not going? Change the strategy

#יםמהשבוי Efrat Kornik #post5

Do you remember the initial meeting between me and my (my partner)?

In that meeting and of course much more after it, we talked about strategy and passions (in a second you'll understand how it all comes together) we broke it down into elements and reassembled our dream and how it could be reflected in the field...

So although our dream is Hollywood, but of course it crashed on the ground of reality on the east coast, since we did not come with a large capital, we were looking for a place where the entry threshold is low (significantly) and the market is less heated and behaves like someone whose behavior can be predicted a little more in the coming years and does not throw a tantrum Monday and Thursday.

And if we have already mentioned passions, then the thing that me and mine would most like to do together as a first project is a nice flip that the all in will be a roof of 150k 

We examined a number of markets together and decided to enter with all our back and energies into Milwaukee because relatively the market there is considered "cold" and stable compared to "hot" markets which are characterized by price levels that see peaks of increases but sometimes also quite a few decreases...

The problem was that no one bothered to inform the market that it should be "cold" and demand levels broke records.

 Dozens of offers competed for each house with market-breaking prices that only caused the prices to climb higher and higher (as Zvi Peak once sang) and at the same time take some more air out of the balloon of our real estate dreams.

From time to time there were glimmers of hope - mind-blowing wholesale deals came our way, the contracts were signed and advances of "seriousness fees" were transferred only for them to come back to us from the title after the sellers or wholesalers regretted it (I wonder if I should write a post about all the times we almost filed lawsuits related to contracts, We have quite a few of these….)

And in the end we realized that what doesn't go with force goes with more force just like that we realized 2 super important things that go with us to this day:

 1. There is nothing to fall in love with in strategy 

2. There is nothing to fall in love with in the market

Along with the new insight, they entered Toledo, following a property we entered into a purchase in a foreclosure transaction from the sheriff (long story short it took more than six months to get the property from the lawsuit, but in the end there was a nice profit)

And we discovered a market that has a little less competition (of course good and attractive properties will always be in every market) and rentals with really good numbers in general and certainly relative to hot markets where sometimes even the 1% rule doesn't always exist

(A law that says that gross monthly rental income must be equal to or greater than 1% of the purchase price, meaning if we bought for 100k we will not enter into a deal where the rent will be less than $1000)

By the way, what exists in other markets where the entry threshold is much higher is that usually the cashflow/monthly flow from the rent is less good, but the increase in value can be greater.

As entrepreneurs/investors you have to think about what you prefer high cash flow or high value increase because unfortunately (and this does not mean that there is no increase in value over the years in the countries where we work) but it will never be like Austin Texas just as an example where a single house in a good neighborhood can bring Expect a double-digit increase in value every year (the entrance threshold of the houses in question does not scratch half a million dollars, and on the other hand, after the hysterical price increase of the last few years, in the last year the prices also decreased by an average of 10%)

In short, we don't have a crystal ball and there's no point in having your head against the wall, no matter what you want and where you're aiming, brass will also put in your toolbox another small quality called mental flexibility, it will help you change your position in the current and stay in the game at all.

*And in general help you with all the creative finance questions of funding strategies that without mental flexibility you will not be able to enter at all (not expanding now but it is a fascinating and creative field)