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Weekly dose of real estate investing


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 4 weeks ago '16        #1
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Usd2bDrich409 
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Weekly dose of real estate investing
 

 
Welcome back for another weekly dose of real estate investing. I appreciate the love, questions, and responses that I got last week.* With the tragic start to all of our week on here I hope we can all take something from it and do whatever we can to do better in whatever you want to be better in in our lives.
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This post is going to be a little long due to the complexity of the topic.

With that being said, I received a lot of feedback and questions last week regarding creative financing.* Specifically, ways to either buy properties without using your own cash or credit or sell properties in ways that get a nice check now or cash flow for a while.* You will hear me say this now and I will continue to say it over time…CASH FLOW OVER CHECKS! Checks come and can go as quickly as you cash them, you account for more taxes up front, and you have to keep going do jobs over and over again to continue getting your check (kinda like your job, right?) It’s you working for your money.* Cash flow on the other hand is your money working for you.* Month over month its money that is directly deposited into your account or handed to you in the form of a check depending on how the person is paying and after you work for it the first time, it keeps paying you.* A lot of times with interest depending on how you set it up. So, I don’t know everyone’s financial situation, but if given the opportunity to either get $15k up front or $300/month, every month for 15-20 years…don’t look at that now money and be a fool.*Take the long bread and find ways to compound it.

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So, what exactly is CREATIVE FINANCING? Simply put, it’s ANY financing agreement other than a traditional mortgage from a third-party lending institution.* There are several different types of Creative Financing:

Loans from the seller

Balloon Payments

Wrap Around Mortgages

Subject Too Mortgages

Sale-Leaseback

The list goes on.*

*

Today I want to focus on the two methods that I use the most and break those methods down as simple as I possibly can and show you how to utilize these methods with no cash or credit and earn checks as well as cash flow off of them.* If you are interested in other methods, then feel free to either leave a comment below or send me a PM.* I spend most Wednesdays getting ready for my webinar with my team so I have time to respond pretty quickly.

First let’s start with Subject Too Mortgages.* What is a Subject Too Mortgage? It is simply you taking over payments of someone else’s property without you having to actually put the mortgage in your name.* Most properties are comprised of 2 documents: 1) A mortgage which tells the lender who is responsible for the loan. 2) A Deed of Trust which specifies who actually owns the property (this is what is recorded at your county clerk's office so they know who to charge for taxes).

When you get a house “Subject Too” the existing financing, you are taking over ownership of the property because the Deed will be switched over to your name, but the mortgage will stay in the original owner’s name.* You will make the monthly payments and be in control of everything with the house, you just won’t have to use your own credit to apply for a loan to get a mortgage in your name.*

That is how you go about doing it with no credit, now on to how you do that with no cash and still make money.* The key to this is finding a seller who is MOTIVATED.* A seller who might be motivated is someone who has to move out of town/state for a job and needs to sell their house quickly, but can’t seem to find a qualified buyer.* They don’t want to be stuck paying two mortgages so you can present them with the offer of taking over the house subject too the existing loan and taking over payments.* Another might be someone who recently lost a job and can’t afford the payments anymore, or someone who is trying to sell their home, but doesn’t have enough equity in their property to cover closing costs, realtor fees, and any other fees a*sociated.

But my absolute favorite and who my company targets are people that are in pre-foreclosure status and their home is getting ready to go to auction.* Typically these people are already behind on payments and to add insult to injury they are getting ready to mess up their credit even more by having a foreclosure on their record.* Some of these people have a way out and can fix the situation while others will have to face their fate.* Some will be stubborn and will just let the house go to foreclosure before they, in their eyes, “give it away to an investor”.* But with enough persistency and effort you find the people who will gladly walk away from their house, transfer the deed into your name, and let you take it over subject to the existing financing in exchange for you catching up their arrears and making on time payments going forward.* In this situation, their credit score is going to increase because you are making on time payments for them.* So how are you making these payments without it coming out of your pocket???

