexpensive REO houses (bank repossessed) with nearly 100% financing, it didn’t take long before I realized my rents were all used up just paying the mortgage payments and expenses. Having the responsibilities of operating more than 20 individual houses without any money left over for me made me feel like a drunken football player running the ball toward the wrong goal post! My problem was this: When you acquire houses for just a few hundred dollars down (sometimes even nothing down), you’re left with very high monthly mortgage payments. 

I had become overly obsessed with my goal of paying hardly any money down and I failed to sit down and seriously analyze how much the mortgage payment and expenses would cost me every month. Listen up friends; this is a very common beginner’s mistake.

When my mentor suggested I start buying multiple unit properties that needed fixup and cleaning, I was all ears as he explained the reasons why! First, he said; if you’re willing to take on junky-lookin’ rundown properties that don’t show very well, you’ll immediately reduce your competition by 85-90%. The big financial advantage is that you’ll pay a lot less per unit price just like anything else you buy in groups or bunches. In addition, depending on your negotiating skills and the seller’s motivation, you’ll be in a much better position to buy these properties at substantial discounts because of how they look. 

As you become more knowledgeable, you’ll find properties that really show ugly and rundown, but quite often the ugliness is very shallow. Meaning, they’re not nearly as bad as they appear!

My Eastside property (10 units) was a textbook example of what I’m talking about here. Ugliness allowed me to buy the property cheap. Rents were substantially under the market rates, almost half of what they could have been had the houses and property been kept up. In less than 20 months of ownership, my rents were $1450 per month higher than when I acquired the property.

$1450 may not sound like a big deal to some, but it was about half my take-home pay from my regular day job back then. Understand that when you acquire under-rented units like Eastside and you’re able to increase the rents by $1450 per month – the profit is all yours.

Millionaire real estate author Robert Kent calls it MIF or money in the fist. Assuming Eastside was a break even transaction when I closed escrow – it was now bringing in an additional $17,400 annually from rents. That means my $20,000 cash down payment was now earning 87% annually. It’s hard to find any kind of a legal investment with this kind of return.

The thing I like most about multiple unit fix-up properties is that it don’t require a ton of money upfront before you can start earning serious money back. In my book "THE REAL ESTATE FISHERMAN”, my millionaire-maker model consists of six (6) multi-unit properties with a total of 40 individual rental units. Buying six multiple unit properties over one’s investment career is not all that difficult. For example; buying just one property every 7 or 8 years would accomplish the task. Buying multiple unit properties with all the benefits can be a much faster investment strategy than buying single family houses. The rewards however, can be 10 to 20 times greater. 

Finding a mentor who specializes in multiple unit properties can save you a good deal of time if you’re just getting started. A good mentor will help you avoid common mistakes and keep you pointed toward your financial goal. Check ‘em out good!