Please forgive me for a little self-indulgence this month. Sometimes I ponder what brought me to this place and time in my financial life. It all started back in 1975 when one of my mentors, Warren Harding, devised a challenge for me. When, as a new Broker, I asked him what I should do to become as successful as he was, he gave me this prescription for success: (A) Complete a course of professional study that would lead to an advanced real estate brokerage designation as a Certified Commercial Investment Member. (B) Complete seminars dealing with practical and creative solutions to real estate problems using unconventional finance. (C) Acquire at least $1,000,000 in highly leveraged income property with fully amortizing loans to hold in my personal investment portfolio. (D) Own property in at least 10 States. And finally, write a real estate article and get it published in a nationally published magazine explaining a new real estate concept. I set out to do all these things and a new life unfolded for me.
In the process of attending the seminars, I not only learned both the legal, tax, and technical aspects of real estate investing, but also how to conjure up my own creative solutions to a wide range of financing problems. The greatest benefit was meeting John Schaub, Jimmy Napier, and Pete Fortunato in the seminars I attended; all of whom have been close friends for over 30 years. Putting what I learned to work to acquire properties, then having to write an article and get it published made me acquire new skills. Yet another unexpected result was that the article I wrote for the November 1975 Real Estate News Observer called “Horizontal Apartments”, served as a spring board to national prominence among real estate Exchangors. It also laid the groundwork for my entry into the seminar business.
In January 1976, I closed my real estate brokerage and “retired” to the good life, which for me was touring the country in my motor home. Along the way I came up with an idea for a new seminar and bounced the idea off of John Schaub and we decided to give it a try. We formed Fortune Seminars, Inc. After a month spent working out the kinks of my rough draft, one fateful day in August of 1976, we launched our new seminar in Ft. Walton Beach, Florida. We charged $10 for two days, and threw in lunch. It was attended by 78 hungry people who came, I suspect, mainly for the food. It was called Miller/Schaub's “Making It Big On Little Deals”. Every seminar in America dealing with houses can be traced back to this humble beginning.
For the first time ever, we promulgated the radical idea, first expressed in my article, that, by buying single family houses, anyone regardless of their education, credit rating, or financial resources could achieve financial independence. The keys to financial security for life for anybody were simple: (1) Take over existing financing and buy well located decent single family houses that you can buy below fair market value. (2) Rent them out to produce enough income to pay their costs; then hold them until they either double in value, or the loans pay off. (3) Sell them and repeat the process. I think just about everything that was written in “Horizontal Apartments”, or that we taught in that first class is still relevant today. Those who implemented what we taught — and who avoided the mistakes of wiping out their equities through re-financing or selling too soon –are now lolling in the lap of luxury.
Even though a buy-hold strategy will build wealth over time, changes in tax laws, the financial markets, and skyrocketing housing prices, buying houses to fix up and sell has also made a lot of people rich in the past few years. The lesson I've learned over all these years is that a person has to be able to adapt technique and philosophy to the market. In today's buy/sell environment, we should buy and sell, but when consumers can't afford to buy, we'll buy and hold. If we want to keep on buying and selling when credit dries up, we'll have to learn to buy and sell “on time”; or we'll have to learn how to create and deal in Notes. If there's no cash in the market, we'll have to learn how to trade properties.
FOR ENTREPRENEURS, THE SELLING SEASON IS WINDING DOWN . . .
If you're in the business of buying and selling houses , every house you buy must eventually be sold. There is no house-buying season in the ordinary sense of the word because so many factors determine when a home is sold. Home owners sell primarily because their personal situation is changing. This may boil down to a job-change, a divorce, the need for cash, changes in family size or income, a change in the neighborhood or school system, a balloon mortgage falling due, or some local factor that makes an owner dissatisfied with current accommodations. The best way I've ever discovered to find out when a person wants to sell is to simply go door to door — if not in person, then by direct mail or a telephone solicitation call –and to proceed to negotiate a purchase from that point.
Once a house is bought for the purposes of resale, fixed up, and offered to the market, being able to sell it swiftly into the retail market is bound by a different set of rules. People who buy single family homes are usually comprised of adults with children. When children are in school, families are reluctant to move, so, in the absence of other mitigating factors, they usually start thinking about moving sometime between when schools let out for the summer, and when children must be enrolled for the next semester. That means, they must reside in a particular school district in order to enroll children in its schools. Absent of some mitigating factor, the single family house season is more defined by the school year than any other factor. So, for those who want to sell houses to the general public, late Spring and Summer have always been prime seasons for putting homes on the market and selling them.
