What Flavor is Your Investor Kool-Aid?

I met with an investor client for the first time yesterday afternoon after spending a short time on the phone with him, after he found me through my Internet presence (can't be sure, but I think it was from here- ActiveRain).

The REO property he had definitely wanted to see was a newer 4 bedroom home listed in the mid $140's.  Unfortunately for him it went into escrow on Friday.  Good for me, because it just reinforced what I told him during the week - that good house sell very quickly in this market.

Once we got together, we went over 7 homes that I had picked out, researched and mapped a tour of.  As we sat in the office, I realized that he has been going through an hands-on training program presented by a popular TV personality that is making a lot of money flipping homes.

It seems there is a formula for the homes the students are bird-dogging to find that will allow them to pick up homes for 50% to 60% of market value.  Of course for it to be a good deal, a popular website that focuses on foreclosures must give it and the area all ‘green arrow'.

I explained it's not that we don't get an occasional deal or two like that in Hemet - San Jacinto.  The problem he will find is when they happen, usually the agent of agents close friend/client will have first shot at it and rarely will it ever hit the MLS, as all REO Listing agents are doing good business with Investor Clients.

I then had my conversation about flipping equals cash flow and holding generates true wealth.  Now this gentleman has some cash and he has excellent credit - so these issues should not pose a problem.  Heck he even already has 3 investment properties including a duplex and a four-plex...so he has some good sense of what is going on in the world of real estate investing.

Because my new client and soon to be new friend (we got along great) had been drinking the guru kool-aid he know about ‘hard money' but thought it was only for flipping.  Well this opened up a great discussion that ended with me referring him to my client/friend/hard-money lender Colleen Bigler of Loan Solutions, Inc. who provides hard money loans for longer term strategies - up to 5 years.

The conclusion of this little tale is that my new friend still likes bird-dogging but he also realizes the upside potential of acquiring more property and leveraging his cash with hard money.  When we get together next week, we will have a whole new profile of properties to look at and consider.