Creating Cash Flow Without Ownership
Issue #2306
- WEALTHY: Think renting is throwing money away? Think again… (Justin Ford)
- HEALTHY: You could be taking other people’s drugs (Shane Ellison)
- WISE: A success formula from Bernard Baruch
ALSO IN THIS ISSUE:
- Which major source of potential traffic is going unexplored? (Wendy Montes de Oca)
- How Larry Fredericks got out of a traffic ticket (Larry Fredericks)
- It’s Fun to Know… about the rat-whisker navigation system
- Add "turbid" to your vocabulary
Cure Cancer With Eggplant?!
That’s C-U-R-E - not just improve - one of today’s most common and deadliest cancers?
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Virtually the entire medical press ignored this natural discovery. But one courageous M.D. broke the news - and has spent his career proving that nobody does it better than Mother Nature. Some even say he’s changing modern medicine…
Keep reading to find out how a true cancer cure with a 100% success rate - 80,000 success stories and a 26 year track record — could get COVERED UP.
"Take the obvious, add a cupful of brains, a generous pinch of imagination, a bucketful of courage and daring, stir well and bring to a boil."
Bernard Mannes Baruch
Creating Cash Flow Without Ownership
By Justin Ford
A married couple I know recently decided to separate. So the husband needed a place to live. Ideally, he wanted a house in the same neighborhood to make visits easy for their teenage children. He also wanted a lease of just four or five months, since he and his wife might reconcile. And if they didn’t reconcile, it would still give him enough time to figure out what to do for lodging on a more permanent basis.
What he was looking for turned out to be difficult to find. The few houses for rent nearby required one-year leases. The few seasonal properties had monthly rents twice his budget. So I suggested he try calling homes being offered for sale by the owners.
"But I’m not looking to buy," he responded. "My wife and I might get back together. And even if we don’t, this housing market might be another year away from a bottom."
"I understand," I said. "But we’re in a housing bear market, and there’s a lot of inventory. Some of those homes have been vacant for months. The owners might welcome getting some monthly cash and having someone there who could show the home to potential buyers. It’s worth a few phone calls."
He agreed to give it a shot. Not 10 minutes later, he struck pay dirt.
He’d found a 5,000-square-foot home that backed up to a lake. And it was only about a half-mile from his wife’s house. So he called the number on the for-sale sign and asked the owner if she would consider leasing the property until it sold. After a quick discussion, they both decided the house was bigger than he needed. So she offered him a short-term lease on a two-bedroom home she had just bought in the same neighborhood. (Her intention was to move into the smaller house after selling the large one.)
He drove over to the two-bedroom immediately. It was the right size and location. They agreed on a rent a few hundred dollars less than he had budgeted. Within 10 days, he had the keys and a five-month lease - with the understanding that either party could terminate the lease with 60 days notice after the first three months.
It’s a perfect arrangement for him and the owner. But it only happened because homeowners are more flexible in today’s market than they’ve been in years. And that can create opportunities for you to structure low-risk, high-return deals - and even create cash flow without ownership.
Here are a few examples of what I mean…
A Lessee Who’s Making More Than the Lessor
One of my favorite single-family homes is a four-bedroom on a corner lot that a partner and I bought nearly four years ago. It’s in an emerging neighborhood three blocks from a popular downtown. We bought it for $153,000, and it’s now worth more than twice that. So we’re happy with our return on equity of over 250 percent. Yet the big cash flow on this property isn’t being made by us. It’s being made by the guy who leases it from us.
Enrique pays us $1,450 a month to lease the house - and that kicks off a few hundred extra dollars for us every month. Meanwhile, we give him the right to sublease… and he turns around and probably clears about $1,500 a month.
Here’s how he does it…
Enrique specializes in "special needs housing." He leases to members of a substance abuse recovery program on a per-bed "all bills paid" basis. He charges them $125 to $150 per week, which includes utilities, Internet, and cable. If he averages six beds for four weeks a month at $150 a bed, that’s $3,600 a month.
