Richard Roop Free And Clear Cash Machine - Part 2
Jun 27, 2009 Real Estate Properties
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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 great offers on free and clear homes:
1. Determine what price you expect to get quickly by offering flexible seller financing to a buyer
2. Get a feel for the realistic minimum for monthly cash flow you can get each month from the property.
3. Determine the minimum profit you want make
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 cash you need to raise to fund the deal
8. Determine the monthly expense of using these funds through a private investor first mortgage
9. Determine the overall cash flow which should be clearly positive (and calculate without including any eventual monthly payments to the seller on a second mortgage)
Your maximum allowable offer (MAO) on a deal like that where the owners owns the property free and clear equals:
* Your resale price, less your target profit, less all your cost to buy, hold and sell, then
* For the term of your seller carry back note - add the total positive cash flow then
* For the length of your seller carry back note - add the total principal reduction
If your final acceptable offer does not exceed this amount, then you’ll meet your target profit goal.
The beauty of this investing approach is that you structure 0% seller financing with the homeowner. And there so many different reasons why sellers are accepting offers with no interest on their equity.
Many investors don’t think owners will accept 0% financing, or wait five to fifteen years for their money… but they often 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 it gets even better; if you like, you can pull most of the profits out at the beginning… in cash… on the day you purchase it. You don’t need to rush to quick-turn these Homes when you have no Cash tied up in the deal and when you’ve already received an extra $10,000 or $30,000 in hard cash at closing when you bought it.
It may seem complicated, but it is not. The marketing is easy. Prescreening these leads is simple (Hint: if there’s a lot of equity… go see the seller!). Negotiating and deal structuring is systematic. The deals you buy using this investing model are super easy to quickly resale or occupy.
Use the steps explained above to compose multiple offers to the sellers and then calculate different offer packages based on:
1. Having the seller be cashed out at the end with no payments until then. (they wait for ALL their equity) 2. Sharing or passing on of the net cash flow each month to/with the seller, 3. Giving the seller some cash as a down payment now and 4. Some combination of cash down payment now, monthly 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 proof to get you motivated and excited…
* How Mark from Virginia realized an extra $10,000 in cash Profits the day he bought a $165,000 house with seller financing at 0% interest for 7 years at $400 a month and no money down.
* Mike from Washington made an extra $25,000 (Cash) the day he bought the property on a $120,000 house with zero money down, 0% seller financing and a $500 monthly payment for 8 1/2 years.
* Denise and Mark from California just bought a completely remodeled $400,000 house which rents at $1,800 for only $290,000 with again no money down, and a 0% financing arrangement with the seller at $800 a month for 10 years.
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