Today was awesome! Bill and I had the pleasure of sharing lunch with Josh Caldwell, the president of our Pittsburgh REIA. This guy is super creative with figuring out how to buy and sell houses. I couldn’t wait to pick his brain!! I think I grasped about a 1/3 of what he told us over lunch!!
There are so many ways to buy real estate-it’s crazy! You see, the best deals when buying houses happen when you buy from the sellers directly. When you find a person who is selling their house themselves, the key is to find out why they want to sell. If they tell Josh that they want the cash so that they can retire, for instance, he tries to find out why they would want the cash all in one amount. Now, that might sound like a crazy question, but let me explain.
If a person sells their house for $100,000 and they don’t owe any money on the house, they are going to get hit with a fairly heavy tax bill. They will then take the money I pay them and put it in the bank where they will earn almost no interest. What if instead I paid them $100,000 @ $1,000 a month @3% interest? They would have a consistent income stream for over 8 1/2 years and would ultimately end up with $103,000. They would have access to their money, to the tune of $1,000 every month, unlike putting the money in a CD, where they likely couldn’t touch the money for 3 years. What if I paid them $500 a month for over 18 years? They would receive $6,000 in interest!
What about on the selling side? Well, my favorite way to sell a house right now is to rent to people…for awhile. These potential home owners almost qualify for a mortgage, but not quite. We give them those couple of months to get their credit score up and then they buy the house.
You see, 80% of Americans can’t qualify for a mortgage. So, all the realtors out there are competing for the same 20% of potential buyers.
I have a problem with the fact that it is so difficult to get a mortgage. This is a knee-jerk reaction to the housing crisis a few years ago, when banks were writing junk mortgages. So the banking industry’s strategy is to now make it extremely difficult for most people to get a mortgage. There are a lot of very hard working people out there who should be able to buy a home, who can’t.
Bill and I can’t wait to be able to offer people the opportunity to buy a house through helping them to get a start. It’s such a win-win! Deserving people get a house and we make a living doing this. One of the real estate classes we have taken is by Lou Brown. He wrote a book called, Doing Well by Doing Good. I love that philosophy-prospering by helping people out, not taking advantage of them.
Back to Josh- he was firing strategies like this at us all the way through lunch. Another strategy he is currently investigating revolves around abandoned houses. He is trying to see if there is a way to buy back any liens on abandoned houses to then become the owner. This one is a little over my head at this point, but as I continue to learn and absorb my mentors’ knowledge, I think I will eventually get it :). Thanks Josh!!
Have you ever heard of some of these strategies? Do you think these are a good idea? I’d love to hear your thoughts.
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