Investing For Cash Flow and Financial Independence


Financial Planners will always tell you to diversify. That’s a good idea except that diversification is usually exercised by most people solely through the purchase of many different mutual funds. It is still investing in mutual funds or the stock market. There are ways to obtain wealth (and financial security) that you may not currently be exploring, ways that go beyond buying mutual funds.

Instead of planning for retirement, plan to reach Financial Independence instead. True Financial Independence is an easily measurable known target, and is a goal that can actually be reached within a short period of time. How? Through passive income. Generate positive cash flow from hard assets such as real estate income property. Rental income is passive income for the most part, especially if you have a solid property manager taking care of the details.

The principles of creating a long-term, on-going cash flow can be applied to most kinds of real estate investments. Mobile home lots, apartments, garage/storage units, and houses all make excellent income producing assets. Houses, in particular, low-end houses, make an excellent vehicle for creating long-term cash flow for a multitude of reasons.

While appreciation is often the most significant form of profit for real estate investors, investing for cash flow is easier to determine and with lower risk. So how do you achieve positive cash flow ethically in the real world? You need to buy in the rare market where high capitalization rates (15%+) are the norm. Such markets are usually depressed like Rochester or Memphis and have a large pool of renters. The reason tenants are willing to pay more to rent than they would have to pay to own in such markets is that they believe property values are falling or level in which case not owning is a good idea in spite of the high rent. Positive cash flow is so rare and so desirable that it eventually attracts out-of-town investors. Their coming into Rochester or Memphis or wherever causes property values to climb so that high cap rates are no longer available.

There are the three primary ways that an investor makes money in real estate: 1. from cash flow, 2. property appreciation and 3. paying down of the mortgage thereby increasing their cash flow and equity. Only if you buy on a bargain basis can you get positive cash flow from a rental property.

Why low-end houses make the ideal Cash-Flow vehicle

First, houses are abundant. Every city, town, and neighborhood has houses. Houses are probably the easiest to buy because they are the most common. Houses are also probably the easiest to buy at a discount, since there are so many sellers who own them in some sort of crisis ownership position: Vacancy, disrepairs, judgments/liens, back taxes, etc.

Houses are the easiest to manage, with the possible exception of storage/garage unit rentals, since these are occupied with stuff and not people, thereby making evictions easy. Well-maintained houses will often keep tenants for a 3-5 year cycle, sometimes longer. Most of the other vehicles have shorter-term occupancy.

Houses are by far the easiest to sell because of the naturally large demand for places for people to live. In most cases the property will sell without holding paper, but many smart investors will sell their houses on some sort of payment contract and be able to charge a 10-15% price premium to the buyer without using a Realtor.

The so-called low-end house can be very desirable from an investor’s standpoint. First, lower-end housing doesn’t mean becoming a slum lord. It means basic, starter homes that are located in good, but not necessarily great locations. These marginal areas typically are more of a buyer’s market, thereby, tilting the negotiation in favor of a hard-cash buyer or a buyer seeking owner financing. Actually, owner financing is easier, much easier in these slightly marginal areas.

Next, these lower level houses can frequently be purchased at various distress auction (tax, foreclosure, estate) sales. In many areas of the US, these houses are bought for prices anywhere from as low as $5,000 to $25,000, without a lot of difficulty (after you know the many inside strategies and secrets).

These homes can typically generate rents of $600 – $900 per month, which based on the low purchase price makes an outstanding return on investment. Returns of 25% – 35% per year are common. It’s not uncommon for smart investors to receive income for 20 years or better from their houses. After this period of ownership many owners will find a stable buyer and sell the house with a vendor take back mortgage (payment contract) and receive another 10 to 15 years of “mortgage” payments.

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Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More……


The Best Cities For Flipping Houses


When you first make the decision to start flipping houses, one of the key questions on your mind should be where you will conduct your activities. After all, as anybody who has had previous dealings in the property market will be able to deal you, location is extremely important when it comes to buying and selling properties, both in terms of the demand for housing and the prices that you can charge for a property.

Simply put, some markets are naturally going to be stronger than others, so it is a good idea to know where to start looking before you make any purchases. Here we will examine some of the best cities for flipping houses in the current market.

Memphis, TN

Memphis is one of the most famous cities in the United States, but according to recent statistics, it is also one of the best when it comes to flipping houses. So far in 2015, the city has seen approximately 250 houses get flipped successfully, which is one of the higher numbers in the States.