As soon as you get the house under contract, you start marketing the house as an owner finance property (No Banks, No Credit Checks).* You will now become the bank for someone who has cash for a down payment and can afford a certain monthly payment, but simply can’t qualify for a traditional loan due to credit issues or employment issues.*

Let’s take a look at some numbers to see how you will make money.* We are going to a*sume the house that you took over has a back payment due of $9,000 and the remaining balance on the house is about $110,000.* The house itself is actually worth $180,000 ($70,000 in equity) and is still in good condition.* Being that you are going to owner finance this property you can actually market it for $200,000 with a 10% down payment or $20,000 with a 9% interest rate for 30 years.* Let’s a*sume the interest rate on the original loan is about 4.5% and the monthly payment is $1050.*

When you owner finance this property and find your buyer, they will have to give you the $20,000.* You take $9,000 of that 20k and you pay up the arrears.* The other $11,000 is your upfront money from the sale.* Since they put $20k down, you will be financing $180,000 for them over the course of 30 years which will make their payment about $1450/mth.* Remember, you only have to pay $1050 on the original loan and they are paying you $1450, therefore you are cash flowing $400/mth as well….EVERY SINGLE MONTH!.....IT GETS BETTER.* The original loan probably only had 15 years left to pay on it.* The loan you created for the owner finance buyer was for 30 years, so in 15 years when the original loan is paid off, you will then be cash flowing the entire $1450/mth for 15 more years.* Altogether, on a house you put no money into and used no credit, you will profit a grand total of $344,000 ($11,000 profit from the down payment, plus $400/mth for 15 years, plus $1450/mth for another 15 years).*

The goal is to do that over and over and over again.* Some houses I make $400/mth cash flow, some I make $900, some more than that, others less.* Eventually you get to a point where your passive income can take care of all of your personal monthly expenses and you have enough left over for the leisure’s of life. This is called early retirement. There are multiple ways to use “Sub Too”, but that what I just illustrated is my absolute favorite.



Next is doing Lease Options a*signments and Sandwich Lease Options (Texas is the only state in which you can’t do a Sandwich Lease Option). For my Texas people I can send you the links to my webinars on this as it pertains to us.* I am going to discuss Sandwich Lease Options in detail because it gives you a way to make upfront money and cash flow for a little while, plus it is the way you can do it in all states outside of Texas.

A lease option is simply a standard lease for 1, 2, or 3 years that has an option clause in it that allows you to purchase the property at an agreed upon price if you want too at the end of the lease period or before the lease period is up.

How do we do this and how do we get paid? Two great questions.* The answer to the first is we find a homeowner who is either currently looking to sell their home, lease their home, or someone who is tired of being a landlord.* From there we simply ask if they would be willing to lease the property to us with an option to buy it outright in a year or 2.* Let them know that you will take care of all the maintenance and they will cash flow off the house each month with none of the responsibilities of a normal landlord and when you close on the house they won’t have realtor fees.* You want to negotiate a monthly rent rate that is as low as they will take.* If they agree to it, then you want to confirm a purchase price they will sell it to you for when it comes to your option to buy.*

After all of that is settled, then you go out and actually market the property to find your end buyer who is going lease option the property from you.* The difference is that 1) Your marketed purchase price for the end buyer will be higher than what your purchase price is from the original seller 2) You will come up with a monthly rent amount that is higher than what you are required to pay and 3) You will collect a non-refundable down payment (also known as an Option Fee or NROC- Non Refundable Option Consideration) from your end buyer which is usually 4-5% of the actual selling price you provided in step 1. This down payment will be subtracted from the sales price you negotiated with your end buyer whenever yall finally close on the house.* With that down payment you will pay your deposit (Usually equal to 1 month’s rent) to the original seller and pocket the rest.* You will cash flow each month because your rent rate to the original seller will be less than what you are getting paid from your end buyer.* At the end, when your end buyer actually goes through and purchases the home with a traditional loan, you will typically make another check that will be the difference between what your price was with the original seller and what your price was with the end buyer, minus the down payment that they already put down.* Everybody wins! The original seller gets the house from under them, you make upfront money + cash flow+ a little equity in the end and your end buyer is the full owner of the house they wanted.*

