My Momma Even Said it Was Too Good To Be True!

Actually my mother-in-law, it sounds better saying momma though. My mother-in-law approached me in May looking to invest $100,000. She had the money in a CD and uses the money to pay for her monthly health insurance premium. The CD rates had dropped dramatically and if she renewed she wouldn't earn enough to pay the premium. She's on a fixed income and has to earn at least 3% on those funds to have enough to pay the bill. She asked me what to do. How bad is it when you have to scramble to find an investment paying 3%?

I explained to her what we did and how she could earn at least 8.5% on the money or could use the money to do wholesale deals. Initially she was thrilled because she would be more than doubling what she made last year. Then the inevitable occurred. She started asking family and friends. They acted predictably, just like the media. They told her that it was too good to be true. They told her that it was too risky. They told her that there was no money in Real Estate and that she'd be making a huge mistake. She ended up investing half the money in a CD and the other half as an unsecured personal loan at 6% to, of all people, one of the family members that said the Real Estate (which, by the way, is a secured investment) option was too risky. Unbelievable!! She'll most likely never see that money again. I pray that when that time comes, I will be compassionate enough not to gloat and say "I told you so."

Back to the deal I had found for her. I found two brick ranches in Metro Atlanta. One was a 3 bedroom/ 1 bath, the other a 3br/2ba. We found another investor who decided it was an amazing deal. He purchased the homes for $14,300 and $14,742. He choose to have us try and wholesale the deals rather than rehabbing them and renting them. We ended up selling both homes for him in less than 30 days. The sale prices were $24,000, the other for $24,375. That would be a gross profit of $19,333. I'll admit, it does sound too good to be true. But it is not. We find deals like this every day. We had a bit of luck, being able to sell them both in such a short span, but it is not that uncommon. Most of our investors choose to do the rehab and rent the homes. Those homes would each rent for at least $900/month. One of the homes had around $15,000 in rehab, the other around $9,000. If the investor chose that route, he would have had $53,042 invested total in the two homes, generating around $1800/month cash flow. Not too shabby. Considering the homes will most likely be worth $90,000 in 3-5 years, I'd say a very smart investment.

Moral of the story, DON'T BELIEVE THE HYPE! These deals are real and are out there. Those who take advantage will be reaping the benefits, while everyone else will be scrambling to earn their measly 3% in a CD. I hope you will be one of the few that get in the game and take advantage of these amazing deals.