Monday, January 14, 2008

A Bit On My Offline Real Estate Business

I have had a few people inquire as to what I actually do offline in regards to real estate. For me it really is two-fold. I invest in distressed properties and flip them for profits and I do hard money loans or as some people call them trust deed investments. If you listen and read the mainstream media you would think the real estate market is dead, everyone is losing money and going into foreclosure. It is true there are some areas of the real estate and mortgage industries that are suffering, but the reality is that there is still a ton of money to be made in real estate.

Flipping can be tricky if you don't do your research and get in over your head. I don't do an investment unless I can get it for 70% or less of comps. Anything above that just isn't worth it to me. I do mostly low to mid priced distressed properties in up-and-coming neighborhoods. I have done houses that many investors shy away from. I see too many people looking for that house they can get for 250, put in 50 and sell for 500. Those are rare and you can miss a ton of great investments waiting on the "big" one. The last one I just did was a $9800 house, yep you read that right, I put in about $10000, and sold for $45000. It was done in less than 3 weeks and on to the next. I made about $25000 while others were looking around for the "big" one. Others had bailed from the market because they believed all the doom and gloom.

The second leg of my real estate business is trust deed investing. These are a high yield investment usually in the 8-13 percent or so range. Trust dead investments are private money, or hard money, loans secured by a real property. A trust deed doesn't transfer property it transfers the title to a property to a trustee that holds it as collateral or security for a loan. The loan against that trust deed is what you are investing in. Say a property owner wants a 600,000 loan on a 1.2 mil property. A trustee will get say 6 100,000 investments or say 12 50,000 investments from private individuals and then loan that money against the property. The trustee and the investors loans are secured by the real property. There are quite a few title companies and mortgage companies out there but I do my investing through Diamond Bay. It is nice because they coordinate all aspects of the trust deed investment from the loan underwriting and processing to hazard and flood insurance.

I know I repeated myself just a bit but I want you to get the idea of what exactly is going on and what my offline real estate business entails. I enjoy real estate and in memory of Grandpa O'Haver want to say a big thanks for your patience in letting a young person learn the ropes.

later all and have a profitable and productive blogging day

Get more profitable and productive information by subscribing to my FEED and my newsletter! or clicking the links below to bookmark my site, or add me to your favorites.

No comments: