Buy San Antonio Investment Properties – Don’t Be Bored and Listless for the Next 20 Years Waiting for Retirement

Greetings from San Antonio, TX! It is a lovely, sunny and chilly day in south Texas. I just got back from a construction site on the south of town with my friend Ted:

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Teddy is our new Cavalier King Charles Spaniel, one of the friendliest and most loving breeds of dogs around. He’s such a happy little guy and loves to play all day !

Anyway, as I was overseeing this $30,000 rehab (which I am converting from a 2 bedroom to a 3 bedroom), I got to thinking about how far I’ve come since I started in under market value real estate investing in 2001.

I was able through a lot of hard work in San Antonio investment properties to retire financially at the young age of 28. Didn’t have much money, had $40,000 in debt from college. But in a few years’ time, I owned dozens of little bitty single family homes in San Antonio. In cash. I have lots of passive income.

Now my life is awesome :). I have plenty of monthly cash flow coming in from my below market value, owner financed houses. I could have listened to my parents and worked in a cubicle for the next 40 years, but I decided to ignore that. I’m sure glad I did and invested in under market value properties.

But what about you? Many people in America toil for decades in jobs where they are bored and listless….just counting down the days when they can retire.

Man. That. Sucks.

It does not have to be that way. The best way to live is how I am living today – with self determination, choices and autonomy, and passive income. I get to choose how to spend my days. If I wanted to, I could sit on a beach and chill for the next 20 years or whatever. I have that kind of cash flow. But I keep investing in under market value, positive cash flow investments in San Antonio because I love it and I want to help others. Buying and selling distressed properties makes my team money, makes me money, and I help people get into a house.

You too can change your life if you are unhappy with it. In my opinion, one of the best ways to change your life is to invest in San Antonio investment properties. If you do it right, you can within a few years have a substantial cash flow that you don’t have to work for.

How to invest? Well, I personally buy cheap houses below market value in San Antonio TX and seller finance them. I’m not a rental guy, not that there is anything wrong with that. Owner finance is just a lot simpler.

Of course, you need to have cash to do what I do. If you don’t have cash, go borrow some from a private investor. That’s really how I got rolling in 2001 – I was able to borrow $2 million from a private investor over two years. It sounds tough, but really, if you go and ask enough people, you can eventually borrow enough capital at a reasonable interest rate to buy your first house.

 

Should I Become a Real Estate Agent as an Investor?

Investing in under market value properties in San Antonio, Texas has provided me with a fantastic, long term passive income. Before the real estate downturn of 2007-9, I was not a real estate agent, and I relied on several investor friendly agents to show me potential under market value distressed properties in San Antonio TX.

After the crash, many real estate agents got out of the real estate business . I discovered that finding a good, long term real estate agent was harder than before to buy below market value property.

It was in 2010 that I made a fateful decision: I became a real estate agent and investor myself, and it has been a great decision for me. It has made it easier for me to buy under market value properties in San Antonio TX.

Being a licensed Texas real estate agent has really helped me to build my distressed property cash flow in the last five years. Currently I own more than 50 owner financed investment properties in San Antonio TX. On most, I am making at least 10% return, which means I have cash flow of $500 to $800 per property. Most of them I own in cash.

Whenever I buy another distressed real estate property for buy and hold, I am able to save at least $1000 on real estate commissions. If I buy 40 houses a year, that’s more than $40,000! What a deal!

If you are buying more than 1-2 below market value properties per year, I think it is a good idea to go ahead and get your real estate license. If you do absolutely nothing else with it, your real estate license will save you majorly on commissions.

On many of my deals, I as the real estate investor agent buy the under market value property, fix it, and then resell it with owner financing. I am able to save TWO real estate commissions on these deals, which in some cases saves me $5000 or more!

Advantages of Being a Texas Real Estate Investor and Real Estate Agent

  • A real estate investor agent can save on real estate commissions for below market value properties, as I illustrated above.
  • You have access to your area’s MLS and can do your own due diligence on potential investment properties. Having MLS access saves you time, and allows you to get offers in before other investors.
  • As a real estate agent investor, you will be able to network with other agents, who certainly know people who want to invest, or may be investors themselves. I often buy unlisted properties because of my contacts with other agents in San Antonio TX.
  • You can do your own BPOs or Broker Price Opinions. This is a 1-3 page report that a licensed real estate agent can do, for a payment of $50-100. This is a great way to earn extra cash flow as you are getting started in real estate investing.
  • You also can sell retail properties to supplement your income, which has really come in handy for me several times each year as a real estate agent investor. Nothing like earning another $20,000 per year!

