What else can go wrong? My Fannie Hurts!

Seriously, what did you expect me to write about today?

The news all over the web is the potential collapse of the Government Sponsored Enterprises, Fannie Mae and Freddie Mac.

• Did you know that Fannie and Freddie control 90% of the secondary market and 50% of the total mortgage market?

For those of you that have been reading, you know that I’ve been positive on the real estate market for the past month or so.  I’m feeling quite challenged to say something positive this week.  If you listen to the news, then you “know” the world is ending any minute now.

Here’s the thing, no matter what happens people have certain basic needs:

• Food

• Love

• Shelter

It’s a little known fact that humans were actually populating the earth before there were cars, houses, or even McDonalds.  If we made it then, why can’t we make it now?

Food- From personal experience I know that no matter how broke I’ve been I’ve always been sure to put food on the table.  People will always find a way to nourish themselves.

Love- If we’re not loved then we feel like we have no purpose.  I am blessed to have a loving wife and a supportive family.

Shelter- We can’t survive without some sort of shelter.  If you can’t afford to buy a place then it’s likely that you CAN afford to rent a place

Let’s see…two out of three of our basic human needs have nothing to do with Freddie or Fannie.  We’re off to a good start.

The third basic need, “Shelter” is the opportunity.

We are real estate investors and our job is to profit from properties.  With this “terrible” news the opportunity has become even greater for us.  No matter what happens people will still need a place to live. Every family can’t live in apartments, nor are there enough apartments to house them all.  That means that people will need to RENT single family homes.

As an investor you should know that rentals are the key to long term wealth in real estate investing.  When you buy a property that cash flow’s today, then chances are that this property will always cash flow. Just so we are clear, when I say CASH FLOW I mean that the rent you collect is enough to cover the mortgage (if you have one), the taxes, the insurance, and the repair budget plus a small profit.

Although that may sound tough these days, the increasing foreclosure market is driving the price of properties down to levels which will make this a reality.  I have a TOP SECRET Formula that I use to make sure properties I look at will cash flow.  How would you like to learn this formula?

The TOP SECRET formula:

Anticipated Monthly Rent (you will have to do some market research to get this number) multiplied by 100.

For Example: If you know you can get $700 per month multiply that by 100 and you get $70,000.  This means that you can’t pay more than $70,000 including your repairs and holding costs.  If the place needs $10,000 in repairs, then you can only offer the seller $60,000.

By using this simple formula you can figure out what your max offer should be on rental properties.  Typically I deduct another 15-20% from my offer price to be sure that I have some cushion.

If you’re one of the people that believes that there’s no hope for a recovery in the real estate market, then I assure you that you WILL be left behind. For the rest of you that play smart and conservatively, I will see you in the millionaires club.

OK,OK…I know that some of you are saying, “I don’t have $70,000 and I have no way of getting it.” How would you like to know how you can start generating cash flow and cash with only $2,000?

Sound interesting?

Then take a moment to post a comment in the box below.  All you have to type is, “I’m interested.” and I will reveal my master plan for turning $2,000 into $10,000.