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Beats CD Rates and No Commission How Two Stockbrokers Discovered
Unique Investment by Accident
by Maryan and George Beardsley
When we decided to move to Tampa Bay from Boca Raton 20 years ago we couldn’t sell our house. The market was bad then, too and we had to leave the house with a Realtor and were making two payments. You may know what that’s like.
After making two house payments for several months, the Realtor called and asked if we would "carry financing." We were terrified. What if they didn’t pay?
But we did it and it worked out and eventually the buyer refinanced and we had the house sold, faster than we thought possible and for more money. That really caught our interest.
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The Big Secret, that makes it all work is: “How Do You Buy Houses So Low? Today, it’s relatively easy.
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One thing led to another, we got real estate licenses, used our real estate commissions and our own money to get our clients into houses without bank financing, did some easy rehabs and a couple of years later we bought a house for $17,000 and paid $13,000 to get it fixed up and lease option it at $550 a month, giving the tenant the right to buy for $49,900.
We thought that was pretty good until a mortgage broker we knew, let’s call her “Mary,” (mostly because that is her name) approached us with an idea.
“Forget taxes, repairs and insurance for simplicity,” she said. “What is your rate of return on your investment in the house?” “And would you be interested if I could show you how to make a LOT more, and I make a profit too?”
“Sure,” we said. “If it is really rented all year (and it may not be), we will have $6,600 in rent and since we have about $30,000 of our own money in it, the return is 22% a year.”
“So, if I were to loan you the $30,000 that you have in it at 8%, you would pay me $2,400 a year, a whole lot more than I can get on CDs, you would have an income of $4,200 and you would have all of your money back so you could buy and renovate another house.”
Pretty convincing logic. We took the loan and everything went well until the tenant refinanced. So after collecting rent for a couple of years with an infinite rate of return we had to sell the house for a one-time profit.
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We Rent and Rent to Own Homes Using The
Famous Rent to Own on Steroids Program (tm)
Mary said we should “Walk the Mortgage.” That means in real estate parlance, we would shift the loan to another house we had just finished, so she would continue to get the high interest we were paying and so we did not have to dig into our cash to pay Mary off. That worked pretty well too.
Let’s Look at Those Numbers Again
Bought House $17,000
Fix Up House $13,000
Cash Out of Pocket $30,000
Monthly Rent ($550X12) $6,600
Return on $30,000 22%
. . . And then Borrow $30,000 From Mary, so we can buy another house to fix up.
Mary earns 8%. We do all repairs, pay taxes and insurance and collect all rents, and we will always earn less than the $4,200, but it allows us to buy and fix up another house with money from Mary. Our return if we only get $1 net return is infinite since we have recovered all of our original investment.
But Isn’t Real Estate Very Risky?
Everything you do or don’t do is risky and there is high risk and low risk. Paying full price at top of the market with the expectation of "flipping" (selling to someone else quickly) with the expectation of the market making money for you is highly risky.
Mary realized that she had no risk of the rehabilitation of the house not being finished and did not need to worry about getting a tenant, because the job was finished and a tenant in place before she put a penny into the transaction.
She did have other risks. We had bought the house at about 40 cents on the dollar and already paid for the fix up, so the property that secured her $30,000 mortgage was worth about $50,000.
And if you are buying 60 per cent below market after the market has gone down 30 per cent, the risk seems a lot more reasonable. Buying below market when prices are lower moderates risk, but nothing eliminates risk. What you do and the way you do it determines just how risky it is and no investment is right for everyone. Prior performanace is no guarantee of future performance. There is no guarantee on investing in real estate and there may be more or less risk based on various factors and timing. This is not a low risk or no risk investment.
What we have learned to do since leaving the stock market is to buy houses WAY below market using a technique that is beneficial to both sides.
What we do, we consider risky and it requires great discipline and experience. What our passive investors do, we believe is less risky. The project is finished and there is a renter in place and there is a positive cash flow. But there are always risks.
We have passed on buying a lot houses because the price was not right. And in nearly 20 years of “good” and “bad” markets we have NEVER had to sell a house for a loss. If you buy them right, you are certainly off to a good start.
We’ve been pleased over the years to have friends and neighbors offer to invest money in our real estate activity, but we never made the opportunity available to new investors before 2009.
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No one, as the cliche goes, has a crystal ball, but we believe the current real estate market presents what may be a once in a lifetime opportunity.