Clearly, the advantages of being a real estate agent investor  are many for getting texas cash flow. I believe becoming an agent is really worth it if you buy several under market value investment properties annually. I also have found that being a real estate agent investor makes it easier to work with investor looking for a good out of state investment property.

Buy and Hold or Flip Out of State Investment Properties?

Anyone who is involved in real estate investing for long will eventually ask him or herself a critical question:

Should I buy and hold or flip San Antonio investment properties?

Flipping houses has become very popular in the last decade, probably due to all the Flip That House type shows on TV. On the other hand is buy and hold investing, which is probably the oldest way to make money in real estate investing.

So which should you do? Well, it depends!

Overview of Flipping Houses

The basic definition of flipping a house is buying a property under market value (20-50% usually), improving it, and then reselling it for a profit. To gain maximum financial advantage, the goal is to sell the house as quickly as possible after the rehab.

A good house flipper in under market value houses will try to buy, rehab and resell the under market value property as quickly as he can. The reason is that holding a piece of real estate without any income coming in costs money. Some of ‘soft costs’ of holding a flip property include:

  • Property taxes
  • Utilities
  • Hard money finance charges
  • Any repair and maintenance

House flippers try to hold the property as little as possible. In the flips I have done in the last year, I held my San Antonio investment properties for about three months each.

Overview of Buy and Hold Investing with Out of State Investment Properties

This type of investing with below market value properties involves purchasing the under market value house, making some amount of improvements, and then keeping the house for rental or owner finance income. To pay for the monthly costs of holding the property in most cases, the house will be rented to a tenant. Typical holding costs for a buy and hold property are:

  • Financing
  • Taxes
  • Utilities
  • Property taxes
  • Maintenance costs

It should be noted here that there are other forms of buy and hold investing, which is the type we usually do. That is, we buy and hold the property in cash, and owner finance the under market value house to a qualified buyer.

The advantage of this type of buy and hold investing with out of state investment properties is that there are no maintenance costs. Also, without a mortgage, this type of under market value investing is usually less risky, especially in a downturn.

Pros of Flipping

  • Short term profits: You can, ideally, realize your profits in a few weeks or months. Your cash will not be tied up in an under market value property for very long, and you can move on to another deal.
  • If you can flip a house in under six months and make at least 15% profit, you have done very well.
  • Good ROI, if you know how to rehab an under market value property without overdoing it.
  • No renters or landlord headaches.

Cons of Flipping

  • Making money at it takes a lot of work. The reality shows make it look easy. Flipping a house and making money isn’t as easy as it looks.
  • Unexpected costs: Anyone who rehabs under market value houses for a living will run into unexpected additional costs. This can be especially damaging when you are trying to make quick profits.
  • Rehab problems: You might think it will take a week to do that roof, but it takes six weeks. That adds to your time line and when you will be able to make a profit.
  • In an appreciating market, you may have trouble finding under market value houses that are truly flippable.

Pros of Buying and Holding

  • Creating wealth: You can really build wealth over time with buy and hold investing, especially with owner financing rather than renting under market value property. Real estate also will generally increase in value over time, which can make you very well off.
  • Steady cash flow: If you own several properties that each make $800 per month, this is a nice way to earn a living.
  • No worry about selling short term: You can usually wait out the inevitable downturn in the market as you are enjoying the cash flow from the property. A flipper could end up in trouble if the market crashes in the middle of a project.

Cons of Buying and Holding

  • Market changes: If you need cash fast, you could need to sell your under market value property but the market dipped so you lose money.
  • Legal problems: Tenants can be a pain in the neck, which is why we mostly owner finance our houses. We only carry the note on our houses, so we have no tenant issues at all.
  • Struggles with being a landlord: A buy and hold rental property can turn into a negative cash flow situation easily if you do not buy the property at the right price, and if there are expensive repairs. Vacancies are another big problem in bad markets. Again, that is the plus of investing with owner financing and buying cash – no mortgages and no tenants.
  • Property management responsibilities for rentals

Overall, in our experience, we prefer buying and holding with owner finance over flipping. Flipping is great if we need to get more cash to buy and hold more houses, but it is not a long term wealth creation solution for us for Texas cash flow.

