If anyone knows what naked puts are in the options world, then this is the real estate equivalent, so if you keep doing this over an over again, you will come unstuck.

If you use it short term to build seed capital you can only lose the (relatively) small amount you put in, but as a long term business model it is flawed.
If you were to use this same deal to buy, renovate and sell/rent out, then you will probably be onto a winner.

For example lets say you buy a fire damaged place for $19 000, do $10 000 work. Now once the work is done, let’s say it is now worth $40 000. You can then re-mortgage it at 75% and rent it out for a rent higher than the mortage payments.

You now have an asset producing you a positive cash-flow and the bank gives you your $30 000 investment back, plus you still have $10 000 equity in the property. This means you are protected from falling prices as the rent payments mean you can hold it indefinitely as it will never cost you any money. You can then find another one and do the same thing again and again with very little risk.

In the current climate of distressed sellers, you should be able to find yourself a good few deals like this and you can always make your offers subject to finance to protect yourself even further. It takes a little while to build up a portfolio that will replace your income, but the growth is exponential (if done correctly) so it won’t be too long before the excess rents (ie the rents beyond what it takes to pay the mortgages and upkeep) from this a ‘normal’ job as this is exactly what I did!

Congrats on your nascient steps into becoming a real estate mogul!