Tag: probate houses

I truly love the real estate deals that other investors won’t touch. Over the years, I’ve probably made at least $2 million dollars off of other investors’ rejects!

I am not saying this to boast – I am being frank because I want you to understand the opportunity that you have if you open your eyes to opportunity others are blind to.

One of my earliest mentors taught me to look for profitable deals in ugly, distressed properties. I have mostly built my career on little distressed houses that alone make me $400 or $600 a month. But altogether, those little houses make me tens of thousands per month in cash flow, which is what allowed me to financially retire so young.

Here are some ‘junk house’ deals that other investors turned their noses up at that I turned around and made terrific money on:

#1 Colima Avenue Made Me $6500

I bought this ‘junk house’ for $15,000 when no one else in my town seemed to want it. This allowed me to buy it more than 30% under market value! I sold it to an investor in California for $20,000, which was 30% under market value. I made a $5000 profit on the sale, plus a $1000 commission. He had it repainted in and out and the door secured, and other minor fixes. That cost him $5000 total in repairs. Then he resold it with owner financing.

Terms were $3000 down, $400 per month, with a final price of
$39,900. This deal is making the investor 12% ROI, and made me over $6000. And no one wanted it because it was ugly!

#2 Eichman Road Property Made Me $13,500

Last year I bought this ‘junk house’ on two acres south of San Antonio TX. I paid $24,000 for it. It was a hoarder house, so it apparently scared off other investors.

I sold it to another California investor for $36,000, making me $12,000, and $1500 for the commission. He put $10,000 into it for cleaning, painting, plumbing and running a city water line. It was sold owner finance for $5000 down, $795 per month, $72,000 final price. He is making 11% ROI on this deal with no property maintenance – on a property no one wanted! Not a bad deal.

Lessons Learned

I am often able to make money on houses that other people reject and for which there are fewer buyers. Many investors are scared off by appearances and don’t see the underlying value that is obvious to me. The few buyers for some of these houses means that I can get the property at 30% or even 40% under market value. So, on the resale, I can make a tremendous return! What you should do: Try to work with a top notch real estate investor who knows your neighborhoods and can help you find way under market value deals that other people don’t want. There could be gold there.
Ugly houses can be deceptively lucrative investments! You can get properties deeply discounted in some cases. With owner financing, you then can off load most of the rehab cost to your buyer. What you should do: Buy under market value distressed properties in markets that are inexpensive and have a lot of blue collar workers who are eager to own a house and fix it themselves.
Don’t be always afraid of foundation and roof problems. Common investor advice is to avoid these houses. Those are some of my best deals! No one wants them so you can get an incredible deal. There is a big difference between a minor foundation issue and a major one. I have the experience to tell the difference. Most of the foundation problems I buy can be fixed for $1500 to $2000. What you should do: Look for ‘junk houses’ in areas with good owner finance buyers even if they have reported ‘foundation’ problems. You really could get a great return!

 

I am a very active investment property buyer and seller in San Antonio TX. One of the keys to my success the last 15 years is that I NEVER charge an investor the highest possible price for one of my properties. I make sure he or she makes plenty of money too, even if it means I make less!

One of my investing partners – who has only been working with me for two years – recently was baffled about why I refused to charge an investor as much money as possible on a transaction.

Let’s take a look at the property in question. The house below in San Antonio on La Violeta St. actually has two small houses on one lot:

One house is a 3/2 that needed only $8000 in repairs, and the other one is a 2/1 that was rehabbed and ready to be occupied. The renter in that house wanted to buy it with owner financing – $5000 down, $995 per month PITI, 10% interest.
The wholesale price? Just $55,000.

As you can guess, there was a huge demand for this property when I released it to our buyers’ list last January. We had 25 people call us to buy this house. This was a great opportunity for many real estate investors/wholesalers to increase the price by $10,000 or even $20,000 and pocket the rest.
The final price I charged: $55,000.

My business partner was baffled by me not raising the price on this fantastic deal. Here’s why I didn’t increase the price, and why I never charge top dollar for these hot deals.

The most important thing to do as a wholesaler is to get a new real estate investor a FANTASTIC first deal. At the $55,000 price, my investor was able to owner finance that property for $85,000, netting him nearly 15% return annually, with no maintenance costs!

Since I sold my CA cash buyer that house in January, do you know how many more houses he has bought? 9!

Here is a case study on one of them that makes him a 12% return.