Better yet, on average the house flipper made about $50,000 of revenue on each home that they sold, with an average buying price in the $100,000 range, while the average selling price was a little over $150,000. Considering the price of renovation work, this can likely spell about $20-25,000 of profit for each home flipped in the city.

Baltimore-Towson, MD

Baltimore-Towson boasts very similar figures to Memphis, with statistics indicating that 258 homes have been flipped in the city during the first quarter of the year. However, the city is set apart from the rest on the list due to the enormous return on investment offered by each flipped property.

The average purchase price for a home during 2015 has been about $125,000, but the average sale price has rocketed up to a remarkable $243,000. There is simply no better market in the country today for people who are looking to make the largest amount of money from a flipped home, but beware that it will become a very crowded market as more people become aware of the potential on offer.

Ocala, FL

Ocala is an excellent city to get started in the house flipping business, as initial prices for a property are fairly low and there is a very good chance that you will see a solid return on the investment you make in the area. As such, if your budget isn’t huge it can be the ideal place to start out.

Average purchase prices in the city are approximately $51,000, with resale prices sticking around the $90,000 region. While that sale price isn’t huge in comparison to other areas, it still represents almost $40,000 worth of revenue from each sale. A few houses sold in Ocala could mean you are able to save up the money you need to get to work in a more prosperous city. The only issue you will face is that there are not a huge amount of properties on the market, with only 69 being flipped during the first quarter of 2015.

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Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More……

Memphis Real Estate


A montage of lively communities, Memphis is no longer the laid-back port town it used to be. The downtown Memphis area is where the life of the city really is. Here one can find antique shops, restaurants, art galleries and coffee shops just a walk away. The downtown area is home to more than 23,000 residents – a number that is steadily growing with the building of houses, apartments and condos in the area. Downtown Memphis is home to Beale Street, the celebrated “Home of the Blues.” Beale Street features a number of bars and cubs that cater to jazz, blues and rock and roll music. Then there is the Pinch District, which is home to cafes and bars that are frequented by local residents and tourists that are attending events at the nearby Pyramid.

Midtown Memphis has some of the city’s most pristine neighborhoods. Tree-lined avenues are flanked by grand bungalows and apartments. Overton Park, located in the center of midtown, is one of the United States’ biggest urban parks. Some of the city’s numerous attractions are the Memphis College of Art, Memphis Zoo and the Overton Park Shell. Several universities and colleges augment Midtown Memphis’ diverse atmosphere. The neighborhoods include Vollintine-Evergreen, Cooper-Young, Overton Square and Central Gardens.

Most of Memphis’ high-status housing areas, shopping and office centers are situated in East Memphis. The Memphis Botanic Garden, Audubon Park, Lichterman Nature Center and other public parks and gardens give a unique appeal to East Memphis. Chickasaw Gardens, for one, is full of elegant houses. The Pink Palace Museum and Planetarium lie adjacent to that neighborhood. Then there is Cordova, which is a rapidly growing community in the Metro area.

Shelby County, outside of the main city, boasts of a number of beautifully integrated cities and towns. These include Arlington, Bartlett, Collierville Germantown, Lakeland and Millington.

Neighboring areas that surround the city include Fayette County, Tennessee; Tipton County, Tennessee; Crittenden County, Arkansas; DeSoto County, Mississippi; Tunica County, Mississippi; Tate County, Mississippi; and Marshall County, Mississippi.

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Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More……


Winter Is Coming – It’s a Great Time for Real Estate Investing


You’ve no doubt heard the concern that real estate sells best in the Spring and Summer – that the worst time for buying and selling houses is Winter.

And, Winter is coming! So what should you do?

First of all, don’t panic! We’ve been investing in real estate full time since January 2005. Here’s what we’ve found, not only for ourselves, but for most of the other investors we know. True: the number of calls you’ll get from sellers and the number of offers you’ll get from buyers will decline.

However, also true: the quality of those contacts will be much higher. Both buyers and sellers calling during these months are serious! So no, Winter is not the season to panic. In fact, some of our most profitable deals come at the end of the year.

I’ve heard many investors say that December and/or January are their most profitable months. Why?

