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I’ve got another thing I want to talk about today. It’s something that I’ve seen a lot of my students do and we’ve been doing it as well. We go and buy really inexpensive houses in either urban areas or rural areas. There’s a ton of rural areas, especially here in Indiana, and in states in the Midwest where you can buy a property for $30K or $40K that’ll rent out for $600 or $700 a month, and that are in pretty good condition. And there’s a bunch of them out there and a bunch of places out there where you can do this.
I’ve got students who’ve built portfolios of 50, 100, 200 properties in just a few short years buying properties like this in rural areas that have cash flow that they can sell – and by the way, they’re not just renting them – they’re selling them on lease options. So they’ll take $5,000 as a lease option fee, they’ll get the $200 a month cash flow and then they’ll get the $400 a month that goes towards the principal that buys that note down every month. And when that person, if they exercise the option, then you can go ahead and sell it to them for cash because they’ll go out and get a new loan. Or, if they don’t exercise the option, you can go around, turn around and sell it to another lease option buyer and make money doing it that way.
And typically you can sell a property for a little bit more than it’s worth when you’re selling it on terms anyway. So, if you bought it for $30K you might want to sell it for $45K, or $40K. If you bought it for $50K, you might want to sell it for $70K. And you can still make a profit on those deals.
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