I had a revelation this week! I am buying houses at very old prices, but still renting them for current prices. As an Engineer, I love equations, but doesn’t this one seem too good to be true?
I had this revelation looking at the history of this brick rancher I purchased from a doctor in Richmond, VA.
Here’s the Deal…
I bought this house directly from a doctor for $70,000 last summer. In 1983, the doctor purchased the same house for $60,000. This doctor called me because I mailed him a “yellow letter” as part of my campaign to reach motivated sellers.
How could a doctor be a motivated seller? In 2011, we had an earthquake in Virginia that took all of us by surprise. The doctor had a very high-end historic property close to the epicenter in Mineral, VA. His building received considerable damage that was very expensive to fix and was not covered by insurance.
He needed to raise capital fast, so he could fix his historic property, and that was his motivation. He had been renting this house to the same tenant since the 1980s, and it had considerable deferred maintenance and termite damage. I made a deal to buy two of his rentals, so he could fix his historic property.
Not Just a Fluke
I also recently bought a brick cape cod for the same price it sold for in 1977, and on another 3-bedroom home I paid the same as the house sold for in 1985.
If YOU could learn to buy houses at prices from 1970s, 1980s or 1990s and learn to rent them for prices from 2013 would that interest you?
I believe that history will show that in the next five years more real estate wealth was created than any other time in the past several decades.
You may be wondering how it is possible to buy houses at prices from 1980s to 1990s. The first key is to learn to source your deals.
Look for Motivated Sellers, Not Houses
The foreclosure and bank REO inventory levels are dropping, and the listings that remain are often going to the “highest and best” offer. This makes it challenging for investors to buy houses directly from the MLS. The good news is that not all deals are generated from banks and brokers.
The key to your acquisition strategy is to go seller-direct. Learn to connect yourself with motivated sellers who must sell fast.
Motivated sellers sell fast at big discounts for a large variety of reasons including death, divorce, can’t keep up with repairs, burned out landlords, etc. There are many ways to generate leads and get your phone ringing with seller leads.
Everyone wants to find that one silver bullet that works, but the truth is that all the lead generation methods work. As investors we need to be intentional and persistent in our marketing campaigns to find opportunities to solve problems for people that have houses they must sell.
How many houses would you need to buy this year to achieve your goals for equity and cash flow? The key to your buy and hold strategy is to buy the right houses and fund them without bank mortgages.
A Simple and Powerful Winning Formula
Buy houses at the same prices they sold for in the 1970s, 1980s and 1990s, rent them at the strong rental prices of 2013, and you will succeed.
What is the one thing holding you back from moving forward this year? Leave your comments below…