 

 

3 ways to stay positive in the midst of a storm

Key Takeaways

  • Listening to positive and inspiring people keeps your spirits up in rough times.
  • Staying positive can lead to new business opportunities.
  • Stay away from negative real estate investors especially online forums.

This article now appears in Inman Select.

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Maintaining a positive attitude in San Antonio investment properties has been key to my long-term success since 2001. My mentors taught me that staying relentlessly positive in my investing would propel me through rough waters.

And have I ever been through some rough Class-4 rapids in my day.

But let’s back up for a second. Before the real estate crash of 2008, I focused largely on $1 million homes in San Antonio, Texas, which I rehabbed and resold for a 30 percent profit. Those were the days — rehab a house in four months and sell it for a $325,000 profit.
Learn from tough times

Then one morning in 2008, I called my local bank to borrow an additional $250,000 for two rehabs. The voice on the other end of the phone said, sorry — we aren’t loaning money on under market value San Antonio investment properties anymore.

What? And that was when it all started to fall apart. It was nearly impossible to borrow money, though I owned 100 houses free and clear and had an eight-year success record.

But I had a bigger problem. I was stuck with $1 million worth of under market value houses that I couldn’t sell. No one could qualify for mortgages, and the market crash had dropped their value to under $800,000.

I had many sleepless nights. Despair crept up on me as my bank account shrank.
Focus on positive speakers

Even though I was losing money left and right at this time, I still managed to keep a positive, can-do attitude with my out of state investment properties.

That’s easy to say, but how did I do it? I listened every day to positive speeches and sermons from famous speakers and pastors.

Being a Christian, I listened every day to Joel Osteen; I found his uplifting sermons about prosperity in all aspects of life to be a huge lift for me.

Also, I listened daily to the leader of Christian Business Leaders International, Bob Harrison, who is also known as the No. 1 increase authority in America.

Harrison has been through trying financial times as well. But his optimism has carried him through, and he is now one of the leading business speakers in the world.
Lead with optimism and find new opportunities

Maintaining an optimistic outlook didn’t just get me through the market crash. It also opened new horizons for me in real estate investing.

I discovered something shocking: the expensive $1-million houses are the riskiest investments. When the market dips, the demand for those homes plummets, as do the prices.

On the other hand, my little, bitty $50,000 three-bedroom, one-bathroom out of state investment property sells just the same no matter what’s happening in the market.

The demand was always there for these small under-market-value houses, and each one made — and continues to make — me $600 to $800 per month on owner financing.

So, the crash and staying positive throughout it led me to an amazing new business opportunity — buying and selling distressed homes and owner-financing them. Even better, the crash allowed me to snatch up 100 of these houses for about $20,000 each, and they now sell for $50,000 each or more.
The crash and staying positive throughout it led me to an amazing new business opportunity.
3 tips for staying positive

It’s vital to maintain a positive, can-do spirit in your real estate investing, no matter what. This is what makes you stick to it when other investors give up. Here’s my advice:

1. When things are bad, listen to uplifting and motivational speakers

Find positive business mentors online that can inspire you and keep you motivated. Zig Ziglar is another great one.

2. Remove yourself from negative environments, especially online forums

I love the Internet, but there is a lot of negativity on some real estate investing websites. Many people just want to moan about how bad things are — it makes them feel better.

I don’t have even one second of time for this kind of talk. Associate with positive, can-do real estate investors only. And by the way, I made plenty of money in real estate without a website or ever being online at all.

3. Shadow a successful, positive mentor

Whatever city you are in, you can locate a good real estate mentor to inspire you. Why would he or she talk to you? Because you have something to offer.

Offer to help them with hanging signs, making calls or doing office work in exchange for learning from them. I met most of my mentors at real estate meetings in San Antonio, and their positive attitude rubbed off on me.

Maintaining an optimistic outlook in down times led me to even better real estate success in under market value  properties, so always keep your chin up.

 

Turn 3 Properties Into 6 or More in 5 Years With Your IRA

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I am a strong believer of investing in under market value real estate property with all cash and owner financing them. When you buy distressed properties with all cash and finance them to qualified buyers, there is one overwhelming advantage with these below market value investments:

  • You have no mortgage on your property investment, so if the property is ever vacant for any reason, you do not have overwhelming financial pressure bearing on you. Over leveraged real estate investors were a major factor in the real estate meltdown five years ago.

