Tips For Investors on How to Avoid Foreclosure in This Horrific Economy
Under leverage yourself: In investment terms, leveraging is the use of a small amount of cash and a large loan to buy something.
Therefore, to under leverage yourself, you need to buy properties that you can pay for in cash which has an ARV of 20 times or more of the price you paid for the property.
This will enable you to hold on to the property until it is sold without having to pay interest and the value of the property can help your balance sheet.
Once your property is sold (for twice what you paid for it preferably), you will have an infusion of cash that will keep you business running.
Be Frugal: Spending money wrong can be a death blow to your real estate investment business.
At this juncture your motto should be "when in doubt, leave the house" because after all, you don't need the real estate.
Real estate is an investment tool to make you money so don't feel compelled or obligated to buy a property even if it is a great deal UNLESS it is a turnkey investment where you can sell the property immediately after you get the property under contract.
I mean, the property should be sold before you make your offer.
I know that sounds impossible to sell a property before you own it but it is really not.
It is all about timing.
CASH IS KING: This is a moniker that I have known for years but it hit home when one of my real estate investor friends told me a story that I will now share with you.
This story is set at a real estate investment seminar where two investors were discussing the amount of money they possess.
After their discussion, there were some properties presented for sale so investor one asks investor two if he would be purchasing a property to which investor two replies that he is unable due to his lack of liquidity.
At which point investor one states to investor two you may own property but you don't possess any money if you don't have liquidity.
Investor two took offense to the statement began to argue his point at which time investor one states lets go to McDonald's across the street.
I will bring five dollars from my wallet and you can bring your equity and let's see who gets served a big Mac! The moral of the story is that you can't buy anything with equity.
Another time an investor quipped to his wife, honey we are millionaires.
We own a million dollars worth of properties to which she stated, if we are millionaires, why can't we pay our utilities.
This goes to show that you must at all times be aware of the amount of cash you have and make sure that cash is your main focus and not the quantity of properties.
Conclusion If you follow these three simple tips, you will be able to survive through the rough and tumble times like a recession or any other down turn in the economy.
Therefore, to under leverage yourself, you need to buy properties that you can pay for in cash which has an ARV of 20 times or more of the price you paid for the property.
This will enable you to hold on to the property until it is sold without having to pay interest and the value of the property can help your balance sheet.
Once your property is sold (for twice what you paid for it preferably), you will have an infusion of cash that will keep you business running.
Be Frugal: Spending money wrong can be a death blow to your real estate investment business.
At this juncture your motto should be "when in doubt, leave the house" because after all, you don't need the real estate.
Real estate is an investment tool to make you money so don't feel compelled or obligated to buy a property even if it is a great deal UNLESS it is a turnkey investment where you can sell the property immediately after you get the property under contract.
I mean, the property should be sold before you make your offer.
I know that sounds impossible to sell a property before you own it but it is really not.
It is all about timing.
CASH IS KING: This is a moniker that I have known for years but it hit home when one of my real estate investor friends told me a story that I will now share with you.
This story is set at a real estate investment seminar where two investors were discussing the amount of money they possess.
After their discussion, there were some properties presented for sale so investor one asks investor two if he would be purchasing a property to which investor two replies that he is unable due to his lack of liquidity.
At which point investor one states to investor two you may own property but you don't possess any money if you don't have liquidity.
Investor two took offense to the statement began to argue his point at which time investor one states lets go to McDonald's across the street.
I will bring five dollars from my wallet and you can bring your equity and let's see who gets served a big Mac! The moral of the story is that you can't buy anything with equity.
Another time an investor quipped to his wife, honey we are millionaires.
We own a million dollars worth of properties to which she stated, if we are millionaires, why can't we pay our utilities.
This goes to show that you must at all times be aware of the amount of cash you have and make sure that cash is your main focus and not the quantity of properties.
Conclusion If you follow these three simple tips, you will be able to survive through the rough and tumble times like a recession or any other down turn in the economy.