Think and Grow Rich
Think and Grow Rich
The Science of Getting Rich
The Science of Getting Rich

Matt Napier's Real Estate Warning to InvestorsSince the beginning of the Great Recession, there has been a debate on cash flow between real estate investors, many of whom learned some tough lessons when the Recession began (including myself). Specifically, the debate is: What kind of deals should you focus on and how is your money best used!? Should you focus on creating equity or focus on creating solid income and cash flow?

You may be saying that they don’t have to be mutually exclusive. While that is correct, many investors tend to focus on either building equity OR cash flow. To me, the decision of what kind of deals to focus on is made easy if you boil it down to one thing- how much money do you need right now to live the lifestyle that you are already living (provided it’s already a decent standard of living) and do you already have enough cash flow to live off of on a monthly basis? If you do not have enough to live off of, do NOT focus your efforts too heavily on equity build up. Instead, focus on cash flow (quick flips, wholesaling, and only rentals that will generate strong cash flow); investments that will put cash in your pockets within 1-9 months.

One of my mentors when I got into real estate investing nearly a decade ago, Del Hinds, who headed the SCREIA, made a point of continually telling me not to focus too much on gaining long-term equity, until I had enough to live on today. His famous words still haunt me- YOU CAN’T EAT EQUITY! I also had another mentor that swore to me, you better have a sure fire exit plan and back up strategy if it doesn’t work. I will explain that more in a minute, but for now, let’s talk about Del’s words. At the time, I thought that he just had a different approach to investing, but he was 100% correct. Although I’d built up a significant pile of equity in properties, that was slowly being squeezed out each month when the Recession hit and since I didn’t focus on strong cash flow from the beginning, the $100 to $150 I was making per property on gross rents (before expenses) barely covered basic maintenance and vacancies, meaning my true profit per month on rentals was close to zero.

This serves as a warning. If the economy goes into another recession (which is certainly possible given the lack of fundamental improvement in the economy and massive spending by our government) and you do not have more than enough cash flow to live on already and are focusing too heavily on equity, change your focus… FAST. Focus on wholesaling, rehabbing, and flipping properties, or if you do buy rental properties, ensure that you have at least 30 to 35% cash flow after PITI payments plus a 10% allowance for vacancies and a 10% allowance for repairs (I actually look for 50% net cash flow now). Just because there are enough properties with potential equity that we can buy all day long right now, don’t buy too many properties too quickly if the strong cash flow isn’t there, and if you’re choosing not to re-sell them right away. Your equity may get squeezed out and you may be stuck with a property that you can’t sell for what you thought, and then you’re holding onto properties that aren’t cash flowing well enough to make it worth your time. You’re one of the smart ones though; you know to focus on cash flow, and thus, you will be a successful investor.

Matt Napier

With nearly a decade of experience in specialized niches of real estate, Matt is considered a highly knowledgeable real estate investor in the Charleston, South Carolina area. Matt has dedicated himself to learning highly specialized skills which allow him to find high-return real estate investments for his clients and his investment company, The Napier Organization. His company offers high-return investment opportunities to select individuals and funds, secured by real estate. In his free time, he enjoys coaching new real estate investors on the technical details of real estate investing.

Fear Not!

There is a Japanese proverb, “Fear is only as deep as the mind allows.” 

Fear while an instinctual part of each and every one of us, should not control us or drive our actions, except in the case of extreme danger like being attacked by a shark or other such creatures. Obvious right?

Then why do so many let fear, some knowingly and most unknowingly drive their daily actions and limit the life they can lead? Well, it doesn’t limit everyone.

Torre DeRoche suffers from Selachophobia, or what she fondly has renamed Horriblehorriblesharkydeathphobia. This is merely one among many of her fears when it comes to the ocean.

