What Would You Do With $50,000? A Real Life Game On TCI
Okay since I can't find out where my previous post just disappeared to 
, I am going to post it again.
Here's the deal, I want to test the creativity, knowledge, and trust of people on this site. I am going to take $50,000 of my own money and put it up against someone's idea.
What you have to do is come up with the best way to make the most return on $50,000 in a year. The rules are that the return has to be greater than 20% and can not involve rehabbing.
I will let this post go on for one month and at the end of the month I will pick the best answer and then spend the $50,000 on seeing how the scenario works. In the meantime, I will keep everyone updated on the progress and situation of the money and returns.
Don't be afraid to give ideas at all. Even if you are a newbie and think you may want to try a way, let me know. It will be a learning for everyone, not only will it be fun, but we all can learn the many different ways there are to make money in this business.
Good luck and can't wait to see your scenarios.
Thanks,
Christian "The Solutions Kid" Beebe
[addsig]
Payoff all Second Mortgages and get an instant 8-12% return on my money.
I am also interested to see what people come up with. I agree with Joel, invest in a lot of seconds.
Try to sub to 50,000 houses.
If the average deal is $25,000 and if you spent $1000 a house, thats a $1,249,950,000 return. Thats not a bad deal. Good luck on finding the 50,000 houses, I'm not sure if your bandit signs can bring in that many calls, but good luck.
Needs more clarification, is the 50k all that can go into the project, or can it be used as collateral (or down payment) against a larger loan which can be used for the game??
nebulousd.
It would only be 50 homes at $1000 each
not 50,000
Your numbers are off by a factor of 1000
hey yeah your right, it's early, and day light savings time always throws me off.
But yeah, I'm thinking defaulted paper would be the way to go. Instead of finding houses, your backing into them through the paper and could probably pick up some nice homes and/or work something out with the owners.
I just realized something, since you don't need money to buy houses, go other routes. Buy the paper or be a private lender.
The money can be invested in a multitude of projects without stretching me thin or increasing liability or risk. The point is to develop a game plan of sorts from A-Z.
Remember, the minimum has to be 20% return. Any ideas are good as long as they are feasible...I like the 5000 sub2 ideas, but too exactly feasible, although 15-20 are
Keep in coming, let's see how good we can all get.
The Solutions Kid
[addsig]
Hey Christian,
Does it have to be in REI? I am sure there are some Colombians who would be glad to give you a 1000% return on that kind of investment
Quote:
On 2003-10-28 09:53, fauche65 wrote:
I agree with Joel, invest in a lot of seconds.
Fauche misunderstood me. I am talking about debt repayment, not investing in other properties.
Quote:
On 2003-10-28 09:44, joel wrote:
Payoff all Second Mortgages and get an instant 8-12% return on my money.
Yuck, I bet you haven't read your Dolph De Roos, sir.
If you are an agressive investor you should be using this money to leverage more debt and buy more property. Unless you're at the end of your investing career you would not want to reduce your debts.
Do what we did with ours: In the begining create a line of credit with a bank using some of it as collateral sed this to get two house construct loans, use part of it for a downpayment $15K on a owner Fin for a profit of $30K and put some into education which we got returned in tax deductions still have it becuase we roll back into the next project.
So technically we still have it. With more than 100% return I'd have to ask my acct exactly what the return was.
[ Edited by Dreamin on Date 10/28/2003 ] [ Edited by Dreamin on Date 10/28/2003 ]
I'll take the money.
I'm not sure what kind of return you'll get.
The Columbians thats a good idea.
I think it's a terrific idea to put this on the board & I'll be a fascinated watcher of all replies with real world suggestions...guess (like most of us) I have a little moral problem with the Columbian connection, and I certainly know it was only a joking suggestion!
Joel, how 'bout making this a forum topic, permanently?
ok, everyone take notes. this plan requires 95% LTV. which is very possible here in vegas.
starting with $50,000
1) fine 20 condos for $50,000 (lots here) each have seller or HUD pay closing.
2) down payment is $2,500 each (2500 x 20 = 50,000)
3) 6.375% rate = $424 per month mortgage.