So, by not getting greedy on the first house, I have been able to make thousands of dollars more. And the investor has made even MORE money than he would have if he had just bought one or two houses. That investor also has referred other investors to me, who have bought several houses.
I refuse to get greedy. I share the wealth with everyone involved. In the end I make more money, and so does everyone else!

New investors usually are in a rush to make as much money as possible. I take a 180 degree opposite view: I want to make money SLOWLY :). Because I know from 15 years of experience that getting rich in real estate takes time, and the wise investor will make MORE money every time by taking the long view of things.

Take Away: Don’t be in an all-fired hurry to make as much money as humanly possible on 1 deal! Don’t try to make $20k on one deal every year. Try to make $3000 on FIFTY deals a year! Treat your investors and money partners like gold, and never overcharge them. They will come back to you again, and again and again.

Have comments or questions? Please share below!

 

In my many years as a successful real estate investor, I have heard investors say a lot of things…..many smart things…..and quite a few silly things!

I understand – most of us don’t know much when we first start investing in San Antonio investment properties. Back when I started, I didn’t know pier and beam from PITI from a lease option! Over the years, I have gained a lot of experience. I also have found some terrific, wealthy mentors at real estate conferences across the US who guided me, and still do.

Still, I thought it would be helpful to some of the new investors out there if I related some of the silliest things I hear investors say! Sometimes, their limited knowledge and resulting rookie questions become an obstacle to successful investing, so maybe seeing them here can help you.

I certainly hope so.

#1 “Why Is This House So Expensive????? Last Year It Was $15,000 Less!”

I am trying to think of something more irrelevant in real estate investing than what the price of a property was last year…….sorry, I cannot think of anything.

What the price of an asset was earlier than today is of no consequence, investors. Real estate markets change dramatically in days, weeks, months, and certainly in a year or more!

In my San Antonio TX market, things have changes DRAMATICALLY in a year.

It has become one of the stronger real estate markets in the country, but still is very affordable. That said, one of our distressed houses that sold for $29,000 cash a year ago recently sold for $59,000 owner finance. The reason is that the market simply has appreciated a good deal in that time. People here have more work and more money in their pockets.

So naturally, investors are going to pay more for their real estate investments. An investor who is stuck in the past – thinking about what he or she would have paid last year – is going to lose out on a LOT of deals in a hot market.

Here is an example: I have a CA investor who recently bought this house north of downtown – cash – for $65,000.

He is a serious, experienced investor. How do I know that? He didn’t ask me ONCE what the house was worth last year (it probably would have sold for $50,000 this time last year). That, he knew, makes not a whit of difference. All he cared about was getting a good price TODAY. He did. And on this property, he is making 12.9% per year right now.

Take Away: Don’t think for a second about what that deal was valued at yesterday or a year ago. Look at current market conditions and comps and make your buying decision accordingly. Focusing on the past allows 12% ROI deals to slip through your fingers.

#2 “How Much Did YOU Pay for This House?”

This silly question is obviously related to the one above. The common theme is focusing on the PAST, and not focusing on what you can make on the property in the FUTURE.

Sometimes I want to tell the new investor, I paid $1 for it. And I’m charging you $25,000. 🙂

Seriously, I have had investors give away properties to me for a few thousand dollars because they needed to unload it. I turned around and charged $18,000 for it – the current market price. I have had people sell me car lots for 1/3 of their value because they needed the money, and then I turned around and sold it at a 200% profit.

And that is completely and totally fair. I would expect any experienced investor I work with to do the same. Those examples are rare, but they do happen.

Here is an example: I bought this house that no one wanted for $15,000 cash:

My investor bought it from me for $20,000, a $5000 profit for me. He then had $5000 in light rehab done on it. Subsequently, it was sold with owner financing for $39,900, the fair market price for the home.

The investor never asked me what I paid for it, because all he cared about was what HE would make on it. That’s the right attitude.

Take Away: EVERYONE makes money in a good real estate transaction. That’s not only normal, it’s how it should be. Don’t worry about what the investor bought it for. Worry about how you can make money on it. If the numbers make sense, buy.

#3 “That House Is So Ugly! I Can’t Buy It!”

You can retire young by buying the ugly houses that most people reject. Last fall, I bought the below ‘junk property’ south of San Antonio for $25,000 cash:

It was a hoarder house on 2 acres that the occupants desperately needed to sell, so I got it for a fantastic price. Other investors scurried off because it was ‘ugly.’