Yet in her mid-twenties, she agreed to embark on an adventure that would mean sailing across the Pacific Ocean and facing every single one of those maritime related fears head on... GO TO POST


Let’s journey to success everyday, first thing in the morning:

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Show Notes

Seth Williams is an experienced land investor, residential income property owner and commercial real estate banker. He is also the Founder of – a real estate investing blog providing real world guidance for part time real estate investors.

This interview is packed full of interesting information about buying and selling vacant lots….and the really cool thing is that most of it relates to buying and selling houses.

Find out how he builds a mailing list that typically gets better than a 10% response rate along with the exact message he puts on his postcards.

Learn how he analyzes these deals so that he knows what he can offer and still make a great profit.

Seth also shares how he is able to sell these lots for passive income and make even more money.

There were several things that surprised me during the interview, like when he informed me that most people that buy lots from him aren’t going to build houses on them. Find out why, in today’s episode.

Top 3 Things We Love (and Hate) About Our Businesses

1. Freedom to do what I want, when I want
2. Large pay days (and thrill of the chase getting deals)
3. Working the business with my wife

Hate – strong word, dislike is more accurate
1. Fleas
2. Bad contractors
3. Dishonest investors

Never a dull moment…ups and downs…

Seth’s Loves and Dislikes

1. Thrill of getting accepted offers – that it’s possible to get great deals
2. Passive Income
3. Large Paydays

1. Times when properties don’t sell immediately
2. Uncertainty of whether deals will be consistent in his pipeline
3. Cumbersome and time-consuming processes for buying and selling

He got started investing in real estate during college around 2005 and 2006. The real estate market then was white hot and that made it difficult to get good deals.

Seth decided to start buying and selling land.

Seth finds his deals by tracking down people that own vacant lots that are delinquent on their property taxes. He does this by contacting the tax assessors and treasures for the counties where the properties are and asks for a spreadsheet with the addresses and owner’s information.

Some will give out this information quickly and without hesitation and then some counties will make it very difficult, if not impossible.

He gets these records anywhere from free to up to 25 cents per record.

With records in hand, he then sends out post cards to the people that are delinquent on their property taxes. He says he typically gets better than a 10% response rate (which is pretty damn good) with these postcards!

You can download one of these postcards here:
Click Here to Get the Postcard Example

During the interview, he goes into detail with how to analyze land (vacant lots) deals so that he knows what to offer so he can make a worthwhile profit.

Seth also shares his strategy for making long-term passive income with these lots. He sells some of them with owner financing at close to 10% interest.

One example is where he bought a lot for about $1,000. He got a $500 downpayment from a buyer and then received payments for several years. The first couple months payments paid him back his initial outlay and the rest was pure profit!

He focuses on buying land in the counties outside of big cities. He avoids inner city lots because they are typically in war zones where nobody will want to build.

Find out why people typically buy his lots by listening the episode….(and it’s not usually to build a house)

Quote: “If you want total security, go to prison. There you’re fed, clothed, given medical care and so on. The only thing lacking… is freedom.” – Dwight D. Eisenhower

Download Example of a Postcard Seth Uses

Click Here to Get the Postcard Example

Recommended Books

Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

Virtual Freedom: How to Work with Virtual Staff to Buy More Time, Become More Productive, and Build Your Dream Business

Getting Past No: Negotiating in Difficult Situations

The Miracle Morning: The Not-So-Obvious Secret Guaranteed to Transform Your Life (Before 8AM)

Seth’s Million $ postcard templates that work

Please Rate and Review

This is my simple request: If you enjoy the podcast and look forward to hearing a lot more episodes, I would be very grateful, happy, beholden and otherwise indebted to you to rate and review the podcast on iTunes.

It’s your choice and I do not want you to feel at all obligated. But I’d love it if you would subscribe and leave a rating and review.

Ratings and reviews allow the podcast to be seen by more people, which will help me achieve my goal of helping as many others as we can to get started in the house flipping business and change their lives.

Click here to rate and review our podcast! :)

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The post Episode 9: How to Flip Vacant Lots w/Seth Williams appeared first on Flipping Junkie.

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