While “rinse-and-repeat” real estate transactions are one of the key components to being a successful investor with your Self-Directed retirement account, another key component is reinvesting. As the proceeds come in from your deals, try to get that money back out working as quickly as possible… I stress this to my Money Partners.
I have lost track of the number of times I have spoken with “saddity”, savvy investors who tell me they will not lend money unless it’s at 3 points and 15%. When I ask them how often they have their money out working like that, it’s usually about 5-7 months out of the year. The rest of the time, they are waiting for another opportunity to come around.
It doesn’t take a financial calculator to figure out that when your money is only working half the time, you are making half that rate of return on an annualized basis. That’s why it is important to get your investment money redeployed as quickly as possible into another good, solid transaction…and in my world it’d be another slamming real estate deal.
Rinse and Repeat
In fact, one of my Private Money Partners did this just a few weeks ago…when we wired his principal and interest payments from a previous deal to his bank account on a Thursday, he redeployed those funds into another house we needed funds to purchase on Friday. Candidly, if the money had not arrived the day before, I would not have had enough to get the next deal funded because my other Private Money Partners had their money tied up in other ventures at the time.
********************************* If you are reading my blog for the first time, let me inform you that… My company buys single-family houses and I write this blog bi-weekly which is primarily directed to educate 1 group of individuals:
Individuals who are losing their shirt as a result of the “roller coaster” volatility of the stock market and low paying rate of other traditional investments, i.e. people that are looking for an opportunity that’ll provide a secured place to put their money to get it working for them to earn better than average returns.
However, often times, homeowners that need to sell their house, stop by to take a peek because they are curious and wondering how and/or where we get the funding to purchase houses. And if they stick around long enough, they begin to understand why individuals partner with us to provide the funding which empowers us to be able to purchase real estate on a continual basis. Simple, it’s because we teach them a secured way to earn better rates of return than they are currently earning.
Request your FREE Education Kit if you are interested in learning how passively investing in real estate may help place you in a better financial position.
Disclaimer: This site is intended for educational purposes only. I am not an accountant, attorney or licensed financial planner. While the information I’m writing here is based on many years of experience buying houses that doesn’t really constitute professional advice (since everyone’s experiences and situations are different).