I then sold the property for $36,000 cash to an investor, who put $10,000 into it. He then sold it owner finance for $72,000. It is going to be a really lovely homestead for the couple who bought it.

My total profit on an ‘ugly house’ that no one wanted: $12,000.

Take Away: Ugly properties can be fantastic bargains, especially ones with roof and foundation problems. Most investors run for the hills. This means you can get an incredible deal. My advice on ugly houses is to do 5-10k in repairs to make them livable, and then owner finance them. Leave the finish repairs to the occupant.

The numbers are stark: Almost 95% of ‘real estate investors’ fail. They never do a single deal. Or they quit after six months, or they lose money. “Real estate is tough racket,” they say as they trudge off to their day job.

Meanwhile, I have been a successful real estate investor for many years. I have personally seen hundreds of aspiring investors come and go over that span. But I’ve continued to buy under-market value property in San Antonio for years. What do I do that so many other investors don’t?

For me, real estate investing is simple mathematics. Here’s how I do it:

I invest in a home 20% under market value with cash.
I do $5000-$10,000 in rehab (never, ever over rehabbing)
I resell it at 100% market value with owner financing.

That’s it, friends. There is no magic formula or strategy. It is just elementary mathematics that produces excellent returns on the funds invested, such as this home in San Antonio:

Purchased for $65,000 cash.

• $10,000 in rehab.
• Resold w/owner financing @ $99,000 (FMV).
• ROI: 12.9%

But the people who fail in real estate investing don’t do that. They do silly things that lead to failure. If you want to fail in this business in three simple steps, this is a typical path:

#1 Chase the Easy Buck

Many aspiring real estate investors jump into the market when times are good. Or maybe they saw a TV flipping show or attended a ‘real estate guru’ class in their town. Real estate investing is portrayed as simple and easy, and you can be rich in a few months.

Baloney. Don’t get me wrong: My system above IS simple, but it took me YEARS of work, developing knowledge of my market and my houses, and growing a good reputation in my city so that I find those under market value deals. I had many millionaire mentors along the way that showed me how to find those great deals.

You don’t do that quickly. It takes years of work. So, take a class, read a book, make an offer, and try to get rich quick and easy. You’ll fail.

Take Away: Becoming rich in real estate is at least a 5-year process. Jumpstart your progress by working with a top-notch real estate investor in your city. Offer him your time and service in exchange for learning the ropes.

#2 Don’t Work Hard

As mentioned above, real estate for me is ‘easy’, but it’s largely because I worked my ass off in the early years. I’m talking 200 phone calls a week searching for money, tearing out dry wall and painting houses myself eight hours per day….it was a ton of work.

And I didn’t come into real estate with any advantages. I had to work for everything I had. After busting my tail for months, I found investors willing to lend me money on a per project basis, and split the profits 50/50. That got me really going.

On the other hand, real estate investor failures don’t work hard and make excuses.

• ‘I’m too busy with my day job.’
• ‘I don’t have cash.’
• ‘My credit stinks.’
• ‘I don’t have any connections.’

BS! Every one of us in America has the same exact shot to succeed in real estate. Successful investors often didn’t have money or connections in the beginning. They just never gave up and worked like dogs till they got their first profitable deal done.

Take Away: Make real estate investing a full-time job if you can. If you still have a day job, fine, but spend at least 15-20 hours per week on your business. And take your business seriously: Get business cards, a checking account, website and a registered business name. If you don’t take yourself seriously, no one else will.

#3 Focus on Too Many Things

I attend many real estate investing networking events (I attended 4-5 per week in my early years, looking for private cash). Last year I was at a small networking event in San Antonio with half a dozen landlords. They didn’t really know who I was. One of the attendees was a mostly real estate investing failure. I told him how I invest:

Buy distressed houses 20% under market value, resell at 100% market value, make 12-13% ROI with no maintenance costs.

Now I’ve done this for years and have done pretty well. I’m very focused on this small real estate investing niche. And what does the mostly failed investor say to me? ‘You know, it’s kinda risky to put all your eggs in one basket. I’d go buy an apartment building and a trailer park to diversify.’

Frankly, I had to stifle my laughter! Most real estate failures don’t focus on one or two areas; they focus on EVERYTHING! If you try to become an ‘expert’ on a dozen different areas of real estate, you’ll fail. You’re spread too thin, and you are never going to really learn one or two real estate areas well.

