"My Life and 1,000 Houses: Failing Forward to Financial Freedom" By Mitch Stephen
Part biography and part how-to book, "My Life & 1000 Houses: Failing Forward" follows Mitch Stephen's road to success which started with the purchase of two condos in Texas while he was working as a bar tender and serial entrepreneur.
All went well with Mitch's investments until the recession hit in the mid-1980s and the banks required him to pay off the condo mortgages. He has the money, but barely. He observed " when a recession hits and/or interest rates go up, fewer people can qualify to buy properties. As a result, rents go sky high. In the simplest of terms, if the market ain't buyin', they're rentin' (or owner financing)." Which makes me think "aren't interest rates headed up now? Maybe we are about to repeat history.
Eventually, Mitch got a job as an apartment manager for some local judges. They would buy an $80,000 house, break it into 8 one bedroom units with a shared bathroom, and rent each room for $50 per week. This brought in $1,600 a month! This is something I need to look into, but it is important to remember that management will be a challenge. He mentions that it is critical to work a $10 late fee into the rent agreement.
Time went on and Mitch decided to start buying rentals for himself. His goal for financial freedom was having passive income that exceeds his bills (does this not sound like a Lifestyles Unlimited Commercial? Interestingly, Mitch and Del from Lifestyles are both from Texas). He decided to do this by seller financing properties.
He didn't have much luck with rentals (he was buying low end properties) so he switch to seller financing. He collected a $3000 down payment and cash-flowed $300 a month after making his debt payment.
How did he buy these houses? He used private lenders and CREDIT CARDS! One or two cards per property. When the intro APR ran out, he'd transfer the balance. Now this would be harder today because your total debt load would count against you, but it might be possible to pull off with small business cards like the Spark Business, INK! from Chase, and Open from American Express cards. I need to look into this more, but my understanding is that while personal credit is checked to issue these cards, the balances don't report to your personal credit file. This could means each LLC owning a property could also own one of each card. At least in theory.
Sometimes he wouldn't own the houses for more than a few minutes. One technique involved getting a contract to buy, getting a contract to sell with seller financing, getting a contract to sell the note, and then closing them all the same day!
Some interesting information on seller notes: seasoned notes are notes with several payments made. Pristine notes are new notes with no payments collected. Note buyers will pay 83-97% of a notes vale with longer seasoned notes being worth more money.
Biggest Takeaway: "You don't have to have the money when you have the contract. Money gets real easy to find when you have a great deal under wraps." - Mitch Stephens.
He has a bunch of websites including Homes2Go.net/PrivateLeading and 1000Houses.com
Old blogs: http://www.BiggerPocketsAlert.com