Real Estate Investing: Financing Resources Overview

Finance

Getting financing for your real estate deals can come from a number of sources. Some will be better for you than others depending on how you want to structure the deal and what, if any, financing you may have at hand. One of them is through a “Joint Venture” where like-minded individuals pool their investment capital to purchase a property for profit.

One of the benefits is that expenses are divided amongst the members which means less out of pocket expense for everyone, one of the drawbacks is that there’s a budget and each expense must be approved by all of the members, which can become tiresome and time consuming. Unless it is contractually agreed upon that it will your sole responsibility to hire a contractor, an inspector, and get all permits needed etc, you must come to an agreement on each of these decisions as a group. A legally binding contract must then be drawn up stating the duties and responsibilities of each member of the group.

 

Also, if you will be performing a function in the group which requires more time on your part than that of the other members, because their schedules won’t permit it, you can receive payment from them and have it stated in the contract. Even if it becomes your sole responsibility to make these decisions for the group, it’s very important that you have daily contact with the other members via phone, fax, or e-mail. it keeps them in the loop and it’s reassuring knowing how their money is being spent. Joint ventures are a team effort, and on a team each member has a role to play, and when each player has the best interests of the other players at heart, there’s a very good chance for success on the “field” of real estate.

House hunting During a Real Estate Scandal

Scandals

Sub prime loan. Three words which really should have such positive connotations are now resounding in the minds of millions of Americans trying to get out from under the rental trap. As mortgage companies scramble to sell off their debt to avoid bankruptcy, the crunch is hitting average americans like a sledgehammer. The biggest scandal to hit the real estate market since the S L; crisis in the 1980’s, this situation has brought many young Americans as well as minorities and immigrants to bankruptcy, forcing them to give up their homes, assets, and their livlihood. For those who fell into the trap, the crescendo of the situation has been the foreclosure of their homes and the upheaval of their lives. At this early stage, blame is being passed back and forth while the government staunchly lays blame not on potentially fraudulent credit companies, but on consumers who don’t understand the legal language of credit documentation.

Caught in the middle are consumers who have budgeted themselves into a smaller price bracket, and who know what they can afford, as well as companies who are genuinely in the business to help people from all walks of life own a home. In the few months in which my wife and I have been searching for our first home in north Georgia, we have heard all the hype about what are called “McMansions” here in the south, and according to the hype, we are more than qualified to immediately take possession of one of these fine homes. We opted to err on the side of caution, however, and avoided talking to the builders. We went old-fashioned, and asked some people we knew about agents. That was the best decision we made. She cut through the hype for us, and let us know exactly where we stood, no holds barred. She also put us in contact with a mortgage originator with whom she had done business for years, and had a long list of inspectors, consultants, and builders with whom she had had relationships for just as long.

 

We learned to find out what we could afford without strapping ourselves, and within a few trips out to visit properties, she was honed in on exactly what we wanted. It was then that we realized what was happening around us. The housing market was drying up- quickly! Our price range was the most highly sought after in the three counties we were searching in, and we suddenly found that we weren’t only competing with other couples, but also with bank expectations, builders, investors, and amateur flippers. We were outnumbered, and outgunned. At every step, other buyers would outbid us on the homes we were interested in right out of our price range. It soon became apparent that we might be better off with one of the new homes which were languishing on half-developed lots. Question was, would the builders deal? As it happens, they do. One subdivision’s builder we looked at dropped prices by ten thousand. Then we found another. Turns out the builders don’t want to be stuck with excess inventory, and are trying to compete with older home sales while legislators are whispering about the bottom falling out of the market. Although that may not happen at all, what is likely is the market correction that is just around the corner, and the dip in home prices that will ensue before the cycle begins again.

 

For those of us out there who have done our homework, and found a good agent, this is a good time to buy, but carefully. My advice to you is to read through all your contractual paperwork, and work with someone who knows more than you do whom you can trust. Then, be sure you understand it all before you sign. Whatever you do, don’t be in a hurry. You’ll regret it if you rush, particularly when the market is so close to being in serious trouble.