4) put property on section 8 ($750 per month)
5) 750-424= 326 profitx 20 units = $6,520 per month. that is a 13% returm per month
6) $6,520 x 12 = $78,240 net (156% return per year)
Totals
20 units
$15,000 gross income
-$ 8,480 mortgage per month
= 6,520 net per month (13% per month)
=156% ROI per year
let me know what you think, send me a pm and tell me if you think that is a good idea. that goes for anyone who thinks this will work or not, just PM me.
[addsig]
Nice idea conflix...I like that, although the investor would be tied up significantly in time consuming land-lording.
You can find nice condos for $50,000 in LV?
I WOULD TAKE THE 50K PUT HALF DOWN ON A PARCEL TAKE OUT A CONSTRUCTION LOAN WHERE I WOULD GET 70% OF LAND COSTS AND BUILD A FEW HOUSES
EMAIL ME FOR MORE DETAILS
Solutions – Playing with your money will be a BLAST! Here we go! Our suggestion is pretty straightforward. PRE-FORECLOSURE (on an executive home) the economy’s twists and turns has caused bankruptcy filings to reach an all-time high, meanwhile the high foreclosure rate can be seen across the country. The decline and sluggish performance in the stock market has reduced the retirement surplus of many ‘Savers’ to dangerously low reserves. Consumer debt for the average family is in the double digits. In summary Maxed out credit cards, car payments, low cash reserves, unemployment, and poor performing investments, has placed the single and dual income executive at risk. Executives have leveraged their homes as a last resort to stay afloat and maintain the lifestyle. Now for the good stuff: The hope is that the executive behind on payments facing foreclosure UNDERSTANDS the power of the investor to create a win-win opportunity. First, we would: Convince the seller of the savings from not paying a realtors commission. Second, begin due diligence to evaluate the property (Prop#1); 8 years old and does not need any repairs, offer to catch up the mortgage payments, up to $10K, talk with the homeowner and determine the location and property where the family can afford to live (Prop# 2). As the investor offer to pay security deposit or option consideration costs in exchange for equity in the executive home. Then negotiate a 1 year sandwich Lease Option agreement with the newest seller, and the seller of Prop #1 to create a NEW monthly rental cash flow.
Deal summary: Prop#1 We paid $10K to catch up payments, advertised in the newspaper the executive single family home, “1 year Lease Option with $5K down.” Monthly rent will create $200/month cash flow and the Lease Option future sales prices will net $20K. Total monies collected = $2,400+$5K+$20K minus $10K =$17,400
Prop#2 Paid security deposit of $2K plus non-refundable $5K for option consideration (which is favorable for the investor; because on paper, these monies are still under your control) Monthly rent from new tenant buyer will create a $200/month cash flow and the Lease Option sales price will net $10K. You saved the sellers credit, by paying the past due mortgage payments thus they can qualify for the home. Total monies collected = $2,400+$10K minus $7K =$5,400
Between both homes in one year $22,800 in profits.
We create a win-win for all parties, what do you think?
Eric & Rosa
[addsig]
Hmm,
I would probably invest it on my own ONLINE "Real Estate Legal Advice" (is called attorney) to review all documents and to answer all our Real Estate questions Nationwide on the spot! I would offer this unlimited service "exclusively" to all members here ONLY to keep us all out of trouble... and all of these for a monthly membership only or better yet for life in which case i would get a % of every completed trasaction performed by my clients so that I can pay my attorney and myself
You said this was gonna be fun didn't you? Okay then, I just had my fun!! haha
I'd do short sales.
In my neck of the woods average profit on an average house for a Short sale is $20,000 and up. Buy them on a short and either sell them outright or on a lease option.
Use the $50,000 to finance the majority of the SS's and reduce the expensive HML fees. Use the profits to add to the pool, and do it again. After 2 or 3 you'll be paying banks in cash. Using only the $50,000 and the profits that would be generated.
I pay $3000 to an investor per deal. 12 short sales, is $36,000 per deal for a 72% return on your investment.
This is great! Being from the Gulf Coast of Florida I would split the funds in two areas. Half would go to preconstruction development on the beach. The other half I would rescue the unfortunates that thought they could afford waterfront property and now want out due to job loss, forclosure, ...you get the picture. The are sssoooo many opportunities it makes my head spin. If I new anything about development, I'd have gone that route.
