Is there such a thing? I think it was the first kneeling reaction when I read the title.
Or maybe it is: WIs the hat a catch?
Well, there is no catch, and it’s teeth Possible. Moreover, this is not a standalone transaction. We are always doing them.
Conditionally buy real estate without using cash or credit
I love when trading twists and turns. That’s because it usually means that you’re generating more sources of income from the same transaction. This particular home I’m talking about is featured below and started out as a rental purchase with an owner who didn’t have a mortgage on the real estate. This is the house where he grew up and he is now in his 80s and lived longer than his two wives. He was taking care of his third wife and he didn’t want to burden this house.
He couldn’t sell it on the open market for $ 189,900, so we leased it for $ 850 a month and signed a deal to provide $ 350 a month for the price. The period configured at this point was 48 months. This means paying the seller a balance of $ 189,900 48 months or earlier. This is the deduction of $ 350 per month, even if it takes months. If it becomes full term, we will borrow $ 173,100 from the seller.
This sold for $ 225,000 over a 36-month period as we move out almost all properties with the rental buyer. You see, make the seller side shorter than the buyer side, giving room for delays, funding, or other curve balls that could come your way (and they would!). Is very important. The monthly payment was $ 1,276. The monthly spread for this property was $ 426.
Create three paydays for every property we buy and sell conditionally. The first is a non-refundable down payment collected from the buyer after the buyer has been pre-screened and ready for a successful mortgage. In this case, it was about $ 12,000. Payday # 2 in this case was $ 426, or $ 15,336 for the entire period. If the seller has a debt of $ 177,300 (after 48 months, it will be $ 173,100 as above, but assume the buyer succeeds and runs 36 months, which is pre-qualified. (Given), Buyer Financing, $ 225,000 minus $ 12,000 paid, Our Payday # 3 is $ 35,700.
Now that this transaction has been done so far, the total of three paydays looks like this:
Payday # 1: $ 12,000 deposit
Payday # 2: Monthly Cash Flow $ 15,336
Payday # 3: Backend / Financing $ 35,700
Total $ 63,036
By most people’s standards, the fact that we put $ 10 down (all our leases / purchases) The deal consists of a $ 10 deposit and you can withdraw $ 63,036 from this small house. This is actually a fairly standard method for us. In fact, the average for all three paydays today is $ 80,471.86, two to four times a month at a small family-owned company, and more than five times with students.
Where did the $ 225,000 profit go?
This deal will be interesting.
A hurricane occurred in the buyer’s home country, and part of their funding plan was an increase in down payment from his dad. Now that Dad and Dad’s area were hit by a hurricane, they wept and came to us asking if they could extend their term shortly before the end of 36 months.
There were several options.
The first option was to stick to their contract, and they had to lose their down payment and move. Then sell the property at about the same price they tied up, if not a little expensive.
The second option is to simply extend the period with the seller if you need more than 12 months (I already have 12 months with him, but of course the buyer doesn’t know that). At that time, I had to extend it, so I was able to raise the monthly amount and price as needed, so payday # 2 and # 3 increased.
There are many combinations of successful trading structures here. So, in this case and in many other cases, what I call a “master transaction engineer” is of good benefit to investors. This means that you can consider any transaction and know how to pivot to create a win / win scenario while protecting your profits.
Now I have selected win / win / win.
We called the seller knowing that he was taking care of his third wife, who was very ill and he didn’t want to deal with this house anymore. We offered to buy a home with the owner’s funds for the balance (about $ 177,300) and a down payment of only $ 11,000.
Well, before I go any further, I strongly support not using my cash or credits. So where did the $ 11,000 come from? $ 11,000 is from another Payday # 3 that will be cashed out from the previous transaction (cash out was actually $ 116,000). This is because we do it 2-4 times a month, which creates a continuous payday of all kinds.I’ve already spent the original $ 12,000 that came In 3 years Before from this buyer.
We negotiated new terms with the 60-month seller and he accepted a monthly payment of only $ 810 principal. So now we have increased payday # 2 and created a large principal repayment of $ 810 per month (previously we only got $ 350 per month), the seller is his property. Buyers, on the other hand, have been given a new term of 48 months and are very grateful and relieved, so don’t worry.
If you raise the owner’s funds and pay only the principal, you can extract 6 numbers from most transactions, so let’s try this.
Selling price: $ 225,000
Small deposit:-$ 12,000
Loan deadline: $ 213,000
We owe the seller In 60 months Deducting a $ 11,000 deposit from $ 177,300 and deducting $ 810 x 60 months will result in a balloon payment of approximately $ 117,700. If you go to the closing table, you have $ 213,000 left after deducting the $ 117,700 balloon payment, which is about $ 95,300 (without adjusting the closing cost).
Wait a minute, Chris. You said a profit of $ 225,000!
It’s not over yet.
Next to this house is an additional parcel that is already individually taxed, with the owner first agreeing to let go of the house as long as I continue to pay taxes. When we renegotiated with the buyer, we made it clear that we could extend the period, but that would keep a lot. They said they weren’t in the yard anyway and that’s okay.
The lot is currently on the market for $ 79,900 and will sell for $ 70,000.
This brings the total profit to $ 165,300 plus $ 12,000 payday # 1 plus payday # 2 totaling about $ 48,960. Therefore, the total profit reached $ 226,000.
The transaction began as a sandwich lease and was converted into owner funding.
Being a master transaction engineer is rewarding.
What do you think about this transaction? Have you built anything as well?
The following comments!