Of course, on the other side of the ledger, you cannot purchase as many distressed sale properties as you could if you leveraged your capital and use 20% down conventional financing. This is always a valid concern for people with limited capital to invest in the best San Antonio investment property.

Still I would like to illustrate how the smart and patient investor can take three fixer upper homes and turn it into 6 and possibly more in 5 years, assuming you have no additional cash to invest after the initial investments. The illustration below assumes you owner finance the houses, so you do not have any maintenance costs. This is our tried and true positive cash flow model!

That $275,000 in Your IRA

I run across many aspiring investors that have savings and IRA assets of $275,000 or so. In current market conditions in San Antonio TX, that $275,000 can fund approximately three solid distressed sale properties in cash. Let’s illustrate with three houses we have right now:

  • Property 1 – 262 Bogle St., 78207: $50,000 + $30,000 rehab = $84,500 investment + $2500 closing costs, $2000 commissions = $89,000 total investment.

Total Owner Finance Cash Flow Per Year: $8940 ($745 per month after tax/ins.)

  • Property 2 – 109 Llano, 78223: $29,900 + $40,000 rehab = $69,900 investment + $2100 closing costs, $2000 commissions = $74,000 total investment.

Total Owner Finance Cash Flow Per Year: $9,000 ($750 per month after tax/ins.)

  • Property 3 – 1027 Sams Dr., 78221: $59,900 + $40,000 rehab = $109,000 investment + $3000 closing costs, $3000 commissions = $115,000 total investment.

Total Owner Finance Cash Flow Per Year: $12,000 ($1095 per month after tax/ins.)

Total Income from 3 Properties Per Year: $29,940

The next step would be to bank that positive cash flow from your three properties for up to five years. At the five year mark, you will have approximately $149,700 in your tax deferred IRA.

At this point, how many property investments you can buy depends upon the state of the San Antonio real estate market. Right now, the prices are higher because unemployment is lower, and more rehab is necessary to sell the houses. However, there is a high probability that in the next five years, there will be a substantial downturn in real estate prices.

In the last crash from 2008-11, the price of my distressed houses dropped from $50,000 median to $30,000 median. I was able to purchase many more homes during the downturn.

If the prices go down to approximately $35,000 per property plus $10,000 in rehab (possible in a slower economy given people simply want any house to live in), you could buy at least 3 more houses, and possibly 4. With three more houses, you would have approximately $45,000 in total cash flow from your grand total of six houses!

If the prices stay the same five years from now (which in my 15 year experience is very unlikely), you could purchase at worst two more properties, with a total cash flow from your five properties of $40,000 or so.

In either case, that cash can be banked in your IRA to buy more of the best San Antonio investment property whenever market conditions warrant buying more.

I am waiting until the next downturn to take my banked cash flow from my current portfolio to buy at least another 20 houses. You can and should do the same thing!

 

 

 

 

 

Converting My Rentals to Owner Finance Was the Best Decision Ever

Before the market crash, I owned more than 100 rental properties. Like many investors, I once thought that owning rental properties was the only way to make money in real estate investing.

What I found was, I always was dealing with some sort of problem with the distressed property. It didn’t matter that I had property managers. When you own 100 houses, you always have to deal with a repair, a late bill, a vacancy, paperwork and so on.

I also found it was hard to know what my cash flow on each house was each month. Writing checks for new water heaters and fridges gets old fast!

It was around 2009 that one of my mentors talked to me about how he had retired with millions in real estate: He only owner finances his fixer upper homes.

Rather than being a landlord responsible for property upkeep and repairs, there are more efficient ways to generate monthly cash flow.

Be the Bank!

Think about your own house. Each month you send an electronic payment (or check) to your mortgage company or bank. Your bank doesn’t have to maintain the property – you do. Since you are buying the property from the bank on terms, it is naturally to your benefit to maintain the property. The bank knows that statistically, homeowners are much more likely to keep their houses in good repair than renters. That’s what makes holding mortgage notes so attractive.

My mentor taught me that I could be the bank for people who do not have the credit history to qualify for a regular mortgage loan. I carry the loan on the distressed property for 30 years just like the bank, and the new owner of the house simply pays me a mortgage payment each month that includes taxes and insurance.

My mentor told me, why should you spend $10s of thousands on rehabbing a property when you can have the end buyer do most of it? Owner finance investment property is smart.