  1. A lot of investors as well as real estate agents get out of the business during these months. They cut back or stop their marketing all together and often use these months to vacation. So, as long as you’re still active, you’re the one who will get the buy/sell calls.
  2. Many high net worth individuals need to use up cash to avoid taxes before year end and they turn to real estate. Now is a great time for you to be calling CPAs and tax advisors to let them know how you can help these clients.
  3. While families are together over the holidays, decisions are made regarding what to do with their parents’ home, or that it’s time to stop dealing with inherited properties. These sellers call us in January needing to sell estate properties.
  4. Fewer buyers during the holidays means less buying competition for us as investors and fewer buyers means sellers reduce prices to get their homes sold. This is the perfect time to buy at discount and begin renovating so your property is back on the market in time for prime selling season, Spring!

Bottom line, don’t panic. Get excited and be prepared to provide solutions for those needing to buy and sell in the winter months. The market is less active, meaning less competition, and the buyers and sellers who are out there are far more serious than the casual shoppers who come back out in the Spring.

What has been your experience in the Winter months? What will you do differently this Winter?

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Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More……



When you live in a hot market, it is very difficult to find a rental property that will provide decent returns.  You are basically lucky if you can even get it to cash flow.  If you are okay with purchasing rental properties that don’t cash flow then your chances of financial freedom are slim.   There are some folks who also are okay with even just breaking even on rental properties.   This also I avoid like the black plague.   I just cant find any reason why I would ever do this.   Some may say that they are hoping for appreciation and that in a few years they can make out by selling the house at significant amount more then what it was purchased for.   This I also avoid.   I am not in the business of gambling my friends and this is exactly what type of investment this is.   I mean don’t get me wrong, I like to throw some money down on draft kings during football season for some fun but that’s a whole different topic to be discussed another day.

At some point you will come to the conclusion that if you seriously want to invest in real estate, rental properties that is, you will have to go outside your comfort zone and start looking outside your hometown.   This could be an extremely scary thought for some however if done properly you can minimize risk.   Just make sure you have a strict criteria and you due proper due diligence on your new city, your new turnkey seller and the house(s) you are interested in.   If everything comes out as expected then I say go for it. That is exactly what I have done now and so far its going great.

I thought long and hard about what city I wanted to begin purchasing rentals and after countless hours of reading about all kinds of statistics and stories I decided on the great city of Indianapolis. Indianapolis fit all my criteria as a city and from a real estate market perspective.  The following stats and qualities below can be applied to any city. Its a good idea to incorporate some if not all of these in whatever city you wish to invest in: (in no particular order)

1) A steady increasing population.   If you google your city name with population appended to it you will see the chart.   You want to see this going up, not down.

2) A city with a diverse economy and not tied down to single job industries.  One with plenty of big employers there and the city is not relying on single companies or an industry to keep it afloat.

3) A city with a good sports/arts/cultural awareness.   Nobody wants a boring city.   People needs things to do and places to go.  Look for professional sports, major universities.   A city that has a great night life also helps.   If it has plenty of bars and a good music scene it will attract more people.  More people = more renters!

4) Cheap real estate! I realize the amount real estate is worth is greatly dependent on where you are from and what you are used to.  To me and the type of properties I’m looking to purchase, I want these properties to be affordable.  Its possible to get a good rental in blue collar area for anywhere between 50k to 70k all in.  I also have houses in my hometown where they are in the 115k to 150k range.  These types of properties make for good rentals as long as the rent prices are in the $1200 – $1600 range.  Now grant it the cheaper the properties, the more run down the neighborhood might be.  This is why due diligence is vital and you need to make sure you do not purchase in a neighborhood you are not comfortable in.   I like C class, blue collar neighborhoods with low crime.   These are perfect rental properties and have great cash flow.

Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More……



Is turnkey real estate right for you? This is an important question to ask yourself, because let’s be honest: it’s not for everyone. As always, I suggest real estate investors try to reverse engineer their lives.

Think about your end goal; imagine what you want your life to look like down the road once you’ve achieved your Freedom Number. What do you envision your future to look like? Will you be spending your free time renovating properties? Or do you plan to collect rent checks passively, while you spend your time with your family doing the things you love?

Turnkey real estate is not for someone who is Type A and needs to be hands-on. If that sounds like you, we have a DIY playlist on YouTube that you might find helpful.

