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$50K Profit + Cash Flow on 3 Houses

by Kent Cheatham   

I have been limping along with my 15 rentals for a while now. I also make good money for a corporation buying and selling electricity nationwide in realtime. It's the adrenaline I like. So I still have my 50 hour/week job. I haven't bought a property in 4 years--until this month.

I don't know what happened; I just decided to "try" a sample ad to check response. I woke up one morning a month ago and, on a lark, placed an ad for handymen. I then called an old friend, who was still actively looking at investment houses, for a few addresses. I placed three bids (can you say low ball?). All have been accepted.

One closed a week ago, another closes in mid-October, and the third closes at the end of October.

I got 60 responses to my handyman ad. I culled 30. I phone interviewed these a second time and, being the number cruncher I am, categorized them by trade, wages and, most importantly, gut feel. I then held 12 physical interviews and found four I wanted, two of which actually showed up for work.

I have since found two more out of the pack for a total of four reliable people out of 60. I need six guys per house (three teams). For the other two, I am using "drop-ins" (you know, the cheap ones you pay once and they are gone).

I am $1,000 over budget on the first rehab. I should clear $9,000 after 80% LTV loan (instead of $10,000...shucks). The second one should net $15,000 and the third (oh, its sweet...) $25,000-$30,000!

I am paying cash to buy and fix up (loans from my 401K). Then refi for the tax free money. 80% LTV loans all carried by rents with $100-$200/month positive cash flow. The total time from start to finish on these three houses will be two months. Oh, what does that come to: $25k/month...TAX FREE.

That's right. The last house was unusually sweet. I think it is an anomaly. I do think I can easily clear $10,000/month for $120,000/year--and I'm part time. Of course, in a few years, I am gonna have to figure out what to do with all them rentals. What the heck; I'll cross that bridge when it gets here...I still ain't got the guts to quit the corporate life. We'll see, we'll see.

 
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