Comments on: The truth about real estate investing

By: Floyd Magee

Floyd Magee — Wed, 22 Nov 2006 21:39:15 +0000

I’ve worked with Mark for the last 6 months or so and I will concur that he sticks to his 65% formula. The difficult thing we have here is most our 65% scenarios are going to have to be on the back end. Mark and I have looked at a number of scenarios in Ouray County that just haven’t made sense at the end of the day. Great deal Garth!

By: Mark

Mark — Sun, 19 Nov 2006 17:39:50 +0000

Your example is a perfect example of doing one of my type of deals. You knew something about this particular deal that told you even though you may be paying 100% of the appraisable value today according to “them”, you knew this is worth twice as much because of the realistic exit strategy you saw. (Therefore being 65% or under)
I paid market value for a bunch of land last fall in an area that others thought I was crazy for purchasing. But my exit strategy consisted of a couple of key things: 1. I improved the land for a specific builder that I knew was hungry for this type of land and had a certain price threshold. and 2. I knew that although I purchased this land for the going rate land elsewhere in the city had risen so dramatically that even if this land doubled in price it would still be half as much as elsewhere.
I ended up making a killing on that land, set a new market price, and now buy the same type of land at 50%-ish of what I can resell it for.

How do I find my deals? It’s a mixture of different sources: Agents, FSBO, Loopnet, Distressed sales. They key, however, is this: It doesn’t matter where I get my leads from because I know the particular area as good or better than anyone else. That gives me the ability to instantaneously evaluate a RE opportunity and pounce if it’s good.

By the way: Awesome deal you did! I’d take that one any day.

By: Garth Schutheis

Garth Schutheis — Thu, 16 Nov 2006 14:27:28 +0000

If you’re buying your properties at 65% of value…where do you find your deals? I’m assuming they aren’t listed on the mls. That they are fsbos or something. Foreclosures? I personally don’t worry about price if I can find a deal that has real potential that other buyers don’t see. I agree though, I don’t buy just hoping it appreciates. It has to make sense and pay at some point after I make the changes needed or of course when I buy.
For instance, I bought a property for $580k and it was a break even scenario, but I recognized that all the commercial income was on the front 1 acre and the back acre could be subdivided off and developed. I did this, made $400k on the back. I also implemented rent increases, better tenants, and improvements to commercial property. I just sold the front acre for $950,000. Bought the property in 2001, final sale Oct 2006.