Net worth is a measure of wealth. After tax Income determines lifestyle, so learning how to create income without learning how to keep it from being eaten away by taxes does little to improve lifestyle. They go hand in hand. For now, let's look at ways to create more income; first when buying and selling, and then as long term investors.

Probably the most effective way to create more income buying and selling houses is to be able to increase the number of houses bought and sold in a given time period. This is controlled by the availability of houses, and the financing that's available to non-owner occupants.

In recent months, with foreclosures mounting, lenders have tightened loan underwriting standards to that it has become much more difficult and expensive for a non-occupant to finance a house. This has two completely different effects. It reduces competition from other buyers and, at the same time, increases competition among sellers of properties that need to sell. The net result is that they are much more willing to listen to unconventional financing schemes than in the recent past.

There are many ways to arrange seller financing without the use of banks, but the most efficient way to buy houses for sale is not to buy them at all. Rather, with only a minimal earnest money deposit, enter into a contract to buy a house at a discounted price, then sell the contract for a profit to an owner/occupant who can get financing. This uses up very little cash and virtually none of your credit line, yet the profit is comparable to actually buying and selling the same house. When you can buy Options, you can afford to put less down and increase your volume without increasing your investment or risk.

Some lenders are now posing "seasoning" restrictions that require a seller to have owned a property for several months prior to selling it to someone else who would apply for a mortgage. As the Option holder, at closing, your buyer would be buying directly from the

long term owner, who would use some of the loan proceeds to buy back your Option, or to induce you to cancel it. Voila; no seasoning problem.

Some States have placed severe restrictions on people who take title "Subject To" a loan, but an Option that calls for a full cash payment legally skirts this problem. Some States don't want a person to "flip" a contract, in that case, once the buyer has gotten to the closing table, you can use your buyer's money to close your contract, have the house deeded to you, and immediately deed it to your buyer. This can cost more because of recording fees and document preparation, but it still offers a way to generate cash when you need it most.