Building up real estate investment cash flow is one of the cornerstones of the business model I am working to achieve my financial goals. The basic premise of what I am trying to do is income replacement, or building up enough side income to detach myself from my J-O-B (just over broke) and focus entirely on my own business. Now, as some of you know, I live in Texas, and right now, the smaller towns such as Belton/Temple/Killeen/Fort Hood where I live and operate are still fairly strong seller’s markets. Some of the larger cities like Houston and Dallas are experiencing downturns in the market due to the sub-prime mortgage loan industry going belly up. But, as far as the buyer’s side of the equation here in Belton/Temple, it is hard to find houses at prices that will make money. However, the nice thing is, if you can find a good deal on the buy side, you can quickly turn it around and make money.

I own a house that was purchased a couple of years ago at discount, that I put up on the market for rent, ran one ad in the paper for 2 days, and put a sign in the yard. That was 2-3 weeks ago, and I am still getting a steady stream of calls coming in for people wanting to rent the house. I also have one couple that is looking to buy the house and put their Mom in it, which I will see tomorrow if we can work out a deal.

So, to get to the point, working and investing in real estate simply comes down to one thing, and one thing only. Buy Right! The one key to real estate investing is buying properties below market price, and selling or renting them at market price. Now, if you are really looking long term at holding property, you could buy at market price, and rent to try and cover your expenses until the property appreciates enough and rental rates increase enough for you to make money, but typically only people with lots of loose cash on their hands can afford to do this.

So how does one find properties at a discount, and how much of a discount do they need to be purchased at in order to produce positive cash flow? Well let’s first discuss finding the properties.

Finding Discount Properties

There are many ways to find and acquire investment properties at a discount. Probing for houses such as tax sale properties, HUD foreclosures, Bank foreclosures, probate properties, and otherwise distressed properties are the best types of properties to go after. Seller’s must be motivated, or you will not be able to get the property at a discount. My main focus has been on HUD properties, and at www.bidselect.com, you can find the current list of available properties for sale. In a later edition, I will define and give you some quick pointers on the other types of distressed properties. But HUD properties are the simplest to acquire; you just have your realtor submit a bid, and the day after the bid deadline, you get an answer. Read the full detail of how I buy HUD homes.

Investor Pricing on Properties

The typical percentage that most investors will feel comfortable with is about 75-80% of the value of the home. If they can purchase and rehab properties for about that much, they should be able to make enough from selling or renting the house, to justify the time, money and risk involved with doing the deal. In the market I’m in, I focus on houses from about $40,000 to $100,000 to invest in, and try to make somewhere around 20k for selling the property, or about $150-200 / month renting it out. The main goal is the latter, getting the monthly real estate cash flow going to help me cover enough of my expenses to justify leaving my job.

So, to sum up, acquiring cash flow properties is one of the main things I will be doing to replace my J-O-B income, so I can leave and pursue my own business. I figure it will take about 10 of these properties to allow me to quit my job. How many properties would it take you to be able to quit your job, and focus only on your investments / other enterprises? What methods do you know of to acquire properties at discount prices? Please leave some feedback, as I have only skimmed the surface as to the strategies available for building up income streams.


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