Best of luck!
supertones,
you can find condos for under $50,000 here, if you know where to look. i've seen some for $14,000 1bd/1ba they have been on the hud list forever, but nobody wants them. the problem is finding a lender that wants to lend only $14,000. although i haven't really looked hard, i'm sure it can be done.
[addsig]
I'd buy two lots, get construction financing for two homes that will sell for $250,000 each that I build for $150,000. Take three months to build them. Advertise the heck out of them and be flexible on sales price. Best case have them sold at completion. Worst case take the average 5 months total. Then do it 4 times more best case making $800,000 return, or two or three times worst case making $400,000 or $600,000. This is a little misleading 'cause there are company expenses, but does include labor costs already.
Anybody know of a good construction loan company that does 100% INCLUDING buying the land? Then I can do it entirely with their money without the $50,000.
Terry
Hey board,
See if this makes any sense, I like to keep things simple.
What if.....you were to take only $40,000, put 10% down on two $200,000 1st phase new construction houses ($20k each) at say...5.5%.
Market the houses as rent to owns at $210,00 with $10,000 down each and owner financing at say..7% on a 1 year term (just to satisfy the games time-line).
Between the two houses, you'd get $20,000 immediately (from the down payment), enjoy aprrox. $6000 in monthly spreads (over the term), then when the buyers finance the $200,000, get another $10,000 walking around $.
$200,000 - $20,000 down
= $180,000
$210,000 selling price, $10,000 down = half of your down payment.
you sell for $200,000, get your other $10,000 back plus an additional $10,000.
Total profit for 1 house = approx. $13,000
x 2 houses = a net profit of $26,000
which = a 65% return AND you still have the $10,000 you didn't use!
Clif
P.S. This providing an upward trend in the market of course.....I bought new construction in 98 for $190k and sold it in 01 for $248k
_________________
Always Think Differently Form The Masses and Always Believe In Yourself [ Edited by pbodys on Date 10/28/2003 ]
You guys make this so hard. That's it, use it to provide Hard Money loans at a rate of 20%. You can justify the high interest because you will not require any kind of qualifying. Only a name and address so you know where to send the bone breaker when they don't pay up.
I've done this before and I am pretty sure I could invest 50000 dollars and within 9 to 12 months turn this money into 100000 to 150000 guaranteed.
gets know better than that.
Cando,
Great post, but you have to elaborate more...how in do you think you can do this?
The Solutions Kid
[addsig]
Really like the ideas so far, some of them are great.
Keep 'em coming, want to really challenge people to put faith in themselves...I mean, come on...it's not your money!
Christian "The Solutions Kid" Beebe
[addsig]
I would buy 10 used mobile homes for $5k each and sell each for $10K on a 12.75% contract for 48 months with $1000 down. You get $10K back in down payments. If you just stick that in the bank and collect the note payments you end up with $115,358. If it takes you 10 months to buy and sell 10 homes, it would take 58 months to collect it all, but your APR on your $40K investment is still 22.1%. Of course you would do better than that because it wouldn't take 10 months to set it up, and you would invest the extra $10K in another 2 homes. That would give you 12 48 month notes and, if you set it up in 5 months, the annual return on your investment is over 28%
I would buy 10 used mobile homes for around $5K each and sell them for $10K each on a 12.75% APR, 48 month contract with 10% down. The $10K collected in down payments would buy 2 more homes for a total of 12. If it takes me 6 months to buy and sell the 12 homes, the return on my $48K investment in 54 months would be $138,430. for an APR of 23.77%.
Joel....
I agree with JohnMerchant.! This is a very creative way of seeing what others with experience have to input.
As long as they come up with real life examples and not just hypothetical situations...... it is a good 'thang'
mace
I think this could be a lot of fun! The key is to do something that you want to do. 20% return for the year etc is not hard and the ways to do it are endless.
I am up 104% on my trading account 10 months into the year. However; at this time I am not wanting to suffer the stress that goes with trying to generate large returns on a short basis.
Frequently hard money lenders are at 20% for a short term loan of 3-6 months depending on the lender and the scope of the project.
Mobile homes are an often overlooked source of revenue in the RE market. Especially the low end under 12k ones. Frequently these can be bought and sold doubling $$ or you can offer attractive financing and get even more return.
