For some investors, because of their goals or current circumstances, cash is king. If you want cash, you have four basic options for accumulating it: Find & Refer, Control & Assign, Buy & Sell, and Buy, Improve, & Sell.
If you are looking for cash and don't want to invest any money or even write a contract, you can accomplish that through Find & Refer. You can become a scout. As a scout, you seek out good investment opportu nities and then bring them to investors who are ready and willing to acquire those properties. In many cases they will be willing to pay you a "finder's fee" if the opportunities are good and they would not have located them otherwise. This is probably the fastest way to earn cash and by far the option you can do the most of in terms of numbers. The drawback is that the money paid per transaction is the least among the four options.
The second fastest option to earn cash is Control & Assign. This means you gain an option or an assignable contract on an investment property and then find someone else to acquire it. Since you control the property, you have negotiation power. This method has a little better margin than Find & Refer, but the volume potential is a little less.
The third option is Buy & Sell, in which you acquire the property, make no improvements, and put it back on the market at a higher price. Your profit margin begins to improve with this option. The issue now is that you will have to spend more time to do these deals and the volume will be less. The payoff is the profit.
The fourth option is Buy, Improve, & Sell. This cash-building method can offer even better margins than Buy & Sell, but it takes considerably more time and money and there will likely be even fewer deals to do.
You can see from the Acquisition Model shown in the chart on the facing page that Find & Refer can provide you with lots of fast cash deals but usually pays the least per deal, whereas Buy, Improve, & Sell can pay the most per deal but usually requires considerably more of your investment
"When I flip, I want to put at least $15,000 in my pocket. For example, my first flip was a property I bought for $40,000 at a bank auction. I put $40,000 into it and sold it for $125,000. I learned a lot of my fixer-up skills by managing other people's properties: first a six-unit and then a 16-unit building."
money to do. There are rare cases where Control & Assign can pay off big, but those deals are extremely hard to find. The truth is that you always should be on the lookout for opportunities, and when a property matches up with one of the four cash-building methods, you should consider moving forward to make some cash from it.
In the end the primary purpose of the four cash-building strategies is to generate immediate cash, income which can be used as earned income or put back into play along the Path of Money. Many of the investors we talked with at one time or another used all these methods to launch their real estate investing careers. When they did them right, which they will warn you is not as easy as it often is made out to be, they were able to build up some cash savings, which they could use as down payments on income properties. They were taking cash and reinvesting it for cash flow and equity: long-term financial wealth building.
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