Let me just answer your main objection/point – maintenance costs. The ideal play with these properties (in my opinion) is to re-sell immediately by way of land contract for $500 a month. (we handle this for you for 10% a month – about $50) The contract buyer is responsible for repairs, taxes, et al.
Do you think there are thousands of buyers out there who can’t get a loan any other way in this ridiculous credit market? I don’t mean a serial deadbeat, but instead a young couple with a baby who may both work at Wal Mart or McDonalds? Or maybe someone who just lost their house in the same neighborhood because the payment went from $700 to $1700? This is my point about the socially redeeming quality of the deal. Consider that you write a 10% note, $500 a month, = a note face value of $51,000. After those payments have been made for 6 months or a year, you can sell the note at a discount. 75% of 51k = around 38k. Add the $500 month cash flow you have made along the way and you get back $40k for your $30k investment.
We understand REIT’s, and mutual funds etc. Again, these are not for everyone – but they are a good option in a diverse portfolio. Creative? Yes. Guaranteed? No. In this market, guaranteed investments pay about 2%. The plan I just showed you pays about 33%.