THis could be interesting, the 50K challenge!
$$ for the innovator and a good return for Christian.
A novel way to generate ideas and see if something new rises to the top!
[addsig]
Thanks all for the replies...
I really love this place, but in truth and in other places, there really doesn't seem to be an "real deals" so to say where people can actually follow step by step or watch a plan develop before your eyes. Just the posts I have seen show how people can think of amazing things, now if only we can put it to use and see if it works.
If this works, then every 6 months I will do the same thing and pose a different scenario. Obviously my skills and knowledge are limited, so I would love to see what the longer running investors could come up with. You know, come up with a deal maybe you have done in the past and start from scratch and see how people would have approached it and tell what you did.
Just rambling, but I think it could benefit us all.
Christian "The Solutions Kid" Beebe
[addsig]
I'm in sort of the same situation as SolutionsKid at the moment. I have between 50 and 65 thousand to invest. The problem is there are so many different ways of going about it that i just dont really know where to start. My only venture so far was a hard money loan where i lent a rehabber 25,000 and got back 35,000 about 3 months later. It was profitable but it just took too long. I'll be checking this post on occasion to see the ideas you guys come up with. I just wish some of you really took the time to think it through in a realistic manner. Some of your ideas have been good but just wouldnt work for various reasons, do you know how many months it would take to find 20 condos that you'd actually want to buy. You also forgot to figure in property taxes, pmi, and the monthly dues since they are condos. I'm looking foward to hearing more ideas though and i intend on posting some of my own.[ Edited by MrDeeds on Date 11/02/2003 ]
I know very little about REI at the moment. Thats why I am here. But I think the 20 condo idea grossly omits the maintantence and tax fees incured monthly. Right?
In my area in Brooklyn New York a co-op that sells for 65k would have a maintenance of approx. 400 per month.
Condos are way out of the under 100k range here.
AJ
maybe we could all be a little less code oriented and explane alittle more for the newbies!
just an idea
I posted a similar topic, and got redirected here. This is smart, but the ideas aren't that great. Honestly, there is so much more involved in just spending 50K and getting return.
Where do you want to invest?
What have you got in your coffers?
How much experience do you have?
How much TIME can you spend on the investment?
There's more to ask, I just can't think of it all right now. My first real estate investment was in Syracuse NY.
I bought 2 houses in semi-distressed condition. I rehabbed them with a contractor, spent in total about 15K on the rehabbing, downpayments, closing, etc... I rent one to a section 8 family, who got a great referral from their previous landlord, and the other is a 3 family. All in all, my rent roll is about 2500 a month, and I'm spending about 1200 on mortgage, management, maintenance, etc...
I used the popular notion that everything costs twice as much as I'd expect, and it was true. I don't make a fortune from this property, but I'm learning a ton. for a 15K investment, I make about $1000 a month, which I'm saving for my next purchase. I've bought and sold since the syracuse houses, and I've learned a ton more, but for my 15K investment, It's returned 100% in 2 years, and will continue to earn money as long as I keep it up.
Just had a goodhearthed lough on OCSupertones post:
"Nice idea conflix...I like that, although the investor would be tied up significantly in time consuming land-lording."
With 6,500/mo clean cashflow on 50K investment, I do not mind managing them even if i do not need to. That's 140% ROI , which if multiplieble according to the above blueprint, would be the subject2 an early IPO inception and on the cover page of the WSJ. However, since is probably not continiously replicable, try to be happy with finding first your first one to begin with.
[addsig]
True experience.
I worked up a deal to purchase 3 pieces of proerties for a total of $50,000, but didn't have the $50,000.
I got the seller to sell on "Contract for Deed" and I was able to put 10% down (which I borrowed from a friend with the promise to double is for him in 90 days).
I got the first house renovated (which already had a tenant) and appraised @ $50,000. I begin working on the second and third. These were finished in 45 days and I got appraisals for both at $55,000 each.
I went on an obtained pending lease agreements and got deposits for the other two properties. Now I have a total of $160,000 in appraised value and I turned to a HML that agreed to lend me 85% on the equity because the lease agreements from 1.5 of the properties would cover the monthly payments.
I took the $136,000 (85% of the $160,000) and paid the seller off. Actually it was concidered a refinance. This left me approx. $91,000.