The end buyer usually has a vested interest in maintaining their property, as they own it.

How a Typical Owner Finance Property Deal Looks:

$62,000 cash purchase, $10,000 rehab, 50 DOM, sold for $89,900 owner finance, $937 per month, 12.3% ROI.

This 3 BR 1.5 bath property investment with positive cash flow north of downtown San Antonio TX is in a heavily revitalizing area. It was bought by the investor for $62,000.

The under market value property only needed approximately $10,000 of rehab, including new flooring, paint in and out, and minor foundation work.

The total project cost to the investor for this under market value property was $72,000.

Within 50 days of the completion of rehab, it was sold with owner financing with the following terms:

  • $5000 down
  • $89,900 final price
  • 10% interest
  • 30 year note
  • $937/month PITI positive cash flow
  • Cap rate 12.3%

After I converted most of my under market value properties to owner finance, most of my worries about my properties disappeared. The owner maintains it and I simply enjoy the monthly cash flow from each property into my bank account.

Most people don’t seem to ever consider owner financing their property investment, probably because they don’t know about it.

The keys to success in owner finance property are simple:

  • Carefully documenting the income of the potential buyer and verifying their work history
  • Follow the Dodd Frank law, which mandates that you must collect proof of their income and document their work history.
  • You can have a Texas licensed loan originator do this for you for a $750 or so fee (we have one on staff).

The bottom line on owner finance investment property  is you enjoy cash flow without maintenance and the buyer enjoys buying their own home at last – a true win-win for everyone.

2513 W Poplar St, San Antonio, Texas 78207

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  • Address: 2513 W Poplar St, San Antonio, Texas 78207
  • Description: Fixer upper home, great opportunity to own cash flow property, Booming Texas Market, 3 beds, 1 bath, 1000 sqft.
  • Estimated Repairs on Distressed Property Sale:10K, includes interior texture/paint, new HVAC, minor flooring, minor foundation, plumbing/electrical up to code. Max ARV 79K with owner financing, Price: 45K cash.
    Exit Strategy: Owner Finance for positive cash flow with 10K repairs: 5k down, $800 monthly P/I, 30 year amortization, 10% interest, Price: 79K, can sell note after 1 year.
  • Positive Cash Flow: $700 per month with no maintenance. Consider this investment in property!

Why You Should Ignore Popular Advice About Real Estate Investing

This article now appears on Inman News.

  Key Takeaways

  • Ignore what your eyes tell you about property’s appearance: study the numbers, cost of repairs and the area.
  • Pay 20 percent to 30 percent under market value or move on to another deal.
  • Buying in poorer areas means less competition for the deal, and it could make you 12 percent ROI or better.

There are so many myths out there about purchasing distressed properties in what people often call “problem” neighborhoods. Raise your hand if you ever heard this before: “Don’t ever buy a real estate investment in a bad neighborhood.”

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I hear it all the time. It’s baloney. Many of the best San Antonio investment properties are in so-so areaa.

If you just trust your eyes and only buy in nice areas, your chances for making money are slim. For instance, a major real estate investing company is a perfectly good organization that focuses on selling rental properties and related training.

In a recent blog, however, the company said this: “The whole idea of buying property for investment is to buy in hot or an up-and-coming neighborhood. Don’t waste your time or money investing in a property located in a poor or declining area.”

It is correct in the sense that you should definitely buy in an up-and-coming neighborhood. I do that all the time when I buy under-market value houses in San Antonio.

I study the market and find the neighborhood near a hot area that I think is going to get hot next, and I snatch up $40,000 houses for cash before they go up to $80,000. I make 10 percent to 15 percent a year on most of these best San Antonio investment properties.

However, the rest of the quote is questionable: “The whole idea of buying property for investment is to buy in hot or an up-and-coming neighborhood.” If this means paying anywhere near market value, I don’t agree at all. That’s how investors end up making zero cash flow.

I will buy a 20 percent to 30 percent under-market-value house in a hot, affordable neighborhood (under $80,000 wholesale is my strategy). That makes a lot of sense. That type of deal will produce excellent, positive cash flow if you don’t over rehab.

For example, a California investor bought this three-bedroom, one-and-a-half bathroom house in a rising area north of downtown San Antonio:

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The investor bought it from me for $62,000 — approximately 30 percent under market value — and did $10,000 in repairs. He resold it with seller financing with $5,000 down, $89,900 price, $937 per month property, taxes and insurance (PITI). That’s 12 percent ROI.