If his utilities, Internet, cable, and other expenses are $650, he clears $1,500 a month. And he does it without having to qualify for a loan or having to pay taxes or insurance or major repairs. He gets the cash flow without the ownership.
Enrique gives one of his tenants a discount for being "house manager" and handling small daily issues - from coordinating trash removal to changing light bulbs. So, after the initial set up, Enrique might have to put in just three or four hours a week of direct involvement for that kind of cash flow.
It’s a good deal for the tenants, too. They don’t have to worry about credit checks or coming up with sizeable rent or utility deposits or the money for furnishings. (We, the owners, provide the appliances. Enrique provides the bedroom set, sofa, dining room set, and patio furniture.) What’s more, the property is kept spotless, and the few tenants I’ve met are delighted to be in such a well-cared-for place.
My partner and I don’t have the time or inclination to be in the special needs housing business. But working with a qualified operator like Enrique, we have a lessee who takes care of the property and pays a fair rent on time.
Sub-Leasing Opportunities Abound
Enrique has had a master lease with us on that house for about a year and a half. (A "master lease" allows the master lessee - Enrique, in this case - to sublease the property.) Prior to that, we had another master lessee for two years.
The prior master lessee was a professional group that cared for people on psychotropic medication. Once again, our experience was positive. They took good care of their tenants and the property and paid us on time.
Many other groups could be interested in a master lease for your property - from organizations assisting veterans and the disabled to those catering to students. Yet you don’t need to work with an organization to benefit as a master lessee.
If you live in one of the country’s many deflating bubble markets, there are probably a lot of vacant properties in your area. Some of these might be owned by people in other states who bought on speculation during the boom and are now stuck with them.
Take a house with a rental value of $1,200. The owner might be open to signing a master lease with you for $500 or $600 a month. That would allow him to at least pay his insurance and taxes and a little toward his mortgage. And you could do a straight sublease to a single tenant - not on a per-bed basis - and net $500 or so in cash flow per month. Do a few of these and you could create a couple of thousand dollars in free monthly cash flow without buying.
If you’re near a university, you might be able to (at least) double your net rents by furnishing the house and leasing it on a per-bedroom basis. In that case, be sure to let the owner know that’s the group you intend to lease to… and that you will be responsible for any damage. (And make sure you get good deposits and guarantees from the students’ parents.)
If you find a vacant multi-family, that can be an even better opportunity. If a four-unit would normally pull in $2,400 a month, the owner might be glad to accept just $800 to $1,000 rather than have it continue to sit vacant and prey to potential vandalism and code-violation citations.
Here’s a valuable tip for you: Many counties have lists of vacant properties and properties owned by out-of-state people. They also have lists of single-family and multi-family properties. With a little cross-checking, you can home in on vacant, multi-family properties with out-of-state owners.
If you’re not ready to buy in your market because you think it’s still far from the bottom, you can use master leases to create cash flow in the meantime. Try to get purchase-options on those properties at the best possible price at the same time, and you could end up owning one or two of them when the time is right. (Purchase options give you the right - but not the obligation - to buy a specific property at a specified price within a certain time frame. They are often executed in tandem with leases.)
When lining up a master lease:
- Make the lease for as long a period of time as you can get. You might do it for a year, for instance, with the right to renew at a 3 percent or 4 percent annual increase for two or more years.
- Opt for properties that need little or no repairs. If a property needs, say, $1,500 in paint and clean-up, offer to cover the cost upfront and then deduct it from what you pay the owner over time. In this case, you’d do the work and then deduct $125 a month from your agreed rate for the first 12 months. If the owner is a little reluctant, you might offer to "split" the cost - with no out-of-pocket expense for him. In that case, you’d do the work, then deduct only $62.50 a month for 12 months.
- Have the master lease spell out respective responsibilities. Typically, the owner will remain responsible for taxes and insurance and capital expenditures. That means if the AC goes or the roof leaks, it’s his expense. But minor repairs - from broken windows to leaky faucets - would be your responsibility as the master lessee.