Timing purchases and sales to take advantage of seasonal market swings can make a big difference in the amount of profit earned in a years. Those who time the market right are able to sell at high prices in a sellers' market and buy at bargain prices in a buyers' market. Once school starts, sales slow down dramatically. Slowing sales translate to a cash flow bind that prevents the erstwhile entrepreneur from being able to take advantage of the autumnal “slow season” to buy bargains from impatient sellers who are unable or unwilling to wait for buyers. To continue to buy, you have to continue to sell.
This newsletter is being mailed around the middle of July. That means that there are only a few weeks left before the market starts slowing down. If you aim to avoid having to sell in a slow market, there are several things you should start doing to speed up sales in the relatively short time left. Here are three tips for speeding up the process of selling a house and recycling the money:
1. If you're in the process of finishing off the interior of a house that you are readying for sale, focus your improvement efforts to build “curb appeal” and get your “For Sale” signs up to attract potential buyers. Offer brokers higher commissions and bonuses for producing a qualified buyer. There's nothing that soothes the fevered brow like having an eager, pre-approved future owner ready, willing, and able to complete the purchase and to move in as soon as your house is ready for occupancy. If you're early with your sign, it will give your buyer time to shop around for financing so you can close quickly once the house is finished.
2. If a buyer can make a substantial down payment and is being delayed by loan processing or funding, take the cash off the table in return for a short term Option pending loan funding and settlement. Let him lease the house in the interim so the kids can get registered into the school district. This works out well. One eager buyer who had sold his own home and needed a place to live in once paid $70,000 for a 90 day Option in order to move in ahead of loan funding and close of escrow.
3. Don't be afraid to give various minions in the marketing process a financial incentive to give your escrow special priority. As much as it's against my natural inclination, I've been known to place a $100 on a clerk's typewriter as an advance tip to speed up loan application processing, surveys, appraisals, inspections, and termite treatment.
THERE'S MORE TO MARKETING THAN “SELLING“ . . .
The term “Marketing” describes the entire process for moving goods from the manufacturer or originator to the consumer. Imagine that you are setting out to sell a new product which we'll call a Widget. In order to create a market for it, you've got to inform consumers that your Widget exists; that it offers unique benefits to the buyer over similar products on the market; that it can be produced at a cost that will enable you to sell it at a competitive price in comparison to similar products; that your Widget can be bought on affordable terms; that it is readily available and easy to purchase; that you're a reliable vendor, and that satisfaction is guaranteed for a reasonable time.
Instead of selling Widgets, we're selling houses, but the marketing principals are the same. In order to sell your house, it must appeal to the widest possible market more than other houses of about the same size, condition, and price. That means that if you want to turn houses over fast, while structuring your offer, you have to know who is going to buy your house, how much they will be willing and able to pay for it, and why they would choose your house over a competitor's.
Market research will tell you that most families want a 3-bedroom house, and that they are willing to pay the full retail market price for it. If they can afford it, they would like a family room and a double garage too. Although Widgets can be purchased in one location and used in another, houses must be used where they are bought, so location is critically important. Most home-buyers want to live in a low crime neighborhood that is safe for themselves and their children. They want easy access to shopping, parks, churches, good schools, and employment.
There's a danger in becoming emotionally involved with fixing up a house for sale. Every improvement made to it should be aimed squarely at the market you're trying to attract. Jay DeCima (www.fixerjay.com), a long time pal who has written many books on the subject of fixing up properties, likes to get at least $2 more in value for every $1 he spends. This is most easily obtained by landscaping, fences, and paint than by expensive kitchen overhauls and appliances. You should develop your own ratios of improvements to profit and stick to them.
Regardless how much money might have been spent repairing a house and painting it attractively, landscaping the lawn, upgrading appliances, putting in central heating and air conditioning or installing modern floor coverings, the house itself has to serve a buyer's needs. The floor plan should make sense. I've seen houses that fail to exploit a spectacular view; or require that a person walk through one bedroom to get to another. Or slice up rooms into tiny cubicles to create separate living and dining rooms. Or offer kitchens without counter-space or room for modern appliances. Re-doing a functionally obsolete floor plan needs to be factored into the price paid for a house.
