When investing in Free and Clear Real Estate (or Real Estate with high Equity) it is crucial to know what steps to need to take to make sure you achieve the success you are out to get.
Follow these steps to make offers on free and clear houses:
1. Determine what price you expect to get quickly by offering flexible seller financing to a buyer
2. Determine the min. monthly income you can get each month by selling on seller financing (or renting)
3. Identify the minimum you want earn (Profit) from this transaction
4. Add up your projected costs for marketing, buying, funding and selling
5. Add up your projected costs for repairs and holding until occupied
6. Decide if you are going to pull out some extra cash when buying
7. Determine how much Funds you will need to come up with from the outside (other people’s money) to fund the deal
8. Determine the monthly expense of using these funds through a private investor first mortgage
9. Determine the net positive cash flow (without offering monthly payments to the seller on a second mortgage)
On such a free and clear deal Your max allowable offer (MAO) equals:
* Your resale price, minus your estimated profits, minus all your cost to buy, hold and sell, then
* For the Length (in months) of your seller carry back loan – add the total positive cash flow then
* For the term of your seller carry back note – add in the total principal reduction
If at the end of the day when you buy that property you follow this rule and don’t offer more than this final number, then you should be able to meet your target profit goal.
The great thing about this investing method is that you structure 0% seller financing with the Owner of the home. And there so many unique reasons why sellers are accepting offers with no interest on their equity.
Many investors don’t think sellers will accept 0% financing, or wait 5 to 15 years for their money… but they do… and they do it all the time. But only when you ask.
The benefits for you are awesome.
* You can collect all the positive cash flow on the property when the seller accepts no payments. If you could net $1,000 a month for 84 months, would that be worth getting involved?
* The truth is, you can make any House cash flow by only offering the seller monthly payments on the basis of what the houses can afford. And any monthly payments you do make are principal only (0% financing remember?) and will therefore pay off the house FAST… creating a huge Profit at the end. If you could buy a house with no money down, get at a positive cash flow, and then collect $50,000 or $100,000 within three to ten years, would that be a deal?
* And if you like, you can pull most of your profit out in advance… in cash… on the day you buy it. There’s no rush to quick-turn these properties when you have no money tied up in the deal and you’ve collected an extra $10,000 or $30,000 in cash on the day you bought it.
It may seem dificult, but it is not. The marketing process is easy. Pre-screening these seller leads is easy (Tip: If the seller owns the home with none or almost no mortgage… go see the seller!). The Negotiation and the structuring of the deal is a systematic step by step process. The Homes you purchase using this investing model are extremely easy to quickly occupy or resale.
Use the steps explained above to compose multiple offers to the sellers and then calculate different offer packages based on:
1. Having the seller wait for ALL their equity, 2. Giving the seller the net cash flow each month, 3. Giving the seller a down payment and 4. Some combination of cash now, cash flow and cash later to the seller
Sound too good to be true? You’ll never try it unless you believe it work for you. Click the link below at the very end of this article to learn exactly how many people have done this and how you can also do this.
Here’s some Real life Proof to get you excited…
* How Mark from Virginia netted an extra $10,000 in cash at closing buying a $165,000 house with no money down, creating 0% financing with the seller for 7 years at $400 a month.
* How Mike from Washington realized an extra $25K cash at closing when he purchased a house for $120,000 with no money down, and a 0% seller financing note at $500 a month for 8 1/2 years.
* How Mark and Mark from CA purchased a newly rehabbed and remodeled house woth $400,000 which they will be able to rent for $1,800/month for just $290,000 with zero money down, structuring 0% financing with the seller at $800 per a month for 10 years.
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