Real Estate Investment

Investor Information

From: Darrell Wentworth
To: Potential Investor

If you are like me, I like to have control of my money and investments, but I have been very distrustful of the stock market. As I expanded my business in the 1990’s into investment real estate, I noticed that my portfolio grew much faster than any of the funds I invested on Wall Street.

Here is what I do and how I can help you. I buy foreclosed properties that are thoroughly distressed. The properties that no one else wants because of the massive amount of work needed to bring them up to code. Typically, I can get the properties for at or less than the land value. I then gut the properties, remodel them and turn them into rental property specifically for Section 8 rentals. I use a tunnel vision approach by creating every house into 3 bedroom, 2 bath starter
homes.

Here are the details for the last project I performed:

  • Purchased a 900 sq/ft cape cod on a large lot in Chesapeake for $35,000
  • I gutted the house, raised the roof, built two bedrooms and a full bath upstairs, built a kitchen addition on the rear and replaced the siding, electrical, plumbing and HVAC systems.
  • The total value of the remodeling was $85,000 giving me an investment of $120,000.
  • The property is now worth $185,000 and would rent on section 8 for $1300 per month.
  • That is a $65,000 gross profit over 6 months.
  • If I choose to rent the property the value of the improvements will steadily increase over time at a faster rate, long term, than the stock market and I am in control of the money.
  • The rent (14,400–15,600) creates income not just offsets the expenses since most section 8 tenants stay in the home for 5 plus years (especially since they have a NEW home to live in!).

Currently, Fannie Mae guidelines allow a person to hold 4 mortgages. $120,000 financed over 30 years costs $750 a month at 6.5%, rough PITI would be $900 per month. So even if the entire amount is financed there is an expected monthly profit of $300 per month.

Remember though, a monthly profit is not the goal: long term profit is the goal. Even with the $300 per month or $3600 “profit” reinvested back into maintenance, the mortgage is paid by someone else, the value of the land and improvements over 30 years will increase and after the 30 year mortgage is paid off 4 properties currently mortgaged at $480,000, valued at $780,000 would be worth an estimated $7.8 million with the investor actually not paying any of that value out of their own pocket.

A typical 30-35 year old couple would have 7.8 million dollars in retirement at age 65 or have a monthly income, of $4800 to $5200 in 2011 dollars for the rest of their life.

I know this is brief, but call me and I can explain it in detail and answer any questions you have.

“If you can dream it, we can build it.”