I've made about every mistake a person can make in this regard; I've paid too much for the wrong house in the wrong location, and I've over-improved a house to the extent that there was no profit left for me when it sold. Overall, I'd have done much better if I'd known, and paid attention to, my marketing before I bought. When location and functionality are ignored, offering lower prices or easier terms may be the only way to lure buyers away from areas that offer more amenities and houses with better floor-plans. When purchase price and fix-up costs combine to make a house too expensive, it may well be a smart trade-off to sell fast for less than to spend the time and money required to sell a less-than-perfect house.
I'm still capable of breaking my own rules buying problem houses in my eagerness to make a deal for a house in a good area, but now I know enough to give up profit in return for salvation. I'll usually try to sell my mistake to a re-seller who knows more about the market for a “fixer” house than I do. Many times, I've been delighted just to get my money back so that all it cost me was wounded pride and lost time. I recommend this to anyone whose reach has out-stretched his grasp. Those who hang on and try to tough it out often wind up losing more.
Please forgive me for a little self-indulgence this month. Sometimes I ponder what brought me to this place and time in my financial life. It all started back in 1975 when one of my mentors, Warren Harding, devised a challenge for me. When, as a new Broker, I asked him what I should do to become as successful as he was, he gave me this prescription for success: (A) Complete a course of professional study that would lead to an advanced real estate brokerage designation as a Certified Commercial Investment Member. (B) Complete seminars dealing with practical and creative solutions to real estate problems using unconventional finance. (C) Acquire at least $1,000,000 in highly leveraged income property with fully amortizing loans to hold in my personal investment portfolio. (D) Own property in at least 10 States. And finally, write a real estate article and get it published in a nationally published magazine explaining a new real estate concept. I set out to do all these things and a new life unfolded for me.
In the process of attending the seminars, I not only learned both the legal, tax, and technical aspects of real estate investing, but also how to conjure up my own creative solutions to a wide range of financing problems. The greatest benefit was meeting John Schaub, Jimmy Napier, and Pete Fortunato in the seminars I attended; all of whom have been close friends for over 30 years. Putting what I learned to work to acquire properties, then having to write an article and get it published made me acquire new skills. Yet another unexpected result was that the article I wrote for the November 1975 Real Estate News Observer called “Horizontal Apartments”, served as a spring board to national prominence among real estate Exchangors. It also laid the groundwork for my entry into the seminar business.
In January 1976, I closed my real estate brokerage and “retired” to the good life, which for me was touring the country in my motor home. Along the way I came up with an idea for a new seminar and bounced the idea off of John Schaub and we decided to give it a try. We formed Fortune Seminars, Inc. After a month spent working out the kinks of my rough draft, one fateful day in August of 1976, we launched our new seminar in Ft. Walton Beach, Florida. We charged $10 for two days, and threw in lunch. It was attended by 78 hungry people who came, I suspect, mainly for the food. It was called Miller/Schaub's “Making It Big On Little Deals”. Every seminar in America dealing with houses can be traced back to this humble beginning.
For the first time ever, we promulgated the radical idea, first expressed in my article, that, by buying single family houses, anyone regardless of their education, credit rating, or financial resources could achieve financial independence. The keys to financial security for life for anybody were simple: (1) Take over existing financing and buy well located decent single family houses that you can buy below fair market value. (2) Rent them out to produce enough income to pay their costs; then hold them until they either double in value, or the loans pay off. (3) Sell them and repeat the process. I think just about everything that was written in “Horizontal Apartments”, or that we taught in that first class is still relevant today. Those who implemented what we taught — and who avoided the mistakes of wiping out their equities through re-financing or selling too soon –are now lolling in the lap of luxury.
Even though a buy-hold strategy will build wealth over time, changes in tax laws, the financial markets, and skyrocketing housing prices, buying houses to fix up and sell has also made a lot of people rich in the past few years. The lesson I've learned over all these years is that a person has to be able to adapt technique and philosophy to the market. In today's buy/sell environment, we should buy and sell, but when consumers can't afford to buy, we'll buy and hold. If we want to keep on buying and selling when credit dries up, we'll have to learn to buy and sell “on time”; or we'll have to learn how to create and deal in Notes. If there's no cash in the market, we'll have to learn how to trade properties.
FOR ENTREPRENEURS, THE SELLING SEASON IS WINDING DOWN . . .
