You’ve seen all the television commercials, and heard the countless radio ads, and they all have the same meme…
“Get rich quick by buying fix and flip real estate. Use other people’s money to make huge profits!”
Have you ever thought to yourself “Gee, I’d like to do that!”? It’s almost as if those commercials sweep you away in thoughts of telling your boss at your 9 to 5 day job to take a hike, and immediately being making money hand over fist. How nice would it be not to have to wake up at 4 or 5 a.m. to get ready to go do something you only do because you have to, not because you love to? It’s all too easy to picture that better life with free time for self and their family, all with the security of knowing that the bills will be paid and there will be something left over is all said and done.
The problems with the ‘fix-and-flip’ real Estate investing advertising meme
Don’t get me wrong, fix-and-flip is a great way to make a profit on a real estate investment, but there are a few problems that keep the overwhelming majority of everyday people from taking place in the segment.
MONEY – This is the most important factor. Most everyday people do not have piles of cash sitting around to sink into dilapidated homes or homes with tons of deferred maintenance. It takes serious cash in order A) acquire a Property, B) make repairs (permitting costs – which can be expensive, materials, labor, etc.), and C) cash to boot for the unexpected. The commercials and seminars always say “We’ll teach you how to find private investors that are willing to put their money up for you!” Truth be told, you aren’t going to call up an investor or finance company and they just agree to shell out tens (or hundreds of thousands) of dollars without you having some skin in the game (money of your own to put into a deal) up front. Furthermore, private lenders are expensive! Unlike buying a home with a regular mortgage, a private loan or note will cost you between 5 to 10 points UP FRONT, and are due in 6 months to a year (this is known as bridge financing – a bridge to get from point A to point B). So unless you have a considerable amount of cash upfront to put into your deal(s), your chances of getting a private loan are extremely thin. Not everybody has rich aunts and uncles in their family. Even if everyone did, whose to say they want to throw money at you and your project?
THE FIX-AND-FLIP MARKET IS OVERSATURATED – Think this is all brand new information? Think again! This method of real estate investment has been around for decades, but has been highly popularized in the early 2000s (around 2003-2005) in the run-up to the 2008 Great Recession. Everyone has heard about it, and everyone else that can is doing it. Does that mean you shouldn’t venture out and try? No, not at all – if you see an avenue to make a buck, and have done your homework – GO GET IT! The point being made is that all of those real estate investment advertisements don’t tell you that everyone that could be doing it is doing it – so competition can be fierce. Best to be on top of your game at all times and be prepared with all your due diligence and be able to act fast. If not, perhaps it’s best to wait until you have a better understanding of what you need to know, look for, and anticipate before you put your (or someone else’s) hard earned money on the table!
DUE DILIGENCE IS A MUST – The biggest mistake one can make when investing in real estate is not doing complete due diligence on your prospective deal BEFORE shelling out any money and putting pen to paper. At the very least, you will need perform a title search (pay for it to be done professionally – don’t think you’re a seasoned title abstractor in order to save a buck, unless you are) in order to find out if there are any outstanding issues like liens, judgments, or municipal assessments that you could end up being responsible for – and could potentially kill your ability to sell the property. You should also get written confirmation from the local authorities that A) the property actually exists (but your drive-by inspection should tell you that), B) there are no serious code violations that will cost you your future profit (and then some) in order to rectify.
There is a way to invest in fix-and-flip real estate without the cash requirements to do the kind of deals the television ads advertise. It’s called TAX-DEFAULTED REAL ESTATE INVESTING
BANKS AND INSURANCE COMPANIES have kept this secret under lock and key for decades, and we are now sharing with you the fact that you can get homes and all other kinds of real estate for JUST the amount of a few years’ back taxes. Yes, it’s true. We’ve done it ourselves and have to proof to show. The BEST part is that this form of investing does not require the mountains of cash required for fix-and-flip methods advertised on TV.
In this scenario, you will be doing business directly with the local government. Every year many millions of homes and other forms of real estate (gas stations, farms, hospitals, vacant land parcels, etc.) end up in tax foreclosure because the owner(s) simply didn’t pay the property taxes. Local governments cannot fund services without property owners paying their property taxes. Every state has laws on its books to allow local governments to ‘force’ payment.
THE DEED SALE EXAMPLE
Property owner X hasn’t paid taxes in 2 years. In property owner X’s state, the local government can sell the title (deed) at sale after 2 years of property tax delinquency. This means an investor (you) can come along an buy the deed directly from the authorities for the amount of the back taxes, and usually a negligible amount extra for the cost of advertising the sale in the local newspaper. In this example, the investor gets outright ownership of the property.
THE LIEN SALE EXAMPLE
Property owner Y hasn’t paid the taxes in 2 years, and State law in property owner Y’s state allow the local government to sell a lien on the property. The lien accrues X% interest per year (ranges are between 4 and 36% per year – you won’t get that from a savings account at your local bank!). The investor (you) must wait 3 years after the lien was sold in order to start a foreclosure action in court to take title to the house and become the owner. If the current property owner pays you back, they have to pay you back the money you spent buying the taxes PLUS all the interest that has accrued since you bought it (PLUS a penalty to the local government). KEEP IN MIND – this form of investing does not give the investor ownership, but a superior claim against the title that earns interest. Once the appropriate time has passed in the particular state, you the investor can quiet the title in court and get a new deed, in YOUR name, to the property.
HOW DO I LEARN MORE?
Click the e-book cover below to download real estate agent and investor Shane O’Brien’s “How to get that real estate CHEAP!”. In the e-book, you will learn:
What types of sales are offered in each state.
When sales are conducted.
How to find out which properties (or liens) are going for sale, and how much they will cost.
What interest amounts are paid on liens sold by lien sale states.
What redemption periods apply in each state, if any (a redemption period allows a homeowner to make the investor whole by paying off all monies invested including interest earned, and any mandatory fees or penalties due to the investor).
Common investing pitfalls (further explained).
IN SUMMARY – Yes, the life you want does exist. There’s no reason you shouldn’t be able to live it. This e-book is one mechanism that can get you from here to there without worrying about having tons of cash to do something that could make you and your family happy and wealthy… Here’s to your success!
– Shane O’Brien
GET YOUR E-BOOK TODAY, JUST CLICK ON THE E-BOOK COVER BELOW!
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