Blog

Printing money through creation of value

The best part of real estate is it lets the creative risk taking people make money independent of naysayers whose thought process is dominated by old paradigms.

Currently lending markets are tightening their belts. Foreclosures are way up nationally and up here as well, but not to the degree as portions of the national market. Of course the national media hardly delineates in its negative hype. I like that--it is putting money in my pocket. Result: buyers are few and sellers/renters are plentiful. Most people are running scared in the streets yelling the "the sky is falling" and I find myself wanting to churn their fear--I wanna yell "run away". The reality is I am in hog heaven--there couldn't be a better situation to find myself (an active investor) in here in Texas. Our local economics are solid--job growth, housing inventory dropping, cheap financing, low market confidence, and loads of motivated sellers.

In the past four months I have bought several properties at SUBSTANTIAL discounts--e.g. 50 cents on the dollar. As a matter of practice we go in and typically add another 20 cents per dollar of value--paint, targeted high payoff improvements, landscaping, and of course required repairs (fix plumbing, repair cracked foundations, etc). Our repairs/improvements are targeted value-added in nature. The property is rented out at a premium--because it looks great! We then refinance to pull all our cash out but we have been getting 1000s more on top of what we have sunk in the deal. We end up with all our cash + thousands more, a 20% equity stake in each property, a renter paying for our newly rehabbed home, and a mortgage in place @ 5.2%, 5.7%...(Randolph Brooks Federal Credit Union). Everyone is happy. I'll be even happier when I am paying back these fixed mortgages with INFLATED dollars 10 years from now...