- Take care of the property as if it were your own. It’s the right thing to do. It will also help forge a good reputation for you that will be helpful when you pursue other master leases and purchase-option opportunities. Since you won’t be living there, only accept tenants that will care for the property - and be sure to inspect it periodically.
Imploding real estate markets are creating exceptional buying opportunities around the country. But if you’re not yet ready to buy, remember that those market conditions can create great opportunities for creative leasing as well.
[Ed. Note: Justin Ford is a successful real estate investor with properties in five cities and three states. To learn more about how he finds value markets and then targets undervalued deals in those markets, click here.]
It Should Be A Crime To Be So LAZY And Still Make This Much MONEY!
I’ve never in my life heard of a lazier way you could make a ton of dough online this quickly. But, turns out it is entirely possible. You can be up and running in under a week. Then the fun begins… Before long, you could be looking at 24/7 cash flow… no income limit on what you might make.
This opportunity is fully guaranteed and risk-free. Please check out all the details on how to get started making money this month by simply clicking here.
Don’t Overlook Organic Search Efforts in Your Online Marketing Mix
Many Internet entrepreneurs think they’re doing everything they can to get the word out about their businesses. They allocate their marketing budgets to direct mail, e-mail, banner ads, print ads, co-registration, and pay-per-click (PPC). They spend much of their time, effort, and money on getting those channels to produce a positive ROI (return on investment). But they’re ignoring a major source of potential traffic… which means they are losing hordes of potential new customers. Big mistake.
I’m talking about organic search via search engine marketing and optimization (SEM/SEO).
Many marketers think focusing on organic search is "a waste of time." Some think there’s no way to monitor, measure, and monetize the results. But they’re either clueless or misinformed. For instance, according to a recent survey by Jupiter Research, 80 percent of Web users get information from organic search results. And measuring sources of traffic and visitors is easy with the free Web tool Google Analytics.
Search engines like diversity in relevant back links to your website. And one of the best ways to get lots of relevant back links - as I said in my article about the SONAR Method of Content Distribution - is with a synchronized distribution of your content to a variety of sources.
So in addition to having optimized website pages, having a variety of news aggregators, social networks, blogs, and directories linking to your site helps give you a heavier weight in organic listings. This helps build your organic market presence for little or no cost. And, let’s face it, low cost is a good thing.
Using organic search strategies helped increase traffic rank and visits to ETR’s sister publication, Total Health Breakthroughs, by 3,160 percent and 81.5 percent, respectively, in only three months. In that same time period, Total Health Breakthroughs had a 62.01 percent rate of converting that organic search traffic into subscribers. That’s about 16,000 organic names in three months at virtually no cost!
Now tell me… does that seem like a waste of time to you?
[Ed. Note: Wendy Montes de Oca is ETR’s Vice President of Marketing & Business Development. For step-by-step instructions on starting your own Internet business, get ETR’s Magic Button program. Click here to learn more.]
Reader Feedback: "I look forward to learning something every time I open a new issue."
"I’ve been a loyal reader for five years. Not only is ETR the best online newsletter, it’s the only one I read on a regular basis. Along with my first cup of coffee, it’s part of my daily morning regimen.
"Whether it’s copywriting, language, health, or investment advice, I look forward to learning something every time I open a new issue. I’ve been a successful direct-response copywriter for 36 years, and I especially enjoy the all-star lineup of DM experts who contribute to ETR.
"Keep up the good work… and keep it up forever!"
- Mike Saxon
Birmingham, AL
[Ed. Note: Want to get your name and opinions published in ETR? Let us know how reading ETR has helped you - maybe even changed your life. Send your comments to ReaderFeedback@gmail.com. Include your name and hometown… and we may print your e-mail in a future issue.]
Name Calling That Persuades
The next time you need to get someone on your side, try this unusual persuasion technique: Call him names.