Here’s are a few key indicators that you and turnkey are a match:

  • You don’t know the first thing about finding a great investment in the right market.
  • You don’t have the time to commit to everything investing entails.
  • You don’t want to get your hands dirty doing a rehab.
  • You don’t want to worry about hiring contractors.
  • You don’t care to pick out paint, or find the right materials.
  • You don’t want to interview property management teams to find the right fit.
  • You want a totally passive experience and high ROI.

It’s a fantastic solution for those investors who want the benefits of high ROI and monthly cash flow, but don’t want to put in the work. Turnkey is totally hands-off, you just sit back and collect rent checks.

The entire system is rock solid. You don’t have to worry about paying contractors crazy rates, and your property management team is ready to go! Everything runs incredibly efficiently, which makes your business scalable.

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Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More……

Zillow Takes Aim at Small Investors


This is a little different type of article than I typically write but I found this interesting and wanted to share. A few months ago, Zillow announced its Instant Offers program, which basically allows sellers to get offers on their homes within two days from institutional investors. These investors are highly qualified buyers and close with all cash within a week. At this time, Zillow claims that it is not offering this service to broker deals and charge commissions; it is doing it to fill a need in the industry. They claim that it is actually encouraging sellers to use agents, not vise versa.

Many agents are upset. In fact, according to a recent survey, 87 percent of Realtors think that Zillow is trying to become a broker and eliminate agents. Some agents, however, are excited about this shift and want to work more closely with Zillow.

If you have not heard, this is how the Instant Offers program is working in two test markets. A home seller completes an online questionnaire. From there, Zillow passes this information onto a small group of institutional investors who are buying houses in that market and to a qualified Realtor. The Realtor is tasked with providing a detailed comparable market analysis while the investors are tasked with submitting offers. Within just a few days, the sellers should have multiple cash offers and a CMA to compare the offers to. They then decide to go ahead and accept one of the offers where they can work with an agent to help with the transaction, or they can close the transaction without the help of an agent, or they can choose not to accept the offer and sell the house in a more traditional manner. This could include listing with an agent.

There have been several agents that claim to have received a large amount of seller leads under the new program. They submit the CMA and then are encouraged to follow up to try to get the listing.

I don’t see this as a bad thing for agents. Zillow is not charging any fees to the borrowers or the investors for this service, and claims that it is not interested in creating a brokerage or charging commissions. They generate revenue from ads and selling leads, not houses. Although many agents feel this could change because Zillow is not a profitable company. Entering the brokerage business could be a new profit center. I don’t see it that way, at least not yet. I see this more as a marketing ploy to attract seller leads for agents.

Although I am not concerned Zillow will take over the agent’s job, nor do I see this as a big threat to investors, I could see how one could view it that way. Zillow’s mission with the Instant Offers program is to capture every lead from distressed sellers it can and turn them over to cash buyers or their “pay to play” agents, virtually eliminating the small rehab investor. It is our job to be aware of what is going on and to maneuver our business to benefit.

Here is why I am not worried. First, the cash buyers are going to need steep discounts and the agents that just want a listing are going to be offering inflated CMAs. Those two could be so far apart it is going to hurt Zillow and the Zestimate it is so proud of. (Zillow’s opinion of value) This alone could make the program crash before it even gets going. That is not what I think is going to happen however. My guess is most sellers will end up listing the house with the agents providing the inflated CMAs. The agent will likely have trouble selling it because they will be listing it too high. This could be a great thing for a small rehab investor. Here are two ideas that you can implement to take advantage, assuming the Instant Offers program comes to your market.

  1. You can network with the “pay to play” agents. If you can prove you close on your contracts and build a relationship with them, they too will be bringing a cash offer to the table. There are ways to make your offer more attractive than the institutional investor’s offers. This could be a great way to get noticed by sellers before the distressed houses ever go in the MLS.
  2. You can track listings that appear to be too high in the MLS. Once they have been listed for a while, you can start to market to the seller and/or listing agents. Be careful though. You may not be able to market directly to the homeowner of a listed house unless you are unlicensed. Cash offers on distressed houses are attractive after the motivated seller has their house listed for a while with no traction.

Currently this program is only available in Las Vegas and Orlando, but there seems to be a lot of optimism around it, so there is a chance it hits your market before long.

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Memphis Buy And Hold is specializing in locating, purchasing, renovating and managing single-family and multi-unit properties and possesses over 12 years of experience in real estate investing and property management in the Memphis and Nashville markets… Learn More……