If you're in the business of buying and selling houses , every house you buy must eventually be sold. There is no house-buying season in the ordinary sense of the word because so many factors determine when a home is sold. Home owners sell primarily because their personal situation is changing. This may boil down to a job-change, a divorce, the need for cash, changes in family size or income, a change in the neighborhood or school system, a balloon mortgage falling due, or some local factor that makes an owner dissatisfied with current accommodations. The best way I've ever discovered to find out when a person wants to sell is to simply go door to door — if not in person, then by direct mail or a telephone solicitation call –and to proceed to negotiate a purchase from that point.
Once a house is bought for the purposes of resale, fixed up, and offered to the market, being able to sell it swiftly into the retail market is bound by a different set of rules. People who buy single family homes are usually comprised of adults with children. When children are in school, families are reluctant to move, so, in the absence of other mitigating factors, they usually start thinking about moving sometime between when schools let out for the summer, and when children must be enrolled for the next semester. That means, they must reside in a particular school district in order to enroll children in its schools. Absent of some mitigating factor, the single family house season is more defined by the school year than any other factor. So, for those who want to sell houses to the general public, late Spring and Summer have always been prime seasons for putting homes on the market and selling them.
Timing purchases and sales to take advantage of seasonal market swings can make a big difference in the amount of profit earned in a years. Those who time the market right are able to sell at high prices in a sellers' market and buy at bargain prices in a buyers' market. Once school starts, sales slow down dramatically. Slowing sales translate to a cash flow bind that prevents the erstwhile entrepreneur from being able to take advantage of the autumnal “slow season” to buy bargains from impatient sellers who are unable or unwilling to wait for buyers. To continue to buy, you have to continue to sell.
This newsletter is being mailed around the middle of July. That means that there are only a few weeks left before the market starts slowing down. If you aim to avoid having to sell in a slow market, there are several things you should start doing to speed up sales in the relatively short time left. Here are three tips for speeding up the process of selling a house and recycling the money:
1. If you're in the process of finishing off the interior of a house that you are readying for sale, focus your improvement efforts to build “curb appeal” and get your “For Sale” signs up to attract potential buyers. Offer brokers higher commissions and bonuses for producing a qualified buyer. There's nothing that soothes the fevered brow like having an eager, pre-approved future owner ready, willing, and able to complete the purchase and to move in as soon as your house is ready for occupancy. If you're early with your sign, it will give your buyer time to shop around for financing so you can close quickly once the house is finished.
2. If a buyer can make a substantial down payment and is being delayed by loan processing or funding, take the cash off the table in return for a short term Option pending loan funding and settlement. Let him lease the house in the interim so the kids can get registered into the school district. This works out well. One eager buyer who had sold his own home and needed a place to live in once paid $70,000 for a 90 day Option in order to move in ahead of loan funding and close of escrow.
3. Don't be afraid to give various minions in the marketing process a financial incentive to give your escrow special priority. As much as it's against my natural inclination, I've been known to place a $100 on a clerk's typewriter as an advance tip to speed up loan application processing, surveys, appraisals, inspections, and termite treatment.
THERE'S MORE TO MARKETING THAN “SELLING“ . . .
The term “Marketing” describes the entire process for moving goods from the manufacturer or originator to the consumer. Imagine that you are setting out to sell a new product which we'll call a Widget. In order to create a market for it, you've got to inform consumers that your Widget exists; that it offers unique benefits to the buyer over similar products on the market; that it can be produced at a cost that will enable you to sell it at a competitive price in comparison to similar products; that your Widget can be bought on affordable terms; that it is readily available and easy to purchase; that you're a reliable vendor, and that satisfaction is guaranteed for a reasonable time.
Instead of selling Widgets, we're selling houses, but the marketing principals are the same. In order to sell your house, it must appeal to the widest possible market more than other houses of about the same size, condition, and price. That means that if you want to turn houses over fast, while structuring your offer, you have to know who is going to buy your house, how much they will be willing and able to pay for it, and why they would choose your house over a competitor's.
Market research will tell you that most families want a 3-bedroom house, and that they are willing to pay the full retail market price for it. If they can afford it, they would like a family room and a double garage too. Although Widgets can be purchased in one location and used in another, houses must be used where they are bought, so location is critically important. Most home-buyers want to live in a low crime neighborhood that is safe for themselves and their children. They want easy access to shopping, parks, churches, good schools, and employment.
