Time is of the Essence!

We are in a very "Opportunistic Cycle" in the Real Estate Market right now. Just think about it. There are hundreds of thousands of properties that are for sale. What is worse is they are non-occupied. The financial institutions are responsible for these properties and they are rapidly becoming overwhelmed. With maintenance issues, not to mention problems with break-ins, squatters, and local communities enacting ordinances that penalize the financial institutions for owning non-occupied properties because these properties are not being kept up. All of this is causing the Financial institutions to become "don't-wanters".

The financial institutions are starting to listen to all sorts of ideas in order to get these problem properties off their books. They are carrying back a lot of the financing, if not all of it, to dispose of the properties. Why, this can be a wind fall for those who take the chance! Just take a safe chance; do not let the banks pin you down to terms that you can not fulfill.

Keep in mind that you should be wary of acquiring commercial property until you have more experience. People will always need a home to live in. They don't need to have a business or rent a commercial property. Most people will work for someone else and pay rent for the family home.

If you think that you can rent out a home for a certain amount, that is fine. However it is only a matter of time before that home will be empty and you get to make the payment.

I try to keep the rent down to 75-80% of what the market will bear. That way I do not have to put a revolving door on the house. I will keep tenants a lot longer. If I can keep a tenant in the rental for 16-20 months I will have less costs. No need to advertise, re-rent, re-paint, etc. The ideal situation is to have your long-term tenants buy the home they're in after 24 months for you to profit. They will then be what the banks call "seasoned" or "proven".

If your tenants made your payment and expenses + $100.00 a month for you, you will do fine. If you sell to the tenant that knows you, and you know them, you have history. Carry back the note on the property and get interest on your margin or profit. The benefits:

1. You will be getting interest on your "blue sky".
   
2. They will have a home that they can afford.
   
3. They will recommend you as a land lord.
   
4. You will make that $100 dollar a month, if you continue renting out the home.
   
5. You will make the interest on your margin, once you sell to them.
   

Here's an example: You will be making money ($2000.00/month) on "air and good faith":

1. if you had 20 small family homes that the tenants can afford,
2. the tenants know that if they keep the home up you will not raise the rent,
   
3. they may even be able to buy the home in the future if they prove themselves.

Like my Dad used to say: "One hand washes the other and both hands wash the face".

All of that being said, time is of the essence. The time is now to acquire properties that are currently held by "don't wanter" financial institutions before things change again. Once people start jumping on these deals, it will be too late for you.

Just a thought.