I went on and accelerated my friend his return ( the full amount $10,000. Even though I still had more time). This left me holding $81,000 by the numbers.
Now when I sat down and added everthing up, the three properties were handled as three different loans, this cost me $10,000. (Just over $3,000 per loan). I looked at the total paid out for renovations $32,000 (approx. $10,000 each). The contractor agreed to wait up to 60 days for pay in consideration of me adding an additional $2,000 to his fee. This really helped me through.
Now I have three houses, all rented out and have a positive $1,200 cash flow from this deal. I also walked away from the table with a $37,000 check after the closing. Everything else was paid for.
This was done with a $5,000 loan from a very skeptical friend and a lot of negociating.
I really think I'm gonna like this new venture.
buy some tax liens that are about to finish the foreclosure process from some of the institutional investors like, bank atlantic, transamerica, plymouth financial, etc.... people who aren't interested in the property just the interest rate.....in states like MS,GA etc...with drop dead dates.....ie...if the back taxes aren't paid on a certain date from the sale the county issues a tax deed to the lien buyer.....with 50k you could potentially quadruple your money
Very Simple. You buy this 10 acre parcel of RA land in the northern part of the San Fernando Valley. You put only $10,000 down. We are allowed to put in a cluster of three houses on each acre accessed by a country road. This is a total of 30 houses. Each house costs $28,000 complete ($20) a sq. ft. Cannot be done but can be done. Houses sell for $58,000 each profit each house is: $30,000. On first two sales you pay off the land. Now you own it free and clear. You master lease the land to each new house buyer. $60 a month. That is $1,800 a month for the next 50 years. That is $1,080,000. My you are going to have some very well off children. Your profit on each house is: $30,000 lets see that is: $900,000 within one year.
With just $50,000 you have made $900,000 within one year and your children and grandchildren have an income of $21,600 a year for 50 years. Of course thats the best time of all on the 50th year the leases all come due. Your heirs can be nice and sell the houses probably for about $200,000 each. Lets see that is $6,000,000. Or they can be stick in the muds and just rent them out say for $1,000 a month each. Thats $30,000 a month.
I would leave that in their good hands. You can of course always come and visit and scare the hell out of them, but they will wish you well, cause they have it made. Of course so did you.
The $50,000 rotates as a construction fund for the first two houses. From that time on you merely borrow based on prior performance in constructing the first two houses.
This is kid stuff very formulatic. Not very original. Jesus, you don't really think the Donald the Frump, er I meant Trump is intelligent? I would say just self directed ego centric person with bad taste in woman. He has got to get past the exterior measurements to the infinitly larger dimensions of the mind.
Now do I win? If I take the $50,00 it is all mine. I would like to share. Why, cause I'm no longer greedy this is the second time around.
Its so easy, is it not????
RECAP: $900,000 in 1 year.
$1,800 a month income for 50 years.
$6,000,000 profit on house sale 50 yrs.
or: $30,000 a month forever.
Now thats fun. Lucius
Is this contest stil going?
is the 50k still up for investment?
I have a real life deal that turned 10k into 2.2mm in 4 years.
[addsig]
WheelerDealer
I'd like to hear how you turned that 10K into MILLIONS.
Well, the rules were that it could not involve rehabbing. But nothing said that it had to be with real estate.
Floor Planning......
it involves providing the funds for a car dealer to buy inventory.
The big franchisees do it for there franchises for interest.
However there are the smaller independents need money too. They unfortunately cant get it at a bank for interest so they have to pay a fee. a fee per car for a very short period of time say one day to 1 month. regardless of the time the fee remains the same. The fee is renewable but only after there is buy down of the investment.
Multiply the fee per unit times the number of units in a 30 day time period times the number of dealers in the pool and you have gross profit.
take the gross profit divided by the dollars invested times time divided by 12 and you have ROI.
the deal is 100% collaterized.
Roll the fee back into the loan pool and the ROI goes thruogh the roof.
_________________
B.G. & Wheeler D. LLc Inc.
(A division of: Half Vast Enterprises)[ Edited by WheelerDealer on Date 12/27/2003 ]
oops double post..... go back one page
[ Edited by WheelerDealer on Date 12/27/2003 ]