Starter home: Determine what type of home in your chosen city/market is a starter home (single family detached house, townhouse, condominium) and then buy those types of homes. This is the entry level home and tends to be the most liquid, most price stable and generally the easiest to rent out too. People move up from them and down into them.
 
Economic fundamentals: Find a city that you are near and that has good market fundamentals (people are moving there, more jobs are coming, amenities and infrastructure are growing, government is pro-business, rent rates are stable or increasing).

Once a property meets all the criteria above, we do the following:

• Find someone looking to make a great return in real estate without having to invest the thousands of hours we've invested to become experts, and use their money and finance-ability to close on the property.
• Find great tenants, manage the property and enjoy the benefits of mortgage pay down, cash flow, and appreciation.

The big thing I want to point out is the fact that so many people get hung up on finding the perfect investment market. The market we're investing in does not have perfect fundamentals but no market ever does (even the coveted Edmonton market which so many investors run to does not have perfect fundamentals). We'd rather become area experts and stay focused where we are and know that we can control our investments because we're nearby.
 
By doing deals just like the two we show below, even if you put in all the capital yourself you will double your money over 5 years, easily. But, you have to focus on buying properties with a CAUSE, otherwise you might end up going through the pain we went through as early "quick cash" investors!

Two recent deals we have done:

Property A:
Purchase Price: $321,000
Cash required from us: $10,000
Cash required from JV: $75,000
Rental Income (Rent To Own): $2,750
All Expenses: $1,300
Net Cashflow: $1,450 split between us and JV Partner
When Tenant purchases in two years, total cash return will be: $50,000 split between us and JV Partner
ROI on our $10,000 = 250% ($25,000 / $10,000) over 2 years

Property B:
Purchase Price $303,000
Appraised Value: $330,000
Cash required from us: $4,000
Cash required from JV: $70,000
Rental Income (Buy and Hold Rental): $1,650
All Expenses: $1,300
Net Cashflow: $350 split between us and JV Partner
If property appreciates, on average only 3% per year for next 5 years, total cash return will be: $110,000 split between us and JV Partner
ROI on our $4,000 = 1,375% ($55,000 / $4,000) over 5 years

 
If you want to learn how to do find, negotiate and manage deals like this we have a Bootcamp starting soon. Learn more about our various coaching programs here.

Image Credits:© Dawn Hudson | Dreamstime.com 

Published November 24th, 2011

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