There are a couple other moving parts in this technique because you want to make sure your paperwork is right, but I hope yall grasped the gist of each of these methods.* Remember, this is just a dose, I encourage you to take this info and go down a rabbit hole to continue learning more.

image imageimageimage:cowboykobelol :imageimageimageimage:kob emad2:

RIP Mamba
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 4 weeks ago '09        #2
g00dears 
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Props!
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 4 weeks ago '15        #3
80nueve  topics gone triple plat - Number 1 spot x2
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Props may you @ me in all future threads if possible? thanks in advance

Make Bx Great Again!
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 4 weeks ago '18        #4
SFamilyRep  topics gone triple plat - Number 1 spot x1
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OP you might as well start a roll call. Starting with me :
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 4 weeks ago '16        #5
Usd2bDrich409  OP
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 80nueve said
Props may you @ me in all future threads if possible? thanks in advance

Make Bx Great Again!
Got you bro
+1   

 4 weeks ago '16        #6
Usd2bDrich409  OP
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 SFamilyRep said
OP you might as well start a roll call. Starting with me :
I've been asked and will do so bro.
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 4 weeks ago '15        #7
masterjay101  topics gone triple plat - Number 1 spot x1
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Props! Add me to ur roll call
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 4 weeks ago '16        #8
pnostarr  topics gone triple plat - Number 1 spot x6
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subject to not subject too... too and to are two
different words. it’s funny to me when someone tries to teach, yet they can’t even spell simple two letter words

 4 weeks ago '16        #9
pnostarr  topics gone triple plat - Number 1 spot x6
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too is used when you’re including yourself... as in “me too” or “I like cheesecake too”.... to is used when you’re going somewhere like, “I’m going to the store” or “i don’t know how to spell”... here’s another example of too: “this guy is teaching real estate but he should take some English lessons too”

I hope that helps you in life and props for trying to teach some real estate. I’m a fellow investor myself.
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 4 weeks ago '17        #10
JacobWatch 
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 pnostarr said
subject to not subject too... too and to are two
different words. it’s funny to me when someone tries to teach, yet they can’t even spell simple two letter words

If he was trying to teach you english, maybe I'd agree with you.

But when it comes to real estate, theres a lot of people making real money but english isn't their first language so mistakes like the one you pointed out are quite common

Sometimes you gotta look past the extra 'o' to get the extra '0'

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 4 weeks ago '16        #11
Usd2bDrich409  OP
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 pnostarr said
subject to not subject too... too and to are two
different words. it’s funny to me when someone tries to teach, yet they can’t even spell simple two letter words
Aye bro, come to the thread with positivity or get the fu*k off of it. Did I spell all of that correctly? I'm fu*king with you. I know the difference between to, too, and two. Good to see another fellow investor on here. Let's JV some deals. I'm working Texas, Florida, and New Mexico currently.


Last edited by Usd2bDrich409; 01-29-2020 at 11:58 AM..
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 4 weeks ago '04        #12
Cali 
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I give you props for spreading this kind of info.

I wish I was more open about what I was doing back in 06-07. But I was only on here to download the newest mixtapes lol.

For those that want to dabble in real estate this post can show you the versatility of making a deal.

I can poke holes in some of the examples but the gist of this post isn’t about the accuracy of an outcome but more to spread knowledge about owning property and financial education.

For years the masses have been brainwashed and manipulated into a way of thinking that keeps people in a box
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 4 weeks ago '16        #13
Usd2bDrich409  OP
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 Cali said
I give you props for spreading this kind of info.