Tips for Selling Your Home in a Sluggish Real Estate Market

Real Estate

The real estate market has cooled drastically in many parts of the country. So what should you do if you need to sell your home?

First of all, you need to accept the fact that not only is the value of homes rising like crazy, but in some areas it is dropping at a fairly good rate. While real estate is – and always will be – a good investment, there are going to be periods of time when there is a potential to lose money if you do not time your buying and selling right. Just because your home was worth $300,000 two years ago does not mean that it will be worth that much today. Be realistic about what you can get for your home, and share your desire for a realistic price with your realtor. Some realtors are so eager to have your listing that they will convince you that THEY can get you more money than it is worth. If you have checked out the recent sales of comparable homes in your area and you think that your real estate agent is being overenthusiastic, move on to the agent who will give you a realistic answer – even if it is not the answer that you want to hear.

 

Be aware that there is a good chance that your home will sit on the market for an extended period of time, and be ready to act accordingly. Your home must be ready to show at a moment’s notice, so keep that lawn mowed and those dishes washed.

 

Do not get too excited about finding your next dream home that you absolutely must own. If you do find that home, the owners of that piece of real estate are probably not having a much easier time selling it than you are having selling your home. And if they do sell it before you have sold your home and are ready to buy it? Well, these things happen. There are lots of other nice homes out there.

 

Be willing to do some creative financing, if you can afford to. Be willing to share closing costs, to throw your antique buffet into the sale, or to give a credit so that the buyer can buy some new carpet.

 

If you simply can not stand the idea of selling your house so cheaply – or you can not afford to – consider renting the property out. Given the fact that mortgage rates are on the rise, rental properties are more in demand. Your mortgage will be paid, and sooner or later the value of the home will rise again.

DIY Real Estate: How to Use Comp Homes to Sell Your House

House

Selling a home can be a daunting task for a professional real estate agent. With property promotion, open houses and a fluctuating market, trial and error usually wins out over book knowledge and written rules. But, what about the homeowner who decides to sell their home without the help of a professional. Believe it or not, you may find some of your greatest help in comp homes.

When placing your home on the market for sale, you will inevitably look in your neighborhood for other comp homes also for sale. Competitively pricing your home will draw in potential buyers more quickly than pricing your home out of the range of other comp homes in the area. This pricing model only works if you can find a comp home in your neighborhood. But, how will you know if a home is comparable?

 

Homeowners should always look at their rival competition for help in selling a home. Visiting the open houses of other homes in the area, or arranging for a walk through with the owners or real estate agent handling the sale, will help you to gauge the home’s condition, in comparison to your home.

 

This tactic is also helpful for homeowners selling a home without a real estate agent. Seeing how a real estate agent offers the information about the comp home, viewing the real estate agent’s fliers and promotion sheets, as well as, seeing the changes or key points a real estate agent stresses during a walk-through will help you to better understand how you should be handling those aspects of your sale.

 

Another key point to viewing comp properties in your area, is to judge the price of your home against the price of other comp homes in the area. If you view a comp home that is larger and newer than yours and priced lower, you will see the lack of value in the situation. A home buyer will not be able to see your attachment to a home, nor will they understand why you believe the home to be worth more than the larger home down the street. Viewing a rival’s home is important as a homeowner selling a home without a real estate agent, to better understand how your home looks to the consumer.

 

Selling a home on your own is a noble task. Using homes in your area to learn the business of home sales, gauge comparable home values and objectively see what other homes have to offer the home buyer, will help you sell your home without a real estate agent.

Pre-Forclosure Homes: How to Profit From Real Estate in a Down Market

Beautiful Real Estate

As a person familiar with both investing and home improvement, I see this market as a time of reflection. Our past action have brought us to a point where many home owners are faced with loosing their home. Many homeowners are faced with losing their home without making a dime. There are many opportunities out there to buy homes. First time home buyers do themselves a disservice if they do not consider buying a home right now. Ideally with this market, you could find your dream deal and have moved in by or near the Christmas holiday season. You could buy a new home, but you should also consider Pre-Forclusers.