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The example we have used here is from nearly 15 years ago, and we are finding bargains today far better and more profitable. And we want to increase the number of houses we buy in this market.
We currently have a few homes already qualified for this investment. They are rented, cash flow in place and have no mortgage so they are available for first mortgage loans with return of 6 to 12 per cent.
What we consider acceptable risk will not be right for everyone and everyone should evaluate every investment decision thoroughly, You need to know what you are investing in and WHO you are investing with and should confer with your own advisors, legal and tax, before making any important decisions.
If you are interested in better returns with what we consider to be acceptable risk, or just want to know more about the opportunity in real estate in 2009, call 727 644 4661.
Would You Like to
Boost Investment Income,
Avoid Stock Market Risk
Get Double Digit Profit
You could be a passive real estate investor if:
1. You would like to make a higher return on your money than a bank will pay you for a certificate of deposit. Much More
2. You have had all the excitement of up and down of stocks and bonds and commodities that you ever want to have.
3. You want something easy to explain to your accountant or CPA.
4. You would like to know that you are helping solve housing problems for buyers and sellers, but you do not have the time or desire to talk to every one who wants to buy or sell a house. You are the passive investor. You put up money and collect interest, not rent or headaches.
As we have said in this web site,we have lines of credit with the banks, we use our own money and we use money of people who have decided to invest with us.
If you would like more information on rates and how the program works, please call George Beardsley at 727 734 2042, or email me at
George@AdvancedRealtyTeam.com.
Everyone want to invest at the bottom of the market, but it is so hard to know when we are at the bottom. Call George to Ask How We Can Put You In the Home Market and Reduce the Risk and Increase the Income You Can Earn. Call 727 644 4661
Maryan and George Beardsley may from time to time offer securities in the financial markets. The information provided through this website does not constitute or form part of any offer or invitation to sell or any solicitation of any securities in the United States or any other jurisdiction. Any securities may only be offered or sold, directly or indirectly, in the state or states in which they have been registered or may be offered under an appropriate exemption.
Maryan and George Beardsley will, when they do offer such securties, offer them in the state of Florida.
Only persons in Florida will be offered such securities and only under appropriate registration or exemption, and no person from any other state or jurisdiction is or will be offered such investments or securities.
Maryan and George Beardsley have made all reasonable efforts to ensure that all information provided throughout the website on the Internet is accurate at the time of inclusion: However there may be inadvertent and occasional errors.
Maryan and George do not guarantee, and make no representations or warranties of any kind whether express or implied about, the information and opinions provided through this website, including an item used either directly or indirectly from the website and reserve the right to make changes and corrections at any time, without notice. The Beardsleys accept no liability for any inaccuracies or omissions in the website and any decisions based on information and opinions contained in the website are the sole responsibility of the visitor. Links to other websites are provided for your convenience, but we are not responsable for the contents of any external websites which link to this website or which are linked to or from it. We accept no liability for any direct, special, indirect or consequential damages, or any other damages of any kind resulting from whatever cause through the use of any information and opinions obtained either directly or indirectly from our website.
This website may contain information about the past investments and successes of the business. It should be remembered that past performance cannot guarantee future performance.
This website may contain statements concerning our business, financial condition, results or operations and certain of our plans, objectives, projections, expectations or beliefs with respect to these items. The statements may consititute forward-looking statements as the term is defined in the United States Private Secrities Litigation Reform Act of 1995.
These statements may include without limitations, those concerning the strategies we may use and our ability to achieve them, expectations regarding real-estate investment, investment plans, and those preceded by, followed by, or that include the words "believe," "expect," "intent," "plan," "anticipate," or similar expressions.
The Beardsleys caution that any forward-looking statements on this website may and often do vary from actual results and the differences between these statements and actual results can be material. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements. The Beardsleys undetake no obligation to release publicly the results of any revisions to any forward-looking statements that may be made to reflect subsequent events or circumstances.
By their nature forward-looking sstatements involve risks and uncertainities that could cause actual results to differ materially from those expressed or impled by such statements. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by thee forward-looking statements.
The Beardsleys may from time to time offer securities in the financial markets. The information provided through this website does not constitute or form part of any offer or invitation to sell or any solicitation of an offer to purchae any securities in the United States or any other jurisdiction. Any securities may only be offered or sold, directly or indirectly, in the state of Florida, in which they have been registered or may be offered under an appropriate exemption.
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