The Professional Investor Plan

The art of using high leverage activities.

Here I would like to make just a few suggestions that will hopefully save you from wasting years of hard effort only to learn in the end that if you had invested using a better strategy, you would have had more profit, happiness, satisfaction, control, and freedom. time as a result.

I’m not going to make you wait to find out the secret, so here’s the gist of this technique. FIND THEM, DON’T FIX THEM! Sounds easy, right? Read on for the full flavor of this topic. There are a few steps to take if you want to be successful using this method and you’ll really need to understand before you go and do it. I need to stop here and take into consideration the new investor who doesn’t have a war chest of dollars to start with.

If you are just starting out or starting with a small amount of capital, you will most likely have to find and fix them on the first one or two properties. By finding and fixing them, and then selling them on your own, you will limit the amount of up-front expenses you incur. Naturally, you will get a bigger share of the profit as a result. The problem with this technique is that it consumes valuable time that could be more profitably spent finding more great deals!

This is what I’m saying. If you spend the day painting a property, how much have you saved or earned? Let’s say a painter at $30 an hour multiplied by eight hours equals $240 a day. You have, in effect, given yourself a new job that pays $30 an hour. Instead of painting, let’s say you hire the painter so he can look for another sale property with a markup of $20,000. Let’s also assume that it takes 100 hours of effort to find, fix, and sell this property; $20,000 divided by 100 hours equals a pay rate of $200 per hour. Don’t make $30 when you can make $200!

By making the first property using your own time and labor, you can get most of that $20,000 profit when you sell, but it will typically take an average of three months to complete, or 480 hours. That comes down to $41.66 per hour and you can’t look any further for great deals. What this will do is give you the capital to pay someone else to do the work on the next one. Once you have your savings, you can start paying up to $5,000 for labor to include materials. Now you let the lower pay scales do the dirty work of cleaning, repairing, painting and installing new fixtures and you no longer spend your most valuable time on low paying labor jobs so now you can make $20,000 and spend $ 5,000 to do that. This leaves you with a profit of $15,000 divided by 100 hours, which equals $150 per hour or five times the painter’s salary! Don’t be a worker if you don’t have to be.

I hope you see how they are worth finding instead of fixing. Okay, you’ll have to learn this superior skill of finding and evaluating good deals, however throughout “Magic Bullets” I’ve given you at least 150 ways to find those deals, like bandit signs, newspaper ads, bird dogs , professional search services, etc. You have the ammunition to launch a campaign that will produce many of these offers.

Once you find what appears to be a motivated, distressed, or disinterested seller, your next set of skills will be to appraise the property to ensure you’ll make a profit if you proceed. Here again, you are focusing on the plumbing, electrical, foundation, framing, roof, and siting, as the rest will usually be cosmetic repairs that can be done quickly and cheaply in an effort to get true value. without ruining

Once you have some precise figures on a likely selling price, cost of materials, labor, time to market, and transfer costs, you can project your profit. Will it produce $20,000 or more in 90 days? Should! If not, you may consider skipping the deal and continue your search for another property that meets your strategic goals. Side note here: often when you walk away from deals like this, they end up coming back to you later when the sellers can’t sell. You will have the opportunity to reduce your offer to an amount that meets your goals, and it will usually be accepted at that time.

Suppose you have found and appraised the property. You will now need to negotiate the sales contract and purchase this property for the lowest possible price. By having your own offer sheets, sales contracts and financing, you can move quickly to acquire these lucrative assets. Since there are so many creative ways to finance real estate, I’ll just mention a few here: owner financing, subject to existing loan, lease-purchase, HUD 203k rehabilitation loans, conventional bank loans, assumptions, all-cash, etc. You’ll see what type of financing can be used as deals begin to take shape. Just be prepared to use the method that will work when you make your offer. Tip: It helps to be pre-qualified and, if possible, have capital lines available to tap into if necessary.

Now that you have found, appraised, and purchased the property, you will need to affect the repairs. I didn’t say you’d have to do the repairs yourself, remember? This is where you play Mr. or Mrs. General Contractor; By hiring licensed and bonded professionals who come highly recommended, you start moving labor issues down to the lower income pay scales so you can come back to find more great deals.

Note: One trick to getting good workers and companies is to ask appraisers who they would recommend for certain jobs if they needed the work done. Appraisers know a lot about value, folks! They rarely misdirect you, so build your network through your referrals.

Another way to save money is to start getting acquainted with local suppliers of all kinds of building materials. I’m not talking about armor members and cinder blocks, but you’ll need to build your repair list often, aka your to-do list. You can create this list of items that you will need to repair or replace in a few hours. By using your notes from your initial assessment, you will be halfway home. These items may include tile, vinyl, carpet or wood flooring, toilets, faucets, sinks, bathtubs, vanity cabinets, mirrors, towel racks, light switches, electrical receptacles, light kits, ceiling fans, knobs, handles, locks and paint to make the property look and smell new again. Now you can spend another eight hours purchasing and scheduling delivery and installation dates on the larger items, but that’s where your work ends and you return to the role of overseeing regular inspections to make sure workers and contractors are doing the right thing. worked. we schedule.

So far we’ve done four things: We’ve found, evaluated, acquired, and we’re fixing. With these steps behind you, the next step will be to begin marketing efforts to find a buyer for this beauty. By pricing it right and advertising it for sale to the entire market of potential buyers, the word will spread. You can help get the word out by using newspapers, yard signs, street corner signs, word of mouth, flyers, newsletters, alerts to neighbors, network partners, and a host of other outreach avenues that almost they can guarantee you a steady stream of buyers when the time to sell is near.

So you’ve found, appraised, purchased, repaired, and marketed the property. Now the final step is to sign the sales contract and schedule a closing date. All of this should be accomplished in about 90 days, and as a result, you will have freed up no less than $15,000. Your results will vary – could be lower and quite possibly could be higher depending on how good you are! I am giving you the overview here. You will perform many tasks along the way that are not explained in depth here.

You will have capital gains taxes. However, when you save all the receipts and use a CPA to do your taxes, the process will be pretty straightforward. This job will pay very well regardless of that fact. By having two or three of these rehabs at any given time and closing just one a month, you should be making over $100,000 a year, after Uncle Sam gets his.

Many highly trained or experienced investors don’t even touch the property. They just find great deals, handle some paperwork, and sell it for less than they could get if they spent more time on it. These people take advantage of their time and their techniques to obtain the maximum benefit in the shortest possible time and with the least effort. I do not approve of being a paper dealer and taking advantage of other people’s ignorance or misfortunes to make paper transactions. I personally have a hard time finding value in acts performed using such methods. That’s why I’ve given you a value-driven roadmap to follow in this short report. I sincerely hope that you create value for those who depend on you to deliver in an honest and caring professional manner. Happy hunting!