There's a danger in becoming emotionally involved with fixing up a house for sale. Every improvement made to it should be aimed squarely at the market you're trying to attract. Jay DeCima (www.fixerjay.com), a long time pal who has written many books on the subject of fixing up properties, likes to get at least $2 more in value for every $1 he spends. This is most easily obtained by landscaping, fences, and paint than by expensive kitchen overhauls and appliances. You should develop your own ratios of improvements to profit and stick to them.
Regardless how much money might have been spent repairing a house and painting it attractively, landscaping the lawn, upgrading appliances, putting in central heating and air conditioning or installing modern floor coverings, the house itself has to serve a buyer's needs. The floor plan should make sense. I've seen houses that fail to exploit a spectacular view; or require that a person walk through one bedroom to get to another. Or slice up rooms into tiny cubicles to create separate living and dining rooms. Or offer kitchens without counter-space or room for modern appliances. Re-doing a functionally obsolete floor plan needs to be factored into the price paid for a house.
I've made about every mistake a person can make in this regard; I've paid too much for the wrong house in the wrong location, and I've over-improved a house to the extent that there was no profit left for me when it sold. Overall, I'd have done much better if I'd known, and paid attention to, my marketing before I bought. When location and functionality are ignored, offering lower prices or easier terms may be the only way to lure buyers away from areas that offer more amenities and houses with better floor-plans. When purchase price and fix-up costs combine to make a house too expensive, it may well be a smart trade-off to sell fast for less than to spend the time and money required to sell a less-than-perfect house.
I'm still capable of breaking my own rules buying problem houses in my eagerness to make a deal for a house in a good area, but now I know enough to give up profit in return for salvation. I'll usually try to sell my mistake to a re-seller who knows more about the market for a “fixer” house than I do. Many times, I've been delighted just to get my money back so that all it cost me was wounded pride and lost time. I recommend this to anyone whose reach has out-stretched his grasp. Those who hang on and try to tough it out often wind up losing more.
Copyright 2006 CommonWealth Press, Inc. (888) 282-1882
Quotation not permitted. Material may not be reproduced in whole or part in any form whatsoever.
CommonWealth Letters are published monthly. ANNUAL SUBSCRIPTION: $70 (OVERSEAS: $82)
FINANCING CONTROLS PRICING . . .
From what I've written thus far, one might suppose that the location and preparation of a house should be the primary focus of the entrepreneur who want to generate fast sales. That's not all there is to marketing; the financing you use to buy and to sell is a critical determinant of how fast you sell and how much profit you can make. In recent years, financing has been a breeze. Virtually anybody with a pulse could qualify for a low down payment, and a low interest rate mortgage on owner-occupied single family houses. As credit card defaults continue to rise, and foreclosure sales stop generating enough money to cover lenders' costs, that's all going to change. Mortgage underwriting standards are rising, so fewer people — whether entrepreneur, investor, or consumer — are going to be able to get loans.
Suppose there were very little mortgage money available to your buyer in your market; if your buyer doesn't have to qualify for a new mortgage loan, then he may be able to afford to borrow enough money on his credit card, life insurance, furniture, car, or other collateral to pay you your profit up front; or at least to make a substantial cash down payment. You can increase your profit with seller financing and by “wrapping” any existing financing with a higher interest rate and repayment terms that will enable a buyer to buy fast. With seller financing, months can be saved that might otherwise have to be spent trying to find a buyer who can qualify for long term institutional financing.
When buying, negotiating a profitable seller-finance transaction may seem to be a remote possibility in today's market, but bear in mind, I'm talking about a the market of tomorrow where there will be fewer cash buyers in the market. Sellers will be facing the prospect of holding a house on the market for many months; so your offer might be a lot more acceptable than you might imagine. Being able to obtain seller financing requires several factors to be in place. (1) The seller must be in a hurry to sell at a price that makes sense to you. (2) The house must be in saleable condition, or you must be able to get it into saleable condition fairly fast at a reasonable cost. (3) It must be priced below the market. (4) You've got to offer the seller enough cash and/or relocation support to solve his immediate problem. (5) You must be able to negotiate the terms you're going to need in order to pass them on to the next buyer at a profit. All of the above factors are important if you expect to move houses quickly when cash is short.
Not withstanding the perceived problems with “due-on-sale” clauses, a lot of impatient sellers are going to have to accept creative financing terms if they expect to sell their houses and move on. Because of generally over-extended credit, far more people will be able to buy houses by taking over existing loans than can with new financing. If you can buy a house by taking over the seller's financing, you'll save the time and expense required for you to obtain financing, and for your ultimate buyer to obtain a new loan. If you can negotiate terms with a seller to perhaps pay a higher price if the seller would wait until the house is sold before being paid in full for his equity, you'll also save a lot of cash.