My stance at this time is not for the current home owners. I do not know exactly how you can save your home if you have reached the foreclosure point. Most predatory lenders that would have helped stopped foreclosures are no longer in business. There are a few that still operate, but their practices have changed drastically. My stance is for the first time investor that wants to lean more about the Pre-Foreclosure market. My stance is for the first time home buyer with decent or not so decent credit but has a desire to own a home. My stance is for the single mom living in an apartment that has no tax benefit from renting. My stance is for the millions of people struggling to just buy that first home. I hope and aspire to help them.

 

My background is in banking. I was a commercial and residential lender. I learned a great deal from banking. I also learned a great deal from training, I took everything from Carlton Sheets classes to Richdad.com real estate program. I learned a ton more from making mistakes. I played in the real estate market with little to no money. I also played in the real estate market with thousands. I’ve won and lost. In the process here are some of the tips I’ve learned that could help you make money now in Pre-Foreclosure Homes

 

What should you do first in the Pre-foreclosure home market to make money

 

Get a coach. It a simple rule but most people do not follow it. When you have a mentor or a coach involved you are more likely to do better than others. If you have a plan that you and your coach or mentor outline, you should stick to it. There is tons of money to be made in the Pre-foreclosure market. There is no need to go after every deal. You should get a coach, make a plan, and take action. My coaches have changed through out the years.

 

Some I still work with today. The fact remains you will need a coach that has more experience than you in the industry to help guide you through troubled times. Some coaches come at no cost. Some coaches charge thousands of dollars for their expertise. If Phil Jackson came to coach my sons’ team for $100,000 it would be a bargain. If someone that is a first time coach want to coach for the same $100,000, it would be a risk. Get an experience coach that can help you achieve you dream Pre-foreclosure market championship. A great pair off coaches I’m aware of are Vicki And Lloyd Irving. They have helped many of their student achieve phenomenal success in short periods of time.

 

How do you start in Pre-foreclosure Home Market to make money

 

Read everything. You can not learn enough about the business. There are many books an periodicals on the subject. Once you have coach and a plan, you will have material to learn. You might have a boot-camp to attend. Regardless, you should pick up ever book you find on the Pre-Foreclosure and Short Sale market. Each book your read on Pre-Foreclosures might have a tidbit of information that helps you move forward.

 

The more you read, the more you should act upon. The fact is knowledge is great but applied knowledge makes a world of difference. You might know how to cook, but until you get in the kitchen to make breakfast you will sill be hungry. As long as you learn and apply the knowledge you will grow in the Pre-foreclosure market.

 

Biggest Key to make money in th Pre-Foreclosure market that will make you money

 

Be creative. Donny Deutsch said it best “You will get what other won’t because you do what other don’.” In this business, creative people make a killing. People that think outside the box and are willing to ask. One of my favorite sources for online creative ideas is Creonline.com. I’ve gone to CreOnline for both contract and information purposes. I live online and use every resource to continue my learning.

 

You should consider, taking over payment of those whom have a mortgage that is assumable. In some cases the mortgage might be $3,000 a month. The owner is $9,000 behind, and you have less than $20,000 in fix up cost. The current home owner simply wants to get out of the deal. I have seen a person with this case in a $500,000 home. They simply wanted to give to the investor for $300,000. With the right coach and plan, this deal would be a slam dunk. I’ve seen people trade a bike a boat and a truck in for a car. You could do the exact same thing for a home, some home owners will accept other assets for their equity. If they can was away with something it is better than nothing. Some home owners will take a second for their equity if they can move on and out of the house. Again, as long as you are creative you can get many deals done.

 

Big picture, the Pre-foreclosure market is one where there is money to be made. If you have an exceptional coach, you learn all you can, and stay creative you will be successful. God Bless and good luck in the Pre-Foreclosure market.

