Joe: Hey, it’s Joe. I’m here to show you another
type of investment that might make sense for you. Again, this whole series is about analyzing
deals. So if you have cash to investment, here’s an investment that might make sense
for you. And I’m not saying that this investment is available right now, but these are the
types of investments that I’m selling that I think make sense to folks and I think might
make sense for you. And you can buy one or you can buy three or you can buy a dozen of
them from me. I can do any of those things for you.
Joe: But the goal here is not to sell this specific property (because it’s probably going
to be sold by the time you see this video) but to understand what you can get and why
it makes sense. So let me show you some pictures. I’m going to show you some numbers. Let’s
take you to the screen capture video. Joe: This is a picture of a property that
I bought through an estate sale. It was in pretty good shape when I bought it. I didn’t
have to spend a whole lot of money on it. But I had about $29,900 into it with all of
my carrying costs, with the purchase price, with the closing costs and everything that
I had into it, then I added $10,000 onto it, and then I sold it to an investor. Now, this
is the same kind of property that I would sell to you as well if you were interested.
And I think it makes a lot of sense as an investment. Certainly it made a lot more sense
for me, because I found it and I put it together, and I got a tenant in there. I had the resources
and the manager to find this. Joe: The process of finding this takes some
skill and knowledge. Everybody can learn it but I happen to have it already. So the guy
that wanted to buy it from me didn’t want to put the time in and still wanted to get
a good return on his money. I would have had a higher return than him if I would have kept
the property. By the way, I would have kept the property if I didn’t find a buyer and
I would have been happy with the return because this was a property that was bought with money
out of my Roth IRA, so I’m going to be able to keep these properties long term or take
a profit on them and then turn around and buy more properties and do it again.
Joe: Anyway, this property – we sold to the investor for $39,900. It had comps on it in
the area for $65,000 to $75,000 so it was a good deal for him. It was certainly an even
better deal for me when I bought it. When he bought it, we had a tenant in place and
that person was paying $800 a month which comes out to $9,600 gross annual income per
year. The taxes on it were currently $584 annually. The insurance was about $594 annually
and the property management was 10% of the income which was $9,600$ per month so the
annual profit on this was $7,462. Now if you divide $7,462 by the purchase price of $39,900,
you get 18.7% return annually on your property. Joe: There’s very few places that you can
go to get this kind or return. Now, keep in mind that doesn’t include future repairs;
maybe a furnace goes out and you have to replace that, maybe you have to put a new roof on
it, although you can see form this picture that the roof is in great condition on this.
It’s got aluminum siding so it’s going to be in good shape for quite a few years. It
had good windows on the property. It’s just a good property, I’ll show you more picture
of it in a second. This type of deal makes a lot of sense.
Joe: Now, this investor had to come up with cash to do it. He came up with money that
he pulled out of his home equity line. His home equity line was costing him about 5%
a year so he’s going to make about 13% on this. Now keep in mind as well, since you’re
going to have repairs and vacancies in the future, I would figure 1% to 4% of this cash
on cash return to go towards that. In fact, he’s going to have anywhere from probably
around 14% to 18.7% as his real return on investment on this property. Now that doesn’t
include if he sells the property, and this isn’t a property that you turn around and
sell right now. You’re not going to turn around and sell this for $65,000 or $75,000 in all
likelihood. These comps were before the market took a hit. And the market took a hit or at
least the comps took a hit because of all of the foreclosures in the neighborhood. All
of these neighborhoods took this hit. Joe: This is a good solid blue collared neighborhood.
It’s not a warzone. It’s actually just two blocks away from $200,000 houses just north
of it (which would be just to the left of it on this picture). So this is a good property,
a good return, and this fellow bought 4 different properties at the same time when he closed
them, so he’s going to get a really nice solid return on his investment; his risk is going
to be spread out. The beauty here is that he buys it very, very cheap. If you bought
for $75,000-$95,000 and got an $800 per month return which is what we used to see, it’s
now possible to buy them so much cheaper because of what happened in the market. So we’re in
a very short period of time right now, it may last a year, it may last 2 or 3 years,
but we’re still able to find these properties and still able to get these kind of deals.
Joe: Now, another thing I might warn you about is – don’t go and buy properties, because
you may find one, for $10,000 or $15,000 in the MLS or in the newspaper or whatever that’s
for sale – but it’s not going to be habitable and if you’re going to rehab the property
and you spend $20,000 to rehab it and $10,000-$20,000 to buy it, it’s not going to be a very good
deal for you. And there’s always the risk, if you don’t know the people who are doing
the rehab, or if you don’t know the property manager, of whether or not they’re going to
fix it up. All of those things – take that into account when you look at the comps and
you say, ‘Oh, I can get a property like this for $15,000.’ If you start looking around
for these properties and if you go to these locations and look at them, you’ll find out
that that’s not necessarily possible. Even we paid more for them than that. So keep that
in mind as you go. Joe: Let me just show you, before I go back,
some of the other pictures on the interior. These pictures above were taken before we
did the work, although actually this one is after the work because it’s got the new flooring
in it – and this is I think some kind of Pergo or laminate flooring – that’s not real wood
down there. Well, that’s actually cheaper, or well, not cheaper – it’s about the same
price as carpet. And we’ve been having so many problems with our tenants screwing up
our carpet that we thought, ‘Let’s put this stuff in and see if it lasts longer.’ and
so far we’ve had pretty good luck with it. And it looks great and they love it and it
helps get it rented faster. Joe: We believe that if you have a property
that looks nice, and you take care of it, you’re going to get a better class of tenants.
We don’t like to be slumlords because that’s the type of tenant that you get. So have a
good property, have something that you wouldn’t mind living in yourself, and you wouldn’t
mind having your kids in the neighborhood – so that’s the kind of the way that we’re
looking at these in order to make them work. So these are good deals.
Joe: So that’s the deal. Those are the types of things that we’ve got if you’re interested.
There’s another video that you might want to watch. It’s at GetMoreClients.com/highcashflowhouses.
Just go to this web address and you can watch a video, and you can buy properties from us
that we’ve got in our inventory already. Or we can actually find you properties which
we actually do with this system as well which might make sense.