I recently included a 3 bed / 2 bth home in Kissimme in an Investor Alert email to my real estate investor buyers. The property is listed at just below market value but the Seller is offering no hassle Financing with $3500 down payment and monthly PITI of $850. I got a lot of feedback but it was not what I expected. Apparently, my investors are well schooled in the characteristics of 'ideal' investments and many were confused at why I included this property. Several asked "Wanda - is this on your list by mistake? This property has little cash flow and it is priced at market value?"
Lol, No, I am not ill and while the current market is taxing, I am still fairly sane regardless. I think it is an excellent opportunity for investors and I included it because not every investor fits the 'ideal scenario'. This listing proves that in this market everyone can get their foot in the door.
I know because I did it. I went to my first real estate seminar many years after I had already been investing (very successfully) for years. I was invited to speak about foreclosure properties and stayed to listen to the others. After listening awhile, I was shocked to find out that I had made what were considered major mistakes. I asked one of the other speakers "what is negative cash flow"? he said 'oh, you never want a property with negative cash flow - that means you have to pay out of pocket every month - that is a bad investment."
Ooops ---- I had done that already FOUR times! I thought 'wow - I messed up big time and still made huge profits? Real Estate is GREAT!' My first real estate purchase, I bought a house in Pine Hills (Orlando) for 57k. (this was the mid 1980s and believe it or not - prices in that area are about the same or lower today - but that is another blog entry!) It was a distress sale and I caught up the seller's back mortgage payments for around $1100 and assumed the mortgage (subject to) at $680 PITI. I easily found a tenant at $695. With advertising, repairs, vacancies, etc...at the end of the year I had negative cash flow of about $100 per month. Not knowing any better - I was ecstatic! I was so proud of myself that I owned real estate for less than $100 out of pocket per month (lol!) It started to break even in a year or so and soon I was even making a profit. When the market was right - I sold it for $165k. Even with all the negative cash flow - I still made a profit of over $100,000.
Of course, I would have loved to invest in 'ideal' properties, but unfortunately I was not the 'ideal' investor. $1100 cash upfront was all that I could do as a stay at home mom using extra money saved from the household budget. I took what I could get, when I could get it and ended up with 4 properties within the next few years. All four of them were purchased at or above market value and ALL of them had some problem and ALL had negative cash flow at the beginning. However, when the time was right - I sold them for triple what I paid for them. When I was picking up properties, I actually never even noticed the sale price or the market value. I just focused on what I now know is 'cash on cash'. $1100 upfront, $100 negative per month for the first few years added up to about $4700 cash invested total. $4700 x 4 properties is $18,800 total invested over the years I owned them. And I eventually sold them within 10 years for a total of $375k profit. And.... I did it in my spare time while I was a full time stay at home (and very involved!) mom to 4 lively children.
I guess you could say, this is the get rich SLOW strategy of real estate investing. In this case - my 'negative cash flow / negative market value' properties turned out very positive and so can yours!
To make this long story short. You are all correct, this property does not fit the 'ideal' and it is not the best I can find for an 'ideal' investor. But if you have very little cash or credit - this may be the perfect property for you. I am proof that some of us have to take the longer way around to get to our goals but no matter how small your budget is - we can ALL still get there from here!
38 Catalina Ct; Kissimmee, FL Built in 1999. Corner Lot. Needs appliances (approx $1000) $65k Seller Financing with $3500 down and $850 per month. Rents for $850 - $995. List price is at or around market value. For more details on this listing, click the link below:
Wanda Phillips, Broker Sucess Investment Realty Wanda32779@aol.com