Real Estate Buyer Beware: Note Buying Scams on the Rise

Loan House

Well-off people who sell their homes sometimes decide to hold the mortgage for the buyer. This means that instead of the buyer writing monthly checks to the mortgage company, they write them to the previous owner. This can a good way to add diversification to your investment portfolio if you don’t need the money right away and have a significant amount of assets. These people are now receiving an unusual number of calls from people who are offering to buyout their note for 70 to 90 cents on the dollar.

The note-buying business is actually a legitimate business; however the people making these calls are victims of the latest dare-to-be-rich scheme. These people get suckered into coming into some hotel ballroom or convention center type event, pay a substantial fee to come, and then hear about how they can get rich by buying owner-held mortgages at a discounted rate.

 

The idea is that many note-holders might be more willing to part with the mortgage they either need the money, or don’t think the mortgage is no longer a solid investment. The note-buyer comes in, purchases the mortgage, and collects the principal and interest and comes away with a significant gain.

 

The problem with the pitch is that the note-buying market is not big enough to support all of the people who are signing up for the program. There’s maybe a market big enough for a couple of hundred people in the entire country who really know their stuff and professionals in the business. There’s just not enough notes for everyone to buy, and the people who actually know what they’re doing and don’t just go to a class in a hotel ball-room will be the ones making the real money.

 

Many of the people who attend these dare-to-be-rich seminars are also not in a financial position to get into the note-buying business. Quite often they are using borrowed money to pay for the notes that they buy, which ads a significant amount of risk to their life. If one of the people that they have given a mortgage to suddenly decide to stop paying, they’re in real financial trouble. If you’re not worth at least a million dollars, chances are having one mortgage note worth $200,000 is not the right thing to do. That’s like investing $200,000 into a single stock. There’s just too much risk there for it to make any possible sense. Investors need to keep a diverse portfolio and not make investments that make up a majority of their net worth.

My Experiences with the Housing Market As a Buyer and a Real Estate Professional

RE

Is the housing market in the toilet? Yes it is, for some people and for others, there’s a rainbow at the end of the tunnel. You just have to be brave enough to walk the path.

I remember a time when a 3 bedroom, 2 baths Cape Cod sold in Union, NJ for $130,000. That was 10 years ago right before the market took off and homes values appreciated at a rate of 20% or more in some areas. What caused this unnatural appreciation? I attribute it to three things: Investors, Americans desire for immediate gratification, and the internet.

 

10 years ago, the economy was good; unemployment was low and people had money. Bill Clinton was in office and he was for all intents and purposes, he was a domestic president. Then came the widespread use of the internet, which change the way people communicated with each other and the way in which people accessed information. Ergo, people were reminded that real estate is probably the only investment that continues to be a smart investment, even in this depressed market.

 

Investors, who were sour after the dot come burst, found a new avenue to make good money quickly. They bought/built homes, fix them up or rented them, and in some cases they resold them quickly for huge profits. Life continued like this several years. And in the midst of all this buy, fix and build era, Americans were seduced by attractive and swift marketing. People began searching for properties online; in some cases, the Average Joe got it into their heads that if I follow these steps as outlined by real estate gurus like Carlton Sheets, I too can make money. Thousands of people made money this way and life was good.

 

Banks had relaxed their lending practices to keep this good market going. They gave loans to people with questionable income and in some cases, they did not verify it. Banks provided loans with teaser rates, adjustable rates/and or interest only plans and they persuaded people to have confidence in the market. They were banking on the market continuing to appreciate. As the old adage goes, all good things must come to an end.

 

August 2005. 10 years after a housing boom. Gas Prices go up and the market started too swift. Properties were taking longer to sell. Sellers had to reluctantly start to reduce their prices so that they could move on with their lives. Investors got nervous and bought less property. First time home buyers saw interests rate creep up a bit and since the prices of properties were not coming down, they were priced out of the market. The market was at a bit of a stand off.

 

August 2007, Sellers realized that they had to make an adjustment; they reduced their prices and started making home buying affordable again.

