INVESTMENT OPPORTUNITIES

There are always opportunities to make money. Sometimes those opportunities are obvious, and sometimes they are staring you in the face and you can't see them. In the late 70s I knew two real estate investors. The first one, who I will call R, was young, and eager to learn. He was just out of high school. His uncle had the expertise, along with some money. Together, they began purchasing low cost rental houses. The uncle provided the advice and capital, and R did the work. They would watch for a good price, with a motivated seller. Many times they would purchase the property on contract directly from the owner. This allowed for a minimal down payment. The rent from the property would make the payments. If the rent could not make the contract payment, then they would not buy the house. To make it more acceptable to the seller, they would offer a 5 or 10 year balloon. That means that after a length of time, they would pay off the loan. That was accomplished by either financing the property with a lender, or by selling the property. R and his uncle were very successful. As the years progressed, they moved into apartments, and then into commercial property. Along the way, R became very good at painting, replacing bathroom floors, windows, and everything else that goes with fixing up old houses.

I also had another friend during that time. I'll call him B. He followed the same plan. He would buy older houses and fix them up for rentals. However, he did something else. Once he bought a distressed property, he would fix it up, and then refinance it with the bank. He was able to refinance it for more than the purchase price, so he would use that money to buy more houses. He started his enterprise about five years after R. After about five years, he declared bankruptcy. He made two mistakes. He started buying near the top of the market, and he was greedy. Today, housing prices nationwide are projected to continue their decline for one or two years more. It's been over 30 years since there has been this type of market. It's not for the faint of heart. You have to be willing to spend most weekends doing repairs on your houses, and many weeknights answering emergency calls from tenants. Older homes don't come without problems. I'm not going to do it, because I don't like to work on houses in my spare time. I like mutual funds. However, the opportunity is there for the right investor.

Remember, the reason you make money doing this, is because you are using other people's money. You have little or no down payment, the rent equals your monthly payments, and you are riding the equity market up. Back in the 80s seminar speakers were getting rich charging big bucks to tell you how to do it. You don't need to pay big bucks. Just do the research yourself. Be prepared to work evenings and weekends. It isn't handed to you on a silver platter, but the potential is there for those who take the plunge. Go here to read details about the housing market.