Take a moment.
I want you to think about how much money in cash you could possibly get your hands on right this very second.
I am talking about 401k money, checking account, savings account, money in your couch cushions, your 10 year-olds-piggy-bank, borrowed money from your parents, whatever.
Assuming that number is somewhere around $20,000 or so — here is the absolute best way I can possibly think of right now to invest that money into something that will make you more money.
Find a property that you can buy, somewhere in the Phoenix or Glendale metro area for less than $50,000. The home will not be a mansion. It will not be a palace. It will most likely have junk all over and probably need some repair work done.
Either buy it in cash or put as little cash down as possible and get one of the new HomePath renovation or HomeStyle renovation loans to finance it.
Hire a Phoenix trashout company to come in and clean up the trash and do whatever remodel work needs to be done.
Then either sell the property and find another property or rent it out and just sit on it.
If you sell it for a profit – then do the same thing again. If you rent it out and don’t want to do anything else – just wait. Either way, you will win.
Case in point.
This week, I spoke with an investor who bought this house for $24,000 in cash directly from the bank who owns it.
He hired a trashout company to come in, clean it up and do some remodel work.
Total cost for trashout and cleanup and remodel work was about $6,000.
Let’s say that he decides to get a mortgage (two mortgage programs that come to mind are HomePath Renovation Mortgage or HomeStyle Renovation Mortgage) for the $30,000. His total PITI payment for a $30,000 mortgage assuming a higher than normal rate and estimating high for taxes is around $350.
Think you can rent out a 3 bedroom 2 bath house for more than $350 in Phoenix, Arizona?
I know you can.
Probably for more than double that number. Possibly closer to triple.
And if the worst-case-end-of-the-world happens… you can always move in.
And no matter how you slice it, you can’t move into your 401k and live there.