A huge factor in my cash flow success has been micro focusing on distressed real estate with owner financing in San Antonio. That’s all I do. My entire team is focused on affordable housing in my city, and my entire network is built around the same. That one small niche and being an expert in it has made me wealthy.

Take Away: Get FOCUSED. Become an expert in your niche, whether that’s trailer parks, 4 plexes or distressed single-family homes. Any of those can make you wealthy if you become an expert and develop a successful team and network. Work with an expert in your desired niche and focus on nothing else.

That is a typical path to real estate investing failure. Don’t take that path! Find an expert mentor, work your butt off, and focus completely on a profitable real estate niche in your area, and you will be a success!

After years of investing success in San Antonio wholesale properties, some random thoughts:

#1 I would much rather make $5000 on 50 deals than $50,000 on one deal.

Many real estate investors spend far too much time chasing the big score on investment properties. That’s why after five years, they’ve done 2 deals. After a few years in the business, many of our investors have done dozens or hundreds of deals. It can make more sense to do more deals for less money on each one than trying to hit a home run on a handful of deals each year.

#2 We embrace the ugly deals that most investors don’t want.

An early mentor told me to go LOOKING for houses with ‘foundation problems.’ Most investors won’t even look at a house with a ‘foundation problem.’ It turns out that many of those problems are $5000 or less fixes. You can make a lot of money on houses with foundation issues, especially on pier and beam homes.

We also will buy many burned out homes, if the price is right.

#3 You do not have to be a landlord to be a successful investor.

Many investors do well with rental properties, and there’s nothing wrong with that. But many of our investors only do owner finance properties. We do maybe $10,000 or $20,000 in repairs, then resell it with owner financing at 10% interest.

The buyer fixes up the property himself and the neighborhood improves. And we investors make money, so everyone wins.

#4 Keep a positive attitude in real estate

You can always find pessimists in the real estate industry. It’s wise to only associate with positive, successful, can-do people in this industry. If you do that, you’re more likely to succeed.

#5 Over rehabbing properties destroys many real estate careers.

When you walk into a run down house, it is very tempting to spend $50,000. This often isn’t a good idea.

Do enough rehab to sell the house with owner financing, and leave the rest to the buyer. I recommend making sure the plumbing and electrical work, roof doesn’t leak, and give everything a fresh coat of paint, perhaps put in new vinyl flooring, but that’s usually all.

Doing just enough rehab to resell the house is the secret. Don’t do more than that.

#6 What the house was worth last year is meaningless.

Real estate markets change overnight. What matters is what the house is worth compared to similar houses in the same neighborhood – right now!

Some investors won’t buy a house that can make them 12% a year because the house costs $10,000 more than a year ago.

It’s best to not worry about what the house was worth yesterday. Focus on getting a good under market value deal in today’s market.

#7 Cheap, steady real estate markets beat the big boom/bust markets.

Austin TX is going crazy these days, with median house prices over $270,000 and climbing. We have bought in Austin, but it’s pricey.

San Antonio properties are always less expensive than Austin and Dallas. Prices are up a good deal in 2021 so you have to do some shopping. But deals are there!

#8 We never charge top price for a real estate investment.

We have had properties that I sold for $55,000 that we could have sold for $70,000. I sold it for $55,000. Why? Because we want the investor to get an incredible first deal, and then come back and buy 10 more.

If you want to do well in real estate investments, focus on the long game, make some money, but be sure you treat everyone right.

#9 Buy real estate for monthly cash flow, not for long term appreciation.

If our investment properties appreciate, that’s great. But most of our investors buy for cash flow.

Investing for appreciation CAN work, but it’s complicated and often depends upon things outside the investor’s control. It’s like this – why risk the low percentage/high reward trick shot in billiards if you can make the straight shot in the left corner pocket every single time? That’s how I look at real estate.

Many of our real estate investors in San Antonio own dozens of houses that produce $300 or $400 a month in cash flow. That’s what they care about the most, not appreciation.

#10 Always buy your houses under market value or don’t buy.

We never pay market value for any property we buy. If we cannot buy it for at least 20% less than market value, we move on. Buying under market value protects the investor in a down market, and makes it easier to turn a profit.

Many real estate investing careers are gutted by rookies buying houses at or above market value. If you can’t get a deal, move on.

#11 We often buy distressed houses in cash, no mortgages.

Buying in all cash means no stress if we have a foreclosure or vacancy. It also means that we can buy any house we like; you can’t finance houses under $50,000, and it gets very complex getting financing on many houses under $75,000.