 

So who are the people who are in trouble? Its people who

Were/are victims of predatory lending: they were given a teaser rates and/ARM’s that they could not afford when the rates adjusted. Its only predatory if the bank representative/mortgage broker did not explain the loan. Although one could make the argument that it’s the buyer’s responsibility to read the fine print.    Applied for sub prime loans i.e. 100% financing and had high debt to income ratios to begin with and did not calculate taxes, PMI or the cost of living into their housing expenses.    Purchases interests only products within the past 3-5 years and banked on the market appreciating. They might not be able to sell their home for much more than what they paid for it.    Experience/Inexperience investors with vacant properties and no buyers/renters in the market.    People who used their homes like cash register and took out 2 or 3rd mortgages.    Lenders who are holding on to these questionable mortgages and defaulting borrowers. They may now have to play Let’s Make a Deal.

Who are the winners in this type of market?

Sellers who have owned their homes for at least 10 years assuming they have not already taken the equity out of their homes.    Buyers with good to decent credit (620 plus). The house that the neighbor bought for $400,000 might cost a new buyer $379,000 for a home of similar makeup and style.    Banks because people will continue to buy; banks will just have to be more weary of who they lend money to.

The next couple of years may not be the golden years of real estate, but the invisible hand will correct matters and maybe in another 12 years, we might encounter the same cycle. Hopefully, everyone will remember these years and not make the same mistake.

How to Resist the Lure of Real Estate and Make a Schooled Decision

Real Estate

The Lure

The thought of Real Estate brings to mind dreams of riches and power. The lure to own property is enticing and powerful in that land and property are seen as being the everlasting all time business investment. While this may be true, everything isn’t always coming up roses in this market. Resisting the urge to follow the rest of the “fish” in the pond may seem to be foolish until you understand exactly what you may be getting yourself into.

 

There are at the very least, three different viewpoints that you can perceive the real estate market from. Each view can be a singular view or a view with multiple panoramas. This article covers some of the basic pros and cons of each position you can take if you do decide to get involved in the business of land and property ownership, (flipping), buying, selling and mediating (agent).

 

Note: In a low interest market with high interest rates you can sell your home every two years to make a profit. Use the profit to buy a better house and repeat your steps until the profit margin is where you want it to be.

 

The Reel

 

The main attraction of buying real estate is that it is usually an extremely appreciable asset. Even in harsh financial times, real estates proves to be the bread winner of many major industries.

 

Pros

 

As a buyer you may have complete control to buy as you wish especially you own a real estate agency or fianancial institution.

 

As a sell by owner oprerator you may have complete autonomy to sell as you wish unless you are an agent.

 

As an agent you forego many of the hassles inherent to buying and selling and keeping to the ideals of your agent training.

 

Cons

 

As a buyer you may have to contend with many factors in order to make a purchase, such as taxes, paperwork, financing, inspections, and other legalities.

 

As a seller you must face the fact that you may not get your asking price or find that you must sell sooner rather than later depending on the market and your own financial status. You should make it a point to find out exactly what your property is worth.

 

As an agent you are subject to the whims of buyers and sellers whether you are independent or not. If you are an independent agent you must deal with the business matters that will result in you running your own business as well as keeping up with any industry affiliations that you belong to.

 

Making a Schooled Decision

 

Before making a choice as to whether you want to enter the real estate market, decide which role or combination of roles you will play. Devise a goal and create a plan based on that goal, only after careful and meticulous research into the market and its niches. Ask pertinent questions of others who have the information and experience you are trying to gain what there most common problems were and are and how they solved them or plan on solving them. Most of all, keep learning everything that you can about your chosen field. Remember, if it sounds to good or easy to be true, it most likely is. Anything worth having, especially success, is hard earned and not easily gained.

 

For more detailed information on real estate go to

 

http://en.wikipedia.org/wiki/Real_estate

 

Shinnelle L. Queensbury is a work at home mom who varied interest inspires her involvement in many activities. Visit her blog at http://www.anonymous.componga.com for a lighter and less serious touch of writing.