This company might consider this a poor neighborhood, but my investor doesn’t have to repair the house, and he makes 12 percent on his money. What a great out of state real estate investment.

“Don’t waste your time or money investing in a property located in a poor or declining area.” I don’t buy in declining areas, but what defines a poor area?

Does that include households that make $2,500 or $3,000 per month? That’s 90 percent of the owner-finance buyers that helped me to financially retire before I was 30 on distressed sales.

The majority of the neighborhoods that I invest in are considered poor areas, but they are on the way up, as the city is pouring revitalization dollars into parks, green space, walking paths and more.

For instance, this three-bedroom, one-bathroom home west of downtown is in a so-so area:

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Sure, it’s not pretty, but smart investors ignore what their eyes tell them and study the numbers, the nature of the repairs and the area. The repairs on this house to resell it were minor, and the nearby area has seen millions and millions of dollars in new construction and city funding.

The investor purchased it from me for $29,900 — about 30 percent under market value. After $7,000 for paint inside and out, foundation repair and clean up, it sold with seller financing for $5,000 down, $55,000, $550 per month PITI. That’s 11 percent ROI.

And this is in an area that most investors would consider poor. It is, however, on the way up.

Of course, you cannot simply go into any poor area and start buying cheap, distressed sales with positive cash flow. That’s also a path to ruin. But if you only purchase investment properties in nicer areas, you will be fighting a lot of investors for any of the few deals that generate cash flow. That drives prices up to market value and beyond, and you can kiss your profits good bye.

Invest in distressed, fixer upper homes or under market-value properties for true positive cash flow, but be certain to:

  • Carefully study the market to learn which area is near a hot area and will likely go up in value in the next year.
  • Get the property for at least 20 percent under market value to leave room for a profit of at least 25 percent on a flip and 10 percent ROI on a buy-and-hold.
  • Buy out of state investment properties in areas that are less expensive, especially in B and C neighborhoods.
  • Owner finance the property to a qualified buyer — save yourself thousands in rehab costs. Do enough to sell the house and leave the rest to the new owner.

If you invest carefully in properties in poor or bad areas, you will end up with cash flow that all the poser investors simply dream of.

Why I Love Down Real Estate Markets!

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I have invested in all kinds of real estate investment properties in Texas for 15 years. That means I have seen many ups and downs in the local and national real estate market.

It’s true that in the last real estate crash, I did lose some money. In fact I was sweating quite a bit in 2010! Still, I came out of the crash owning more than 100 MORE houses than I did before the crash! It turns out that the real estate crash was a blessing for me.

Here are three ways that I was able to get through the last downturn in terrific shape in my real estate investments, especially distressed sales.

#1 I Got The Heck Out of Expensive, Higher End Houses

The biggest problem I had in the latest downturn was that I had far too much money invested in expensive houses from $500,000 to $1 million in San Antonio TX. When the market was rolling in 2004 to 2006, buying these houses was great. I bought a house for $500,000, put $200,000 in and resold it for $1 million. I was making fantastic money, but the bubble was about to burst.

One day in 2007, I called the bank and they would no longer loan money to investors. My heart sank. That’s when I knew a down turn was coming. And it sure did.

I ended up getting stuck with several $1million houses that I could not sell for what I paid for them. I ended up losing several hundred thousand dollars.

That got me down, but it was a blessing: I learned to not invest in such high end real estate. While it can be good when times are good, those houses are the first to get hit in a downturn.

I learned to invest in real estate that ALWAYS in demand no matter what’s going on in the economy.

#2 I Started Investing Only in Under Market Value Affordable Homes

If you read this site at all, you know what I do: I invest in under market value real estate in San Antonio and distressed sales, which I then owner finance at 10% interest. This real estate product is always in demand in my affordable neighborhoods. I know that no matter how bad the economy gets, I can always sell these houses and make money.

The best part about distressed property sales: The demand for them increases in a downturn! People lose their jobs and houses, so need a small house, and I provide it.

As a matter of fact, I love real estate downturns. I actually make more money. In the last crash, I snatched up 100 more houses at $25,000 each. Now they are worth $50,000 or more.

I love real estate crashes.

