Get Rich Quick

By Bernard Hale Zick (Copyright, with right of publishing to MSI.)

Question: I got into this business with the hope of making up for lost time. I need a cash flow and to build net worth quickly. My first deal got me five houses at ten per cent below market but they barely break even. Am I on the right track?

Answer: So all you want to do is get rich quick and stay that way, right? The answer is simple.

First, the deal you did was a good one. It is a perfect step for building long term net worth and cash flow in the future. You purchased $350,000 in assets that will appreciate to double that in ten years at current appreciation rates. The break-even cash flow you now have will turn into a strong positive. (FYI to the reader - the original question has lots of details about the properties.)

It would be great if you knew to ask for separate releases from the blanket note you gave them, but it will still work. You build big equities by buying at deep discounts. Foreclosures and tax sales are a good way to do that. You build cash flow buying fixers and lease options that you rent out.

But the real point you need to hear is this…

You need to get on a program, one that takes into account doing it all the hard way. Get half a dozen ways of finding deals working, follow up on leads, make deals, etc. I call this your "Investor's Business Plan." If you will work that plan, an amazing thing will happen. Now and then, you too will find a super deal. It will be the one that gives your cash flow situation a leap forward or makes you a pot full of equity.

As an example, a student of mine found a half rented mobile home park while looking for single-family house deals. She purchased the park for nothing down, bought foreclosed mobile homes for a song and financed them, then rented the park out one unit as a time. Six months later she has a $3000 per month positive cash flow.

Another student found a pre-foreclosure with $200,000 in equity that would rent for the payments on the $190,000 first mortgage. The owner needed a place to stay since he was days from loosing the house. My student had just been given a deed to a much smaller home. It had about $15,000 in equity; the first mortgage was paid current. That seller wanted to walk away from it after his divorce.

The student traded the "equity" in the cheaper (divorce) home for the pre-foreclosure. He lease optioned the $390,000 pre-foreclosure home to the potential renter/buyer getting enough money for the option to cover the back payments. Now he is $200,000 richer on his financial statement! My point is that he was not going for such big fish. He was looking for his regular deals when he heard about the larger foreclosure.

Again, both of these people were "working their plan" when they came across super deals. Don't get impatient. This may not be a "get rich quick" business, but, worked properly, it is a "get rich slowly but surely" business!

BZ