I Never Do REI with Mortgages Anymore. And You?

Question

I am familiar with the argument of doing REI with mortgages; so you can leverage your purchases and buy more properties quickly. But I have seen far too many people get into trouble with this sort of scheme. I am a simple man, and I want a simple, stress free path to cash flow.

These days I only buy in cash or use cheap other people's money for 1-2 years. I flip houses in the interim to build cash to pay off those short term loans.

So my general REI strategy is to buy in cash through my SD IRA. I've bought various types of MFHs and SFHs over the years. But my belief is the best bang for the buck is distressed homes in the range of 35-55k. I've rented some, but I do owner carry on many houses now, and I make over 10% a year on each one. I especially like having the buyer maintain the house, being the simple man that I am  :)

I know many people on BP use mortgages and I respect them, just not something I like to do anymore.

Account Closed · Answer

how are you doing your owner fiance with dodd-frank rules/ What type of down payment do you take? What credit requirements ? What discount do you feel that you would sell your notes for at after a year of seasoning ?  Thank you I have some free and clear properties and want to delay taxes

Jeff S. · Answer

I am with you; I hate closing costs Account Closed However, your model works well in your area. In fact there was a podcast with a guy doing the same thing. This is not feasible in my area or I would do it too.

Eric Thomson · Answer

Jim, this is exactly where I am trying to get now. I've been snowballing my profits into each deal and after my current project I'm going all cash from here on out. I will flip houses and continue to snowball the profits until I can pick up a few rentals/owner finance properties along the way.

Bill Gulley · Answer

Don't see a question there, but what that says to me is that your opportunity costs as to the use of your money is really low, nothing much else to do with it. But, if that buys peace of mind, then good for you. The cheap OPM is good too, but banks are more plentiful with more money at pretty good rates for REI. A money management aspect, leverage is good when used responsibly. Good luck :)