Broke Cash Investor - Can We Do It?

Broke Cash Investor - Can We Do It?

Rogersville, AL · Member since 2008 · 6 posts · 3 votes

Starting with no money in 2017, my wife and I decided we wanted to be cash real estate investors. For personal reasons, we have committed to not borrowing money for any reason. I understand this is contrary to all good real estate investing advice, but just accept I have a mental defect that will never allow me to accept borrowing money and go from there. 

We saved monthly for over a year and in the fall of 2018 we purchased a half acre of land with a 1990s model single wide house trailer on it for $15,000 from a local real estate investor who had abandoned the project after letting it sit on the MLS for a year at 40k and needed money for another project. We did some heavy cleaning and had it sold within a couple of months for $25,000. We took that, continued adding money monthly, and watched the market for another deal. About 6 months later, in May of 2019, we purchased a beat up 3 bed, 1 bath brick home near a college in Florence, Alabama for $35,000 from a bank. We put another $15,000 into it over the course of 6 months while waiting on the right of redemption to expire. Once expired, we sold it for $85k. After Realtor fees and paying ourselves back for some of the work we overspent on, we had $75k in the bank back in February of 2020.

Then, COVID-19 hit. The markets crashed. We are complete amateur investors, but somehow managed to put all of our $75,000 into funds and four weeks later sell it all for $90,000. Now we are looking at what's next. What would you suggest? All I read about is that the fix and flip market is dead. I could probably come across another deal in the next 6 months that would be worth buying into, but am I wasting my time when I should be in other types of real estate investing? I've been discouraged by finding that deals through the ways I was looking before are turning up nothing (REO sites, local auctions). I'm debating trying to do the "we pay cash for houses" campaigns and source our a local buyer. Looking at maybe picking up something to keep, but I can't do anywhere close to the numbers I've been doing in a rental or even VRBO market. Any advice for someone in my shoes?

1Reply
17 views

Most Popular Reply

Rental Property Investor · Topeka, KS · Member since 2017 · 56 posts · 137 votes
6y

@Casey W. Can you do it? Of course you can! You’ve already proven that. There are lots of opportunities in Alabama, especially with the recent growth in places like Auburn and its outskirts. We have a goal this year of paying off our rental (bought it in Feb) because of your same “glitch.” Leverage is fine for some, but I want to stay in this thing for a long time and want to be sure my strategy works in the good times and in bad. Our current place will still provide a healthy return, so it’s an approach we can live with. Virtual high-five to you, brother!

See this reply in the discussion

4 Replies

Jump to latestLatest
  • Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    6y

    Up until this point you've come really close to what I'd call gambling three times.  I don't know about your area but most places a $15k mobile home on land isn't in livable condition, what would you have done if you couldn't resell, it seems you might not have had enough capital to bring it up to rentable or livable condition.  As for the second property you were spending money on making improvements during a time that it could have been redeemed and you would have had it taken away from you.  As for the third time you got lucky with market timing, that doesn't happen often and if you try to replicate it you put yourself in danger.  If I were you I'd start looking at lower risk and yes lower return options like a steady rental or even a flip that you own unencumbered after covid is over.

  • Rogersville, AL · Member since 2008 · 6 posts · 3 votes
    6y

    Thanks for the reply.  I'm thinking you are right, and your advice is what I need to be doing.  I will say though, that I think it was less gambling and more waiting very long periods of time to find a good deal.  The mobile home was livable.  Really not bad at all.  The house I was improving during the redemption period is in a state where they would have to pay back the cost of any permanent (whether essential or not) improvements to the property if they redeemed it, with interest. I just think I got really lucky three times in finding the right deal, and now that I have more money than before I am missing out on greater opportunity to be making at least something off my available cash while I wait on miracle deals. 

  • Real Estate Investor · Clovis, CA · Member since 2014 · 195 posts · 194 votes
    6y

    @Casey W.

    Nice story. I don’t agree with Aaron, at all, on your situation. I’m sure you could have rented out that mobile home for some good cash flow if you couldn’t sell it.  The other investments were well calculated as well. 

     It seems like you are good at finding the next opportunity.  (Obviously your options are more limited without using financing).  I think flips are part of your future. Even if you want to buy and hold - you need to generate a lot of cash to make that work.

    I say keep looking for the right opportunity.  I think your gifted at it - not lucky.  Just keep looking with your eyes wide open.  Continue to think a little bit different than the next guy and opportunities will show up.

  • Rental Property Investor · Topeka, KS · Member since 2017 · 56 posts · 137 votes
    6y

    @Casey W. Can you do it? Of course you can! You’ve already proven that. There are lots of opportunities in Alabama, especially with the recent growth in places like Auburn and its outskirts. We have a goal this year of paying off our rental (bought it in Feb) because of your same “glitch.” Leverage is fine for some, but I want to stay in this thing for a long time and want to be sure my strategy works in the good times and in bad. Our current place will still provide a healthy return, so it’s an approach we can live with. Virtual high-five to you, brother!

Join the conversationCreate a free account to reply, vote on answers and follow this thread.