> I read the interesting formula
> today in the EH and thought, how much TIME
> does it take to find someone willing to
> lease and allow you to sub-lease and then
> find "investors" who want the 12%
> interest...WOW, what a lot of time is spent
> doing that.

In The Entrepreneur's Hotsheet - http://www.sowpub.com/entrhotsheet.shtml - we linked to a rather long post about investing in real estate without cash, credit or collateral. Here is the link in question:
http://www.creonline.com/wwwboard/messages/43449.html

For those who don't have the TIME to read it, it goes something like this:

1. Find a landlord who will let you pay them for five months upfront, and give you your sixth month free (because you gave so much money in one hit). And find one that will allow you to sub-lease as well.

2. Find an "investor" to put up the money for the lump sum five payments.

3. Find a tenant.

4. Pay your investor back their money plus 12% (1% of the borrowed money, per month). Pay it back like you were paying off a loan. And use the tenants rent to pay the money back.

You get to pocket the difference between the rent paid and the money returned to the investor.

At first, and going by the numbers in the post, it can seem like quite a good deal. Hey, who couldn't do with making $160,000 per year for a little deal making, right?

However, after re-reading it several times, and using my calculator, I am seeing profits which seem to come from nowhere. And when I remove these phantom numbers, the actual profit is so low it does not make it worth your while.

Sure you can play around with the percentage points to make it fit. And it could certainly be profitable doing so.

But again, as Gordon said, how does it stack up "time wise?"

I can figure a way to leave the percentages as they are and virtualy triple the profits, but the TIME is still a factor.

Even if you don't DO as the post in question suggests, it is a good example of making money by controlling things without owning them. It's a good example of how to control things by using "paper" - contracts, agreements, forms, etc. And, you can use your own money instead of an investors and increase your returns more.

If you had enough of these properties under your control, you may even be able to start up an accomodation finding service. Charge people a small fee to be on your books and to be notified of any vacancies. Hey, you don't even need to control properties to start this service.

Whatever. It's an interesting way of using the Brain to achieve a goal instead of money. Just make sure to also use the Brain to factor in your Return On Time.

Michael Ross


The Entrepreneur's Hotsheet