With financing in place, and very little of your own cash tied up in a house, it can make a lot of sense to sell it on “rent-to-own” terms. Doing this won't trigger the need to pay off the seller in full on a due-on-sale contract because you aren't selling the house, you're renting it. It's important that you explain this possibility to the seller at the time you buy, rather than to argue over the semantics later on. If you can get the seller to take a promissory Note secured by another property for his equity, when you sell the house, you won't have to pay off the loan, and you can use the sale proceeds to buy another house.
The bottom line is to find a way to unload inventory during the hot summer season so you can take advantage of the slow fall season. It follows that the more cash you can save when you buy, and the more cash you can retain when you sell, the more houses you can cycle, and the more money you'll make. That's fundamental.
Copyright © Sunjon Trust All Rights Reserved, www.CashFlowDepot.com. (888) 282-1882
Quotation not permitted. Material may not be reproduced in whole or part in any form whatsoever.
FINANCING CONTROLS PRICING . . .
From what I've written thus far, one might suppose that the location and preparation of a house should be the primary focus of the entrepreneur who want to generate fast sales. That's not all there is to marketing; the financing you use to buy and to sell is a critical determinant of how fast you sell and how much profit you can make. In recent years, financing has been a breeze. Virtually anybody with a pulse could qualify for a low down payment, and a low interest rate mortgage on owner-occupied single family houses. As credit card defaults continue to rise, and foreclosure sales stop generating enough money to cover lenders' costs, that's all going to change. Mortgage underwriting standards are rising, so fewer people — whether entrepreneur, investor, or consumer — are going to be able to get loans.
Suppose there were very little mortgage money available to your buyer in your market; if your buyer doesn't have to qualify for a new mortgage loan, then he may be able to afford to borrow enough money on his credit card, life insurance, furniture, car, or other collateral to pay you your profit up front; or at least to make a substantial cash down payment. You can increase your profit with seller financing and by “wrapping” any existing financing with a higher interest rate and repayment terms that will enable a buyer to buy fast. With seller financing, months can be saved that might otherwise have to be spent trying to find a buyer who can qualify for long term institutional financing.
When buying, negotiating a profitable seller-finance transaction may seem to be a remote possibility in today's market, but bear in mind, I'm talking about a the market of tomorrow where there will be fewer cash buyers in the market. Sellers will be facing the prospect of holding a house on the market for many months; so your offer might be a lot more acceptable than you might imagine. Being able to obtain seller financing requires several factors to be in place. (1) The seller must be in a hurry to sell at a price that makes sense to you. (2) The house must be in saleable condition, or you must be able to get it into saleable condition fairly fast at a reasonable cost. (3) It must be priced below the market. (4) You've got to offer the seller enough cash and/or relocation support to solve his immediate problem. (5) You must be able to negotiate the terms you're going to need in order to pass them on to the next buyer at a profit. All of the above factors are important if you expect to move houses quickly when cash is short.
Not withstanding the perceived problems with “due-on-sale” clauses, a lot of impatient sellers are going to have to accept creative financing terms if they expect to sell their houses and move on. Because of generally over-extended credit, far more people will be able to buy houses by taking over existing loans than can with new financing. If you can buy a house by taking over the seller's financing, you'll save the time and expense required for you to obtain financing, and for your ultimate buyer to obtain a new loan. If you can negotiate terms with a seller to perhaps pay a higher price if the seller would wait until the house is sold before being paid in full for his equity, you'll also save a lot of cash.
With financing in place, and very little of your own cash tied up in a house, it can make a lot of sense to sell it on “rent-to-own” terms. Doing this won't trigger the need to pay off the seller in full on a due-on-sale contract because you aren't selling the house, you're renting it. It's important that you explain this possibility to the seller at the time you buy, rather than to argue over the semantics later on. If you can get the seller to take a promissory Note secured by another property for his equity, when you sell the house, you won't have to pay off the loan, and you can use the sale proceeds to buy another house.
The bottom line is to find a way to unload inventory during the hot summer season so you can take advantage of the slow fall season. It follows that the more cash you can save when you buy, and the more cash you can retain when you sell, the more houses you can cycle, and the more money you'll make. That's fundamental.
