09/20/2024
Once, someone inquired, "Roger, with $25,000 as a real estate investor, what's your move?" I grinned, replying, "I'd steer clear of buying property." Confused, they retorted, "Why not? That's my plan!" I countered, "Not wise." They urged me to share my strategy. Agreeing, I began, "I'd opt for two paths: Firstly, I'd turn into a hard money lender, loaning to investors against property collateral. Given the risk, I'd charge top rates. If they falter, I claim the property. Alternatively, I'd establish a private fund, pool capital, and acquire an apartment complex, surpassing simple flips." Impressed, they exclaimed, "Wow, that's ingenious!" I smiled, encouragingly nudging them, "So, what's holding you back? You've got some fuel to go on, so go get it!!"
Critics might concur, but the rationale is this: work smarter, not harder. Leverage is key. To elaborate, if you lend your capital at 15%-18% interest as transactional funding, you could recoup that return in as little as 30 minutes. In contrast, it could take an average of 6-12 months (depending on the market and downtimes) to achieve a comparable return as a house flipper (that is, if you can ever get close to those margins). I wouldn't even recommend becoming a wholesaler. Instead, become the bank. Use your own personal capital to start (or a small collective among friends), and as you gain momentum, then leverage by pooling or syndicating your funds if you prefer that route. While you're waiting to lend, place that capital into interest-bearing accounts so that your capital is always growing, even at a mere 1-2%. This way it is never stagnate.