#12 We make a buy or no buy decision immediately and stick to it.

One of the most important parts of our success is our local reputation. People know we’re serious investors and if we say we will buy a house, we do it and pay within two weeks.

Guard your reputation in your city like gold, and it will pay you back for decades.

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“If you challenge conventional wisdom, you will find ways to do things much better than they are currently done.” – Michael Lewis, Moneyball: The Art of Winning an Unfair Game.

Before I discovered real estate investing, I lapped up the conventional investor wisdom: If you invest for retirement, buy stocks and mutual funds in a 401k.

So I invested in the stock market. While I did ok, I felt out of control. Stocks go up. Stocks go down. I had so little control over my portfolio. I never felt secure in my investments.

I also noticed that my best stocks only paid an annual dividend of 3-4%. That’s puny.

I thought: There must be superior ways to secure my future with higher ROI and steady monthly cash flow. And that is real estate.

Real Estate Is Better

‘Hold up’, you say. ‘You’re carping about the risky stock market, low returns and you think REAL ESTATE is better? Do you know how many people lose their shirts in real estate?’

Let me hazard a guess – when I mention real estate and cash flow, what do you think of first? Probably rental properties. Being a landlord. Repairs. Vacancies. Headaches.

That’s what the conventional wisdom tells us: ‘Real estate investing’ equals ‘rental property investing.’That isn’t what I’m talking about.

What I AM Talking About: Distressed, Owner Financed Real Estate

A major key to success in real estate is finding a good strategy, and then finding property that fits that strategy. That is what I’ve done with a type of real estate investing that just crushes the stock market year after year. And that is owner financed inexpensive single family homes.

This type of investing is steady, safe and low stress:

• I buy under market value houses in town for $40,000-$65,000 – cash.
• I perform a ‘light’ rehab of $5000 or so per property.
• I do NOT rent the property. I seller finance the property to a qualified buyer with a steady job, documented income and a
• $5000-$10,000 down payment.
• I only ‘carry the mortgage note’ on these investment properties.

Advantages:

• Simplicity – Owner financed real estate profits are extremely easy to calculate
• Add up annual cash flow.
• Subtract property taxes and insurance.
• Divide by property purchase price.
• There’s your ROI. 10-14% is common.
• Reliability – Steady cash flow of $500-750 per month.
• No repairs or maintenance.
• I am NOT a landlord.
• Only expenses I pay are property taxes and property insurance.
• No stress and complete peace of mind.

Here are my houses and their returns – after taxes/insurance are paid:

Property 1

$51k purchase, 16.4% ROI.

Property 2

$72k purchase, 12.3% ROI

Property 3

$43k purchase, 16.5% ROI

The bottom line on my distressed property portfolio:

• 3, $50-$60,000 houses
• Bought for cash and owner financed to qualified buyers with
• $5000 down minimum.
• Total return average: 15.06% ROI
• Repairs: None. Ever.
• Total cash flow per year: $23,450.

My cash flow is rock steady and doesn’t vary. In a few years, when the stock market inevitably dives and investors are in a panic, I’ll continue to pocket my 14.1% annually.

Summary

My distressed real estate portfolio simply crushes the typical stock portfolio. It is more profitable, less stressful, and much less prone to market fluctuations than the stock market. It also does not suffer from the problems of rental property investing: vacancies, repairs and maintenance.

Regular investors can stick to the conventional wisdom. Me, I’ll take the unconventional and enjoy 14% per year – for life.

 

In February, we sold one of our cash investor’s properties in San Antonio by owner finance to a homestead buyer. Are you surprised, given its appearance? Many investors would pass by a house that looks like this – the conventional rental investors at www.biggerpockets.com were outraged that we sold this house to a buyer. But what would you expect from a bunch of landlords with mortgages? Conventional thinkers – enjoy your $200 a month in cash flow and your repairs! 🙂

As the picture shows, this is a rough 4 bedroom, 1 bath located on Colima Avenue on the near west side of San Antonio. It has approximately 1400 square feet and obviously needs a lot of work.

Our investor bought this property one month ago for $20,000 and spent approximately $5000 to make minor repairs and to paint it inside and out.

Many of the investors that I talk to have told me that they would demo this house; obviously, no one would ever live in such a place!

That is an understandable reaction. But it is a mistake and a lack of understanding of the affordable home demand in our city – we should not view these properties from the point of view of how we the investors live, but how our end clients live. This house presents an excellent opportunity for a blue collar contractor who has rented for years and never thought he could own a home.

