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My 2 Favorite Markets To Work In As A Real Estate Investor

 

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My 2 Favorite Markets To Work In As A Real Estate Investor

Joe: Hey, it’s Joe. Another question. “Joe, what’s your favorite market to work in as a real estate investor?” Now, I’ve got two favorite markets that I like. I like expensive properties and I like cheap properties. I like both of those markets for different reasons. If I’m in an expensive market, I know that I can make more money per deal. So, let’s say I’m working in $400K, $500K, $600K properties in maybe Utah or California or, you know, the east coast, or down in Florida along the coast. And I’m working in these higher end markets in the United States.

Joe: When I do that, the likelihood that I’m going to take a $20K payday on a lease option deal is pretty high. Maybe I get $10K in cash, maybe $10K, you know, on the back end, sometimes I get $10K up front and maybe another $10K or $15K or $20K on the back end, you know, and when you’re working in higher markets, the higher the markets you’re working in, the bigger the payday that you can have. But, it does take a little bit of expertise to be able to that, and confidence.

Joe: You’re going to be talking to people with a lot of money who often expect more from the person they’re talking to. And they may have a sense quicker that you don’t know what you’re doing and have less at stake. You know, they have more options. When you have more money, you have more options. That’s why you want to have a successful business so you have more options in your life. People that have more money with more expensive properties usually have more options. And you want to be able to show them what those options are confidently and then have them pick the best option, which is almost always doing it the way that I suggest that makes you money. And if you can do that, you’re going to make a ton of money.

Joe: The second type of properties are the cheap properties. Cheap properties are fun. They make you less money per deal but you can do a lot of them and you can do them fairly quickly and you can keep a lot of those for your portfolio. If you’re dealing with $600K properties, you’re probably not going to keep those in your portfolio. And so you’re not going to build wealth. You’re going to make bigger chunks of money. But the cheap properties, you can keep those in your portfolio.

Joe: So, let’s say I go out to a market that has $50K properties, a rural area, or maybe an urban area that has inexpensive properties that have good rent to price ratios. So, if I go out in let’s say downtown Indianapolis and buy a property for $50K that has a rent on it of $900 a month, I compare that to buying a $150K property that has a $1,200 a month rent to price ration, that cheap property, I have to put down a whole lot less money, I have to put up a whole lot less money to buy a $50K property than putting up $150K to get, you know, slightly more than, well not even twice the, I have to put up three times the amount of money not even to get twice the amount of rent on a property like that.

Joe: So that rent to price ratio makes a big difference. And, when you’re buying properties in those low end properties, especially in the $30K, $40K, $50K range, a lot of people own those things free and clear that are just willing to get rid of them. And what you can do is make them a land, they don’t even have mortgages on them. So, they, you can make a land contract offer on those properties and pay for them with a zero interest loan.

Joe: So, let’s say you have a $30K property and you want to pay them, and it’s got $700 a month income and you want to make sure $200 a month of that is cash flow, and then maybe $200 of that is, maybe $250 of that is, and I’m doing these numbers in my head real quick here, another $150 taxes and insurance and property management, so, maybe you’ve got $350, let’s say $400 off that $700. That leaves you $300 a month that you can pay them. If you divide that into $30K at $300, that’s, what, 100 months. So, that’s about eight years of payments.

Joe: So, eight years of payments and you pay a property off free and clear in eight years. Plus every payment that you’re making, every $300 you’re giving them is 100% principle. There’s no interest on it. And the way that you approach people with something like this is say, “Hey, I can make payments to you over time. I can make 100 payments to you of $300 a month and pay you off in eight years. Would that be acceptable to you?” And we’ve had so many people accept these. I have multiple students who have many, you know, many properties that they’ve bought with this method and that they’re paying their properties off in five, seven, eight, ten years and they completely own these properties free and clear without having a dime in it, plus getting the cash flow from these properties while they’re paying them off.

Joe: And getting lease options fees on top of that. So they’re making a lot of money on little properties like that and so I love those markets.

Joe: So, high end markets, low end markets, they’re both beautiful. Of course you can work in the in between markets as well. You know, those have been the staples. But, don’t overlook places where you can make a ton of money.

Joe: All right. Good luck.

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