Even if you don't have a
deep bank account, you may have an old 401(k) or IRA from a previous employer
that can be used by moving the money to a self-directed IRA. It's possible to
use life insurance equity in some cases too. You might have more ability to
invest than you think, let's connect and chat about the possibilities.
That being said, here
are the strategies I'm focused on if you're interested in partnering:
1) Single
Family Fix & Flips - I'm finding off market houses that are in bad shape and the
sellers would rather just sell them for a discount than go through the hassle
of repairs and listing on the MLS. I typically get a bank loan for 80% of the
purchase and then use investor (in the form of a loan) money to cover down
payment, closing costs, and repairs. The average flip requires about $100,000
of investor cash. I typically borrow the money at straight 8% per deal and aim
to return the money within 4-6 months. If we can pull off 2-3 of those per year
then the annual return gets pretty good. With any investment, there is risk,
but we take calculated ones and I will make zero dollars before my partners
ever lose any money.
2) Apartments (aka
Multi-Family) - We buyproperties
of 5+ units and, in many cases, form what's called a syndication, or pool
of investors. Properties will need to meet specific criteria and be in metro
areas of growing populations and economies (anywhere in the country).
Unfortunately, legislation in California is not landlord friendly so there
would need to be a lot of right variables for a deal to make sense here. Our
strategy for apartments is long-term. In most cases, we at least five years as
the goal is strong cash flow. Additionally, it's easy to force
appreciation of apartments because they're valued based on the income they
produce. So buying a run down, under-performing complex and then fixing it up
and improving the amenities and systems causes it to generate more income and
thus significantly improve its value. After 5-10 years, we have completely renovated
the complex, ridden the market cycle up, and received good cash flow and then
investor returns are often 15%+.