I’m not talking about calling him insulting names. (That’ll just make him mad.) I’m talking about giving him a "label" that he’s going to try to live up to. Let’s say you want to convince someone to support one of your ideas. You suspect he will have a negative "gut reaction" to it. But you think that if he keeps an open mind, he might agree with you. In that case, you start by saying something like, "You’re a reasonable, fair-minded person."
This technique even works with the police. The last time I was stopped (and clearly guilty of running a red light), I told the officer, "I’m sure you’re just a working guy like me. You must know how the pressures of a job can make you do something you know you shouldn’t have done. Is there any way you could see fit to just give me a warning?" Long story short: No ticket.
[Ed. Note: Larry Fredericks is an entrepreneur with a history of successful business dealings in retail, direct mail, the Internet, and real estate. He is also the creator of the Master of Persuasion program. To learn more, click here.]
How to Get Prescription Drugs Out of Your Tap Water
By Shane "The People’s Chemist" Ellison, M.Sc.
One of the consequences of being "one nation under drugs" is that we’re exposed to toxic, prescription drug metabolites via our tap water.
Drug giant Merck recently warned: "There’s no doubt about it, pharmaceuticals are being detected in the environment and there is genuine concern that these compounds, in the small concentrations that they’re at, could be causing impacts to human health and aquatic organisms." To wit, officials in Philadelphia have identified 56 pharmaceuticals or byproducts in tap water. These included pain meds, cholesterol-lowering drugs, birth control pills, antidepressants, and blood pressure meds. None of them belong in little Johnny’s "sippy cup."
Don’t expect your city to be any different. The federal government doesn’t require any testing or safety limits for drugs in tap water. But you can protect yourself with the right water filter.
The market is flooded with water filters - microfiltration, ultrafiltration, nanofiltration, reverse osmosis, electrodialysis reversal, membrane bioreactors, and combinations of membranes in series. At the recent conference on Wastewater Reclamation and Reuse for Sustainability, reverse osmosis filters proved most effective at removing all pollutants, including pharmaceuticals. Looking for the most user-friendly and economic filter, I found the RioFlow Complete 5-Stage Reverse Osmosis System. For about $180, you can rest assured that you are doing everything you can to keep your body free and clear of "other people’s drugs."
[Ed. Note: Shane Ellison (www.thepeopleschemist.com) is an author, organic chemist, and contributor to ETR’s free natural health newsletter. He is a two-time recipient of the prestigious Howard Hughes Medical Institute Research Grant for his research in biochemistry and physiology. An internationally recognized authority on therapeutic nutrition, he is the founder of The AM-PM Fat Loss Discovery package. Click here to learn more.]
It’s Fun to Know: The Rat-Whisker Navigation System
Rats have poor eyesight and live in sewers, tunnels, and other dark places. So how do they get around? MIT researchers have discovered that a rat’s whiskers are the key. When they touch something in the rat’s path, they vibrate rapidly. The vibrations are sent through the nervous system to the brain. There, the signals are processed… and the rat knows which way to move.
(Source: LiveScience )
How a Simple Internet Mistake Can Make You $3,012 In Just Two Days
Actually, you could make more, even faster. By complete accident, one of my colleagues discovered a “back door” to online money-making that is faster and easier than you may imagine…
You don’t have to be pinching pennies anymore because this new online program for raking in some good money works in almost no time flat. That $3,012? My colleague made that in only an hour. No hype, no kidding. Read on to discover how you could do the same starting right now.
- Patrick Coffey
Word to the Wise: Turbid
Something that’s "turbid" (TUR-bid) is (1) muddy, or (2) disturbed. The word is from the Latin for confused/ disordered.
Example (as used by David Walker in The Independent): "Rough or smooth, the Irish Sea at Blackpool is always turbid. Beneath the murk float unspeakable things."
[Ed. Note: Become a more persuasive writer and speaker … build your self-confidence and intellect … increase your attractiveness to others … just by spending 10 VERY enjoyable minutes a day with ETR’s new Words to the Wise CD Library.]
Copyright ETR, LLC, 2008