We have made a very profitable career out of buying houses such as these that other investors pass on. We love the fact that other investors recoil in horror at these houses!

We had dozens of calls from owner finance buyer candidates for this house.

We are able to buy and resell these houses effectively in San Antonio because of our end buyers – mostly blue collar, contractor Hispanics who love to buy cheap, run down homes and fix them up.

While this house looks very rough to most investors, the right owner finance buyer sees it as an opportunity to own a home cheap and to fix it up into a nice little house.

The end buyer on this home was thrilled to get it, believe it or not. He had the $3000 down payment in a McDonalds bag, and has documented income which we carefully verify per the SAFE Act. He already has the keys and is starting to rehab it.

Terms on this deal:

• $3000 down payment
• 10% interest
• $400 per month
• No prepayment penalty, no balloon
• 30 year note
• Final price: $39,900 (FMV)

All Dodd Frank underwriting rules are followed in buyer qualification process.

Owner finance price is FMV and IS NOT ‘predatory’ lending, which is highly illegal.

Our investor is going to make a 12-13% cap rate on this property, after tax/ins are paid. He has no other expenses.

Despite what some investors think, you can do extremely well on cheap, distressed houses, and not maintain them.

Note: This strategy may or may not work in your specific market. The strategy works well in our San Antonio affordable home market, your experience may differ. Any REI strategy has risks, and this one is no different. Be sure that you follow all applicable laws and regulations in your area. Dodd Frank rules require that all potential owner finance buyers be fully qualified to ensure their ability to repay the loan.

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Real estate investing for most investors usually means renting out houses. And for many landlords, they often are tempted to buy cheaper homes with theoretically higher rates of return (with correspondingly higher rates of repairs and headaches).

I used to landlord, but never again. Rather, I now work in residential real estate without repairs, landlording, or any overhead costs at all. What type of investing, you ask?

I buy affordable residential investment properties for cash in affordable markets, and owner finance them to qualified buyers. This was my first house in San Antonio I bought and owner financed to a carefully qualified buyer ($5000 down, $810 per month, 20 year note, income fully documented, stable work history):

My first non-rental property when I bought it in 2013 for $51,000 (see original back porch in photo at top of page). A train wreck. Scroll down to see what it looks like today (Occupant paid for rehab not me).

My focus in real estate investing is NOT asset appreciation, but pure, no overhead cash flow. This type of investing is what I prefer today for three reasons:

First, I provide a philanthropic service to my community with home ownership. My buyers are hardworking families with a stable job and good, documented income, as well as a sizable down payment.

Most of my buyers rent a home for most of their lives. My real estate investing program in Texas provides them with an opportunity to own their home. This in turn helps to raise up entire neighborhoods, as more and more people buy their own homes. Note that TX is an easy foreclosure state, so if they default, I simply resell the house again in 60 or 90 days with another down payment going into my bank account.

Second, I am not responsible for property maintenance. I have no overhead costs as landlords do. As the note holder on this distressed investment property, all I do is collect the monthly payment electronically. The buyer living in the home maintains the house, so I as the note investor sleep like a baby. That family is nearly always a blue collar, contractor type with the skills and desire to fix up their home. This also means that investors need not live in this area to invest. Below is a property I bought for $50,000. The end buyer has poured $25,000 into the house, and it’s now worth over $125,000.

The same house in April 2015. Buyer put $25,000 of rehab into it. If I ever have to foreclose, I will resell the house $10,000 down, $1300-1400 per month, rather than $5000 down, $800 per month as I do now.

Third, I earn a solid rate of return with a cash real estate purchase with no mortgage. Buying affordable homes in San Antonio, Texas means that I can buy a home for only $40,000-$70,000. The rate of return on each property is at least 10%, and can reach 15%. I enjoy passive, monthly cash flow without maintenance costs. Here is a typical deal in our market with a 12.3% ROI.

Currently I am waiting to buy more of these houses until the market goes into the next down turn. A major advantage of this type of investing in distressed houses is that the business only gets better in a crash. The $60,000 house becomes a $40,000 house and I can buy up ever MORE of these for more cash flow :).

When you consider these facts, I think you can see why I prefer to seller financing affordable real estate properties in my market over rental properties. Seller financing your investment rather than renting offers you a high rate of return, no overhead costs, with no property management stress.