Lesson 15: Profit Strategies
October 19, 2021
Review:
- Exam 2
Presentation:
- Strategies – ways to make money
- Buy something broken
- Cosmetic fixer
- Major repairs
- Problem should scare away amateurs
- Buy at a discount … by paying cash
- Pay cash
- Cash offers are expected to be lower than conventional financing
- Implicit discount to avoid bank financing headaches (e.g., inspection, appraisal, approval)
- 3 “D” opportunities
- Default – owner is facing foreclosure or bank-owned
- Death – death in the family forces family to sell
- Divorce – joint assets must be liquidated
- Pay cash
- Fix and flip
- quick profits/cash
- higher tax rates
- Buy and hold rental
- more headaches
- long term income
- lots of tax deductions
- 2-year hold
- hybrid approach
- avoid short-term gains tax
- relatively quick ROI
- “Live and Flip” approach
- Seller financing
- defer capital gains taxes
- earn interest income
- set price
- Business with Real Estate
- motivated sellers
- buy together, sell separately
- valuation is tricky – proceed with caution
- liquor store deal
- Buy something broken