5 Key Things to Learn Before Investing in Real Estate

Investing in Real Estate can be profitable. It can also get real ugly, real fast too. You just have to know what you are doing. Like in everything else, you need to know what to avoid. There are countless stories of investments gone wrong; The stories of the landlord that could not manage his property or the couple that ran their well dry because they rushed into investments.

Thereby, if you wish to enter the wheeling dealing world of real estate investment, you should not be entering it all blind eyed or with blind optimism for that matter. There are a lot of good deals out there at the moment, but there are some bad ones that will cripple your finances. In this article you will find 5 of my key learnings from my exposure to real estate during my time working in the bank and my own personal experience.

 

First and foremost, this will be your full-time job. I do not mean that it will consume all your time and that you do in life. You just to be aware of all your opportunities and be prepared to grab them. Real estate is knowing about you opportunities and follow through. You never know who your next client will be. You need to build your network and the most basic thing you need is to have your business card on you all the time. No one can sell their property to you if they cannot contact you or buy that lovely little property that you have on hand.

 

Rentals may give you continuous cash flow, but you may have to consider the various type of complaints that the tenant come to you for. Tenants will come for you for everything under the sun, from blocked toilets to noisy neighbors and they have the right to do so. You may have a management company running things for you, the tenant will always come to see you in the end. After all, you are the person that rented the place out to them and not the management company. There are so many laws that protect the tenant’s rights, just be mindful that you may end up paying more than you are getting.

 

When hiring a contractor, take one that charges by the job rather than the hour. Unless you plan to oversee the project for the whole duration, it is more likely than not you will be paying more than you bargained for. Ensure that you sign a contract with a must be completed by clause. The very least, you will get some compensation in the form of discount or penalty payments if the contractor does not complete in the stipulated time.

 

This is common sense, but always make a thorough inspection of the property before purchase. The repairs that need to be done to the property need to be lower than the profit that you intend to make. Foreclosure properties that the bank get, may be very good investments. You may get them for cheap and you are allowed to inspect them beforehand.

 

Finally, take the advice from someone that does not invest in property with a pinch of sale. They might say that they know where the next big thing is, but they would not know the pitfalls of investing in property until they do. They will sometime make an emotional case for it and you would be sucked into the hype. Before you know it, you will have a piece of property that is depreciating faster than a third world country’s currency.

 

These are just a few of my learnings and I am still learning. There is still a lot that I have to learn. Hopefully, the 5 learnings that I have will help you along the way to becoming a great investor and to give you food for thought on some the aspects of real estate investment.

A No Cost Real Estate Investment

Real Estate

Several years ago a friend of mine called to say that an old friend of his and his wife were looking to purchase a small home. Nothing fancy, a couple of bedrooms and one or two bathrooms would work out just fine. After all, it was just for the two of them and they really wanted to get out of the rental trap and have something that they could call their own.

A few days later I met with this couple and they gave me all of the details and information that I needed in order to help them find what they were looking for.

 

They had some cash saved up and after visiting with a lender, they knew that they could qualify for a new loan and also what their price range was. They were pretty excited about all of this, so within the next two days I furnished them with a list of potential properties to drive by and to call me on the ones that they might be interested in seeing.

 

Four days had gone by when I received a call from the wife and she said that of all of the houses that they had driven by, there was only two of them that they would like to see. Because of each one of them working different hours and her having such a hectic schedule as a nurse, we picked a day and a time that we could get together and take an look inside of these homes.

 

Entering the first home, they were somewhat disappointed because it was just to dark inside for them. Although it was a beautiful setting on the outside, the darkness on the inside was caused by the tall, mature tress that completely surrounded the property and they certainly didn’t want to cut the trees down.

 

The second home we visited was much brighter and more cheerful, but neither one of them liked the floor plan. It just made a person feel cramped. I told them not to be discouraged and that I would research another list of homes this evening to see if anything new had come on the market. Unfortunately, there was nothing new.

