Profitable

[Teen2233]

Hey guys, I am reading Dans book, and also have just received "Deals on Wheels" by Lonnie Scruffs, with I hope to use to build my capital from about 1500(stop laughing) to an amount I can use to perhaps invest in more expensive, but also more profitable real estate. Thing is, how much capital should I attempt to gain before I move on(unless Lonnie Deals are the best:)) to bigger things? And what exactly are those bigger things?

Thanks in advance
Rion

[Jeffery (LCLA)]

"my capital from about 1500(stop laughing)" That's plenty to start with Mobiles. You'll have to look a little harder for deals within that price range. One of my MH's that I just sold last week (for $16,800) I purchased for $1500 and the seller moved it for free. I put about $800 into it. New floors, paint, carpet, etc. It needed a new central A/C, but I put in window units instead. I rented it out for a little more than a year, got all my money back, then sold it rent to own.
"how much capital should I attempt to gain" It really depends on how much you need. How much you need depends on how you get the property. You could do a Sub 2 and get it for nothing down, just pay costs to transfer to your name. No one can give you fixed amount. To make your life easier and relieve some stress, you really want to have a few months worth of holding costs (for your current props and future props) in the bank. If you're looking at a new property, you'll want to have those fix up costs, closing costs, and a few months holding costs in the bank.
"unless Lonnie Deals are the best" Lonnie deals are by far the easiest way into investing. There's a fella over in FL that started two years ago and anounced a couple of weeks ago that he's retiring. His home is paid for, his automobiles are paid for and he has enough income from owner financing to support himself and his family. I couldn't even begin to assume how much his net worth is, but Lonnie Deals have been good to him.
"And what exactly are those bigger things?" Ummm, perhaps Trump Tower

[txrigdiver]

I never realized MH's were that lucrative. I lived in one for while growing up in Louisianna and since then never wanted to anything to do with them. Maybe I need to re-think some things.
And who is this Lonnie you guys keep talking about?

Here's a link that tells you more about Lonnie, Don. http://www.mrlandlord.com/mllshop/lonniescrubs.html

[Jeffery (LCLA)]

"And who is this Lonnie you guys keep talking about?" Lonnie Scruggs, the grandfather of buying and selling Mobile Homes. You really don't need a book to do it, but Lonnie teaches how to negotiate on the price, how to inspect MH's and how to sell them. His book is about 30 bucks and worth it. The biggest hurdle in MH investing is that most (if not all) states require that you have a dealer license in order to sell more than one to five a year. It's more restrictive than selling stick build homes. There are ways around the licensing requirements in most cases. Some states have criminal statutes regarding selling without a license, some just have civil penalties. The yield on MH's is unreal (see example above) but the big bucks reqires loads of work. I can buy and sell MH's all day long and make a grand or two, but it takes doing this everyday each month to make the same profit that you can make from a stick built. I like my MH's for the cashflow.

[Teen2233]

Stick Builts?
Stick built means 2x4 wood frame construction in most cases, there are variations of 2x6 for insulation purposes, just know they are referring to lumber as opposed to sheet metal or block.

[Jeffery (LCLA)]

Stick Built = Site built home as opposed to a mobile/modular home. Stick builts are your normal everyday houses. Kinda like Real Estate vs. Wheel Estate

[Teen2233]

So let me see if I have this right:)

Mobile Homes: Good for cash flow, and basically building up your capital from a small amount(like I have) up to a more moderate amount.

Stick Built: More expensive, and possibly a lower yield, but that yield is much larger than a Mobile Home

So basically the yield may be smaller for a stick built, but that yield comes out to be much more money than the higher yield from a MH.

Does that sound about right?

And do you recommend I get into stick builts in the future? If so, what amount of capital do you recommend I have before starting, obviously I cant buy one with 1500:)

[Jeffery (LCLA)]

"So let me see if I have this right

Mobile Homes: Good for cash flow, and basically building up your capital from a small amount(like I have) up to a more moderate amount.

Stick Built: More expensive, and possibly a lower yield, but that yield is much larger than a Mobile Home

So basically the yield may be smaller for a stick built, but that yield comes out to be much more money than the higher yield from a MH.

Does that sound about right?"
Yep

"And do you recommend I get into stick builts in the future?" Assuming you have what it takes (ability to cold call sellers, manage money, can take rejection well, et al) to deal in real estate, then Yes.

"If so, what amount of capital do you recommend I have before starting," $125,000 should get you started good. I really can't give you fixed amount. I'm not familiar with your area or market. But, like I said before, to reduce the stress on yourself, you'll want to have at least three months of holding costs in the bank (including your personal bills). If buying in a simi-traditional method, you'll need to have closing costs, repair costs, and a little extra cushion.

"obviously I cant buy one with 1500" You couldn't be more wrong. A friend of mine once bought a $58K house with $1200 out of pocket.

[ProCustomHomes]

....with I hope to use to build my capital from about 1500(stop laughing) to an amount I can use to perhaps invest in more expensive, but also more profitable real estate. Thing is, how much capital should I attempt to gain before I move on(unless Lonnie Deals are the best:)) to bigger things? And what exactly are those bigger things?
Rion

Rion
You can turn that $1500 into about $30k in about two to three months. When we grow new developers we take them by the hand and show them exactly how to use options to invest in new construction. You can do everything from home, either over the internet or by phone. As little as $500 down you can control a $75k lot which you purchase at wholesale. Then sell it at a profit.

Once you have control of the lot, you turn it over to the realtor to sell the lot for you, with a home. You can figure about $10k per lot that you control with very minimal risk.

Now it's a simple matter of pyramiding what you're doing. Ex: $1500 controls three lots = $30k profit (minus realtor fee). Take the $30k and repeat the process and control 60 lots. Earn $600k. Then you can step up to the big boys.

(I used the figure of $10k per lot. This would ultimately depend upon the retail cost of the lot and what you negotiate with the developer. $10k is about average and realistic. Even at $5k per lot that's still a hefty profit on a $500 deposit and much better than any other form of real estate investing.)

I will tell you that you will have a problem that no one ever discusses in real estate. You get taxed on the profits. However, the solution is a 1033 and invest in more lots or real estate. You'll also want to take a percentage of the profits and place into a self-directed IRA and build your retirement funds very quickly.

Making money in real estate isn't that hard. It's keeping it from the tax man that's the challenge. :smiley21:

Good Luck!

Storm