Cash Rich, Equity Poor part 1

Over the next two posts I will examine similar investing strategies that will have a different outcome. In our current market we can buy single family homes and cashflow $200 without being experts. With the drop in property prices and the consisitent renal rates, their has become an inequality in the marketplace. And it's to Our advantage!



Eastpointe 3 Bedroom, Brick Bungalow, Basement & Garage
$101,000 purchased 24 months ago


24 to 36 months ago as investors in Eastpointe for example, we would pay anywhere from $90,000 to $105,000 for a 3 bedroom, brick ranch, with a basement and garage. Now let's look at what that property would cost per month:

Debt Service: $583.33 ($100,000 @ 7% interest only)
Taxes: $275 ($3300 annually)
Insurance: $45 ($540 annually)
Water: $50 ($600 annually )

Total: $953.33

For us to make these numbers work our exit strategy was always a lease option. We could usually get better tan market rent, $1100 in this case, and we were able to sell the home for an 10% over market elevated price. When mortgages were easier to qualify for, and it was a sellers market, this strategy worked great. However the market has shifted and we all must adjust.




Eastpointe, 3 Bedroom, Brick Ranch, Basement & Garage
Purchased and repaired at $60,000 in September 2007

Let's use today's numbers to look at the opportunity afforded to us in this buyers market that we are in. Just to qualify a line item that you may think was missing above, our price includes repairs.

Debt Service: $440.25 ($60,000 @ 8% principle & interest over 30 years)
Taxes: $275 ($3300 annually)
Insurance: $45 ($540 annually)
Water: $50 ($600 annually )

Total: $810.25

You can see at today's pricing you can pay principle and interest, cashflow almost $200 monthly, and own a home for 60% of 36 months ago pricing. Obviously values are down, but it is to our advantage.

Take for example the changes in the mortgage industry in the last 6 months to a year. There are more renters out there today than ever before. We are all able to deliver the bread and butter 3 bed, basement homes to the Americans that need them. I wish I had some hard numbers to back this next statement up, but I have to believe that there are more than 10,000 renters in the tri-county are that can afford $900-$1100 per month. I don't know your personal goals, but if you want to own 10, 20, even 100 houses, what is Your excuse?

My next post will help you discover the power of being
Equity Rich & Cash Poor.

~Make It Happen~
www.REIAofMacomb.com
www.PrettyMiHomes.com
www.WeOfferToday.com