 

They were becoming a little disgruntled at this point, but I explained to them that if we didn’t change their search perimeters, that we’d just keep looking and something would eventually come up. Though they agreed, I could see in their eyes that, ‘right Jim, probably any moment now, right?’

 

I kept my eyes watchful on the market and sure enough, a few days later, a new listing became available. Although it wasn’t in the two areas that they were wanting, I told them that it sounded like a nice home in a nice neighborhood and since they hadn’t found anything of any interest up to this point, that it wouldn’t hurt for them to at least drive by it.

 

They agreed and two days later they called me.

 

She was excited as she spoke on the phone and said that the home was just gorgeous from the outside. We made arrangements for the next day to see the inside. Upon entering, they were just blown away from it’s appearance. I have to admit that I was very surprised as well. It was immaculate. It showed liked a model home.

 

Not a thing was out of place, nor could you find a speck of dirt anywhere.

 

It was just beautiful. They walked around checking everything out and the more they looked, the more they fell in love with it. It had everything that they were looking for. We spent a good hour there with her saying over and over again that, ‘we want this house!’

 

We drove over to my office and after comparing prices with other similar type homes, they were able to come up with a purchase price that they felt was fair to both them and the sellers. We made an offer based around the existing FHA loan that they could assume and therefore they could bypass having to obtain new financing. It would be much quicker and easier to go this route and that’s what they elected to do.

 

There wasn’t a large amount of equity in this property ($3500), so these folks used their savings to put down the difference between the sales price and the existing loan, therefore, cashing the seller out completely. They also agreed to share closing costs 50/50, which was a minimal expense.

 

The sellers liked what they were being offered and after a few concessions on their part, accepted the offer within the next several days.

 

We closed escrow within 14 days and everyone was happy.

 

About 3 years later, I received a call from this gentleman explaining that he and his wife had gotten a divorce some time back and because of a job transfer, he wanted to sell the house. I was sorry to hear about the news because I remembered her as being a very lovely and spirited woman. I told him that I could help him with the details and so we set a day and time to meet at his home.

 

Pulling up to the front of the house, it still looked as nice as it did several years ago. Once inside, the cleanliness still dominated throughout the entire home and I could quickly see where her female touch still took it’s presence.

 

As we discussed the facts and figures, he informed me that he really wasn’t interested in receiving any money

 

right away. He just wanted to get out, put everything behind him and move on with his life.

 

Although it was a smaller house, it had still appreciated through the years. I showed him the new value and he was comfortable with all of the information that was presented.

 

I told him that I would be interested in purchasing the home and he was all for it. He just wanted out as soon as possible.

 

I opened my briefcase, drew out a blank purchase agreement and together we went line for line creating an offer that would work for the both of us.

 

We agreed that I would assume the same existing FHA loan that him and his wife had assumed originally and that he would carry back a 2nd deed of trust secured by the property in the amount of any remaining equity.

 

I explained to him that I would be using this as a rental property and in order for me to make the financing work, I would need to construct the payments to him in an amount that would be at least equal to, or less than the amount that I would be receiving from the tenant in the way of monthly rent.

 

The rental market was strong and that helped us to derive the amount of money that he would be receiving.

 

We would split the closing costs 50/50 and close the transaction in a timely manner that would coincide with his transfer.

 

He didn’t have any problem with this and even agreed to pay all closing costs up front.

 

I offered him a fair interest rate on his second deed of trust and I used a longer than normal amortization to help lessen the amount of monthly payment to him, therefore keeping the financing in a positive cash flow.

 

After several years, the 2nd deed of trust was paid off and today the property has an even greater cash flow, along with an increase in equity.

 

In summary:

 

(A) I had used my sales commission in lieu of paying down most of the equity that he had in the property, therefore creating an even smaller balance on the 2nd deed of trust.

(B) He paid for all of the closing costs, eliminating me having to pay any out of pocket expenses.

(C) In essence, I purchased this property at no cost. No cash down payment and without any cash of my own.