Flipp, Flipping or Flipped ?
The purpose of getting involved in the real estate investing business is to make money unless it is for philanthropy (charity).
A few years ago I made a loan to a person, secured by his house and business. This person defaulted on the loan and I wound up with a house and an automobile business.
I still have the small car lot, which does a “Buy Here – Pay Here” kind of business much like doing Subject to’s. When I first took over the lot, a gentleman was leaving after looking at several of the fine pieces of automotive machinery I had for sale. I stopped him and asked why he was leaving because I noticed he really liked this 89 Ford Taurus. He replied, “You guys are trying to screw people”. This startled me a little bit. I said “Oh! what do you mean?” He replied, “12% interest. Nobody charges 12% interest”. Taking one second to reflect, I told him someone misquoted the interest rate to him. It was 35% interest. He then bought the car.
The car he bought was $800 down. I purchased the car at a dealer’s auction for $600. The “out the door price” was $3,995.00 plus tax and documentary fees.
The story does not end there; I started an Auto Title Loan business on my car lot. I loan 10% of the wholesale value of the car; so a car that would retail for $10K, I would have about $800 in it. If they default I will give someone a break and sell it for $8000.00. My interest rate is 980% per year on the car loans. I know, I know! Some of the guys in the title loan business charge 1,200%.
There are no usury laws in the State of Nevada. Think this is a carry over from the Mob days, probably for the Shylocks. I personally do not like the term “flipping”. I think it applies to something illegal like having an appraiser tack on $100K over the real value of a house, getting a loan for the total amount and then selling the home and so on.
You might say what I do above is “flipping,” but it is “legal” in Nevada. Do we need a new word for flipping, kind of like my “I Buy Dwelling’s” theory?
$Cash$
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