Exit Strategies and Thoughts about USA Properties..

Have to say I like the owner-financed option as an exit strategy – I'm just wondering how much you could add to the price when selling it, if say the area hasn't gone up at all since you bought? If you add less than 12-15% to your total benefit, wouldn't you have been better off selling it, like Eng says, at no or almost no profit, just so you could free it up to make more money elsewhere? And why would a potential home-owner want to get his finance from you (the owner) at 12-15% if he can get it at say 10% from the bank? The only people open to it, I'd say, would be those who are refused standard channel funding – and then, do you really want to get into a financial bed with them as their last option?

A very fine line there…I'd be interested to see how you'd structure those deals and how successful they turn out to be – please keep us posted.

I had contemplated that vendor finance strategy could be an exit strategy when the market returns to equilibrium.

The problem that I feel would affect the concept is, as you say, the % over standard interest rates and the type of clients that this would attract – the desperate or bad credit rating or both  jump to mind. Then more so the fact that the US Re market has a history of boom and bust so by following a vendor financing approach will you actually get out in time or will you be stuck in the market with vendor finance deals whilst the market crashes again.

Regards

I don’t know how others feel (Jay and Alex would be interesting) but I would not let a Wall St fund anywhere between my money and real estate. My sister (Emma) has been really successful in subprime stuff because she can outperform, out manage and out deal the bigger operators – she is on the ground doing it. The only reason she is successful is because she can do it better and faster. Same goes for my managing agents – the little guys are always better. Jay partners which means he has skin in the game and Alex buys where he knows the market really well. A glossy Wall ST brochure does not fit in my picture of the down and dirty management that is required, there is too much slippage involved with people who play numbers but wouldn’t know the first thing about a tenant application.

Nor I would not want to deal with a US company that had 14,000 rentals. My feelings are you will only be successful in the US if you can do it better and more personally than the next guy.

Staying away from direct investment, have a look at Jay’s system (truewholesalehomes). Big by my standards, but tiny by fund standards.

As I am writing this my attitude is hardening. I would not like to buy something from any company that has a sales force that in reality will know nothing about coal face real estate – thats already one (big) wage that needn’t be paid….

Interesting, but those are my thoughts.. Like you I would be interested in others opinions.

So, as I suspected, you and your team Alex (like I would guess anyone else) are successful because you are different and do it better than the next guy.

I would back you any day over a sharp suit….

Is it really that bad that that cash flow is the only angle right now.  I will make way more money renting these houses out till i retire than i would if i cash flow them for five and then make a decent amount of money off the sale.  When i got into this game all i wanted was a passive income that paid me like a pay check that i used to get from a job.  A passive or residual income in my opinion is like living off a hedge fund, u won't ever really need to work again if u do it right.