I wish I was more open about what I was doing back in 06-07. But I was only on here to download the newest mixtapes lol.

For those that want to dabble in real estate this post can show you the versatility of making a deal.

I can poke holes in some of the examples but the gist of this post isn’t about the accuracy of an outcome but more to spread knowledge about owning property and financial education.

For years the masses have been brainwashed and manipulated into a way of thinking that keeps people in a box
Preciate it bro. And these examples aren't how it plays out piece by piece, I'd have to write 10 pages to go through all of that. This is, as you pointed out, a way to give people a gist of how it works and how to make money several different ways in real estate. I haven't even gotten into the contract side of things, how to avoid the Due on Sale clause, how to protect yourself in these deals, hell even a*set protection. I was telling someone in a PM last week, I set my company up to be iron clad. Some may call it overboard, but I want to protect what I got while limiting my personal liability and my tax liability. So each of my properties have their own LLC. Each LLC is setup as a foreign entity either out of Nevada or Wyoming. Each property is also purchased using a land trust where my LLC is the beneficiary and my attorney is my trustee. The LLCs are managed by my C-Corp and my S-Corp is used as a "consulting" company to help minimize taxes on everything. This sh*t can get deep, but the further you go the more you learn.

If I can help as many people as possible get out of that box then one of my personal goals will be reached.
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 4 weeks ago '16        #14
Tyty 
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Good stuff I’m looking to invest within 3 months
I see the light at the end of the tunnel
of this rat race!!!

Add me to roll call
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 4 weeks ago '17        #15
kaliko 
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in for this add me ..props for the post
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 4 weeks ago '16        #16
Usd2bDrich409  OP
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 Tyty said
Good stuff I’m looking to invest within 3 months
I see the light at the end of the tunnel
of this rat race!!!

Add me to roll call
How exactly are you looking to invest bro and what's stopping you from taking action now?

 4 weeks ago '18        #17
NeverBrokeAgain 
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This is the type of positive sh*t I like to see on Boxden!
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 4 weeks ago '15        #18
masterjay101  topics gone triple plat - Number 1 spot x1
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 Usd2bDrich409 said
Aye bro, come to the thread with positivity or get the fu*k off of it. Did I spell all of that correctly? I'm fu*king with you. I know the difference between to, too, and two. Good to see another fellow investor on here. Let's JV some deals. I'm working Texas, Florida, and New Mexico currently.
Im looking to invest in the real estate game in Fl.. thinking of multi family housing... was looking at crowdfunding to lower my risk. Kind of nervous about it tho! I like knowing everything I can about something before investing in it, which is why i haven't invested just yet!
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 4 weeks ago '19        #19
scondini 
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Props, put me on that roll call bro!
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 4 weeks ago '19        #20
scondini 
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This more of a general question about the game, but would you say that wholesaling/ contract a*signment is as good of a strategy to get that capital up in the short term as a lot of these investors online make it seem? It seems relatively low risk but I feel like a lot of these gurus gloss over the legal/paperwork aspects
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 4 weeks ago '05        #21
B.S. Writer 
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Good looking! Finna read through this on my way home.
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 4 weeks ago '11        #22
LetMeBeGreat 
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Add me to the roll call brotha thanks for taking some time out to spread some knowledge
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 4 weeks ago '17        #23
DJdidit 
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 Usd2bDrich409 said
Got you bro
Same bro!

I've always loved the idea of subject to, have yet to do one. It's a lot of responsibility, especially with it still being in someone else's name. I almost want to do it with a house in like, the mid west or something just because in some places I've seen houses where the mortgage payment is 4-500 bucks a month. Definitely feel more comfortable there than in Seattle
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 4 weeks ago '13        #24
BIGJ82 
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Whoa I love this bro. Please @ me on your future post
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 4 weeks ago '16        #25
Usd2bDrich409  OP
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 scondini said
Props, put me on that roll call bro!
Got you bro.



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