#3 I Buy in Cash And Don’t Sell

As a distressed property expert,  I buy most of my houses in cash and for cash flow. So in a crash, the last thing I do is sell a house for a loss. I simply let the house produce cash flow. If I have to foreclose because someone loses a job, then I resell it for $5000 down again.

People tend to lose their shirts in crashes because they buy more expensive properties and are depending upon appreciation to make money. I never do that. I simply buy my little under market distressed houses or distressed sales for cash flow.

Always remember: The key to my success in real estate investing is I can make money in any market.

 

 

 

 

The Crash and How I Stayed Positive in Real Estate Investing

‘If you look the right way, you can see that the whole world is a garden.’ – Frances H. Burnett, The Secret Garden

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By John Majalca, Financially Retired Real Estate Investor

It is incredibly important to always stay positive in your real estate investing business. Early on in my career, I learned maintaining an optimistic attitude in my under market value real estate investing would carry me through the tough times.

And have I had some tough times! But let me back up:

Before the crash, my real estate investing in distressed San Antonio properties boomed. I also bought $1 million houses, rehabbed them and resold them. These were the boom years – I could resell those big mansions for a $300,000 profit! Life was great.

The Crash

And then one day in 2007, I called the local bank to borrow more money. They said:  ‘Oh, we aren’t loaning money to investors anymore.’

Whoa. And that was when things started to crumble. I couldn’t borrow money from banks, even though I owned more than 100 properties with an excellent record of success.

Worse, I couldn’t sell my $1 million mansions anymore for what I paid for them. And of course, fewer banks were doing mortgages, people lost their jobs and couldn’t qualify….that end of my business was a bit of a mess.

God and Increase

However, I managed to stay positive throughout it all. In my personal case, I focused on God and people who deliver Godly, positive sermons and speeches. Some of the positive people I listened to online included (and still do include) Joel Osteen. I find that his positive and optimistic sermons about increase and prosperity (in all things, not just money) to be tremendously uplifting.

I also listened every day to Bob Harrison, who is known as America’s #1 Increase Authority, and is the founder of Christian Business Leaders International. His lectures and seminars are incredibly rewarding.

Those two mentors most of all got me through the crash.

Optimism Leads to New Opportunity

Maintaining a positive outlook through the downturn opened me to new opportunities in real estate investing. I realized that ironically, it’s the higher end, $500k+ homes that are the riskier investments! Meanwhile, my little $40,000 2 BR 1 bath houses still bought and sold like normal! In the middle the crash! And that was when I fully focused on distressed, under market value real estate investing.

My logic was, people will always need a house to live in, even in bad times. So the demand for affordable homes ($25k-75k depending on the market condition) will always be there. I was able to buy up distressed homes in the crash for as little as $20,000!

I bought 200 of them and most I still hold today, each producing monthly cash flow with owner financing.

3 Tips

Now, I always advise new and experienced investors to maintain a positive attitude at all costs. It is what will make you stick with investing and be successful when others quit. Here is what I recommend to you:

  1. Listen every day to positive and motivational people during your work. Personally, I listen to Christian leaders such as Harrison and Osteen, but that is what works for me. You may be different. Find positive mentors online that you can listen to and inspire you. Listening to them is what got me into the best part of my real estate career – owner financed real estate in under market value houses. You cannot go wrong in distressed sales with positive cash flow.
  2. Stay away from all negativity, especially online. The Internet is wonderful, but it can be a cesspool of negativity! The problem is that people feel anonymous and uninhibited online, and will say terrible things. This is true in real estate forums. I’ve had people tell me all sorts of nonsense about owner finance, that it is dishonest, illegal, predatory….it’s a waste of my time. I get away from them immediately. If you spend too much time among real estate investors online, the pessimism of a few can really get you down. Get completely away from that! I made nearly all of my money in real estate investing without a website and without ever going online. It’s not necessary to participate in real estate online forums to succeed in fixer upper homes for positive cash flow.
  3. Find a positive and successful real estate mentor! Whatever city you live in, you can find a mentor to talk to that can inspire and motivate you. Why would he talk to you? Well, what can you offer him? Offer to help him out for free in any way he needs so that you can learn from him. You want to find a really successful, long term, ethical investor, ideally a person in business 10 years. You’ll  have to go to real estate meetings for a few months to figure out who is who in your city. I did exactly this when I first got started and got connected in San Antonio with very successful investors who still inspire me to excellence today.