My $200k private money lender makes more cashflow than my buddy buying a $320k duplex. I get that its not 'apples to apples' But being a lender is the best position in real estate. Hear me out. A friend called me today to ask if I could show him a duplex tomorrow. $320k purchase price $2600/side $250/mo property tax $70/insurance He would pay all cash for the property right now and possibly refi later. Heres the breakdown of his 'cashflow' (remember this is very basic for purpose of a post) $2600 gross rents - 5% vacancy - $250 property tax - $70 insurance = $2150/mo Less than a 7% Cash on cash return. Now lets take my private money lender. He gave us $200,000 to hold onto for all of our deals We pay him 12% on that money. Think 1% per month. That ends up being $2000 per month. - No late night calls - No clogged toilets - No finding properties By the end of the call we realized that he would make a similar return by putting less money into our RE deals. Want more fun ways to make money from real estate? Give @meetmikehiggins a follow.
@meetmikehiggins Mike, we used to flip only. A few years ago we pivot it into lending because the spreads narrowed between the two. Your post is 100% accurate. Yes, we lose appreciation potential but I’m also not crawling through corral spaces looking for mold. 🤣
@GetPromosNow But mold equals gold!!!! lol Hope to earn your follow