Link to Video
I teamed up with my dad this week to discuss what we do. Through these quick-hit style podcasts, we hope to help those getting started with real estate or attempting to see it from a different lens.
Below is a summary of what we discussed:
Our main goal was to make $10k in passive income when we began. This passive income was achievable through buying cash-flowing rental properties. The problem was that we had no money to purchase these rentals.
-
The best way to get the money to buy these rentals was to purchase distressed properties, fix them, and sell them for market value. These "fix and flip" projects would generate the capital needed to acquire the rentals.
-
Even so, we had no money to buy the distressed properties. Luckily, we could find lenders who would give us most of the money needed to fund the projects based on their After Repair Value (ARV). The rest of the funds required are by private investors, referred to as "gap investors" because they fill the gap needed.
-
Once we figured out how to fund these projects, we repaired the properties and sold them at market value. So, for example, we would buy a distressed property at $100K, fix for $30K, and sell at $200K. If closing costs were another $50K, we would have $20K as profit. We could use this $20K to either be a gap fund for another project or used as a down payment for a rental property.
Share this post