Yesterday, I was talking to young Joe Luckino, owner and cofounder of Money4Investors.com. It's hard not to get the fix and flip bug when you listen to Joe's success story. Joe doesn't flip all of his properties. He plans to increase his cash flow by maintaining 100 rental properties and he's more than half way to his goal--in only four short years.

Joe's method is totally different than many other investors. He uses Rehab financing with high interest and points to obtain properties with no money down.  He doesn't use any of his own money to buy and fix the houses. After the house is fixed, he either sells it for a quick profit or refinances the house to get his profit. Because the area Joe works supports rents that more than cover his mortgage, Joe gets positive cash flow. With Joe's system, the investor makes pure profit without putting money into the property.

In contrast to Joe's fix and flip strategy, investors in other areas make money using their own capital. These investors either purchase with all cash for a deep price discount or put up a significant down payment. In locations like our Southern California market, houses rarely bring in enough rent to cover the mortgage payment. When houses were appreciating faster than the mortgage payment base, we didn't care if we rented the houses or not. With slowing prices, cash flow seems more important. Mortgage payments of $2,000 or more can quickly eat up profit.

Next Wednesday, September 20, we'll talk about new investing strategies on our free Real Estate Investing teleseminar. Send me your questions and stories to share.

Jeanette Fisher