Happy Hanukkah, Happy Kwanzaa, Merry Christmas and Eid Mubarak.
Have a wonderful, safe holiday everyone
Sunday, December 24, 2006
Thursday, December 21, 2006
What is the best way to make money in real estate?
Buy property without using any of your own money.
Seems like a no brainier, but you will meet people that still believe that it's a good idea to use there own cash and credit to buy real estate.
How much real estate could you invest in if you never needed to use your own money?
This is simply called using leverage.
But the opposite of using leverage is to pay ALL cash for property and own it free and clear.
Why do some people still want to own real estate free and clear?
Because they believe that they are making more money if they borrow as little as possible to buy it.
Lets look at 2 examples to see which example makes more money.
Example 1.
Use $40,000 of your personal savings to buy a house with 20% down and get a loan for the rest.
You may cash flow $400 per month.
And on this one house you will also be getting -
A) equity build up like a personal saving account.
B) good appreciation as the house goes up in value.
C) great tax deductions that will lower your tax bill.
Example 2.
Use a $80,000 new business line of credit instead of your own CASH and buy 2 houses.
You may cash flow $200 per house per month for a total cash flow of $400 a month.
And you are making money on TWO pieces of investment real estate instead of one.
Your also getting -
A) Double the equity build up.
B) Double the appreciation.
C) Double the tax deductions.
AND YOU NEVER USED A DOLLAR OF YOUR OWN CASH.
The entire down payment came from a new business line of credit!
Seems like a no brainier, but you will meet people that still believe that it's a good idea to use there own cash and credit to buy real estate.
How much real estate could you invest in if you never needed to use your own money?
This is simply called using leverage.
But the opposite of using leverage is to pay ALL cash for property and own it free and clear.
Why do some people still want to own real estate free and clear?
Because they believe that they are making more money if they borrow as little as possible to buy it.
Lets look at 2 examples to see which example makes more money.
Example 1.
Use $40,000 of your personal savings to buy a house with 20% down and get a loan for the rest.
You may cash flow $400 per month.
And on this one house you will also be getting -
A) equity build up like a personal saving account.
B) good appreciation as the house goes up in value.
C) great tax deductions that will lower your tax bill.
Example 2.
Use a $80,000 new business line of credit instead of your own CASH and buy 2 houses.
You may cash flow $200 per house per month for a total cash flow of $400 a month.
And you are making money on TWO pieces of investment real estate instead of one.
Your also getting -
A) Double the equity build up.
B) Double the appreciation.
C) Double the tax deductions.
AND YOU NEVER USED A DOLLAR OF YOUR OWN CASH.
The entire down payment came from a new business line of credit!
Friday, November 24, 2006
Real Estate Investors
Why are some real estate investors who get into this busines so successful, happy, positive and charged?
And yet other's who start in real estate investing just don't seem to get it?
They're stuck in a rut, can't get started, sabotage themselves, etc.
In my view, the difference is in their level of confidence.
Those who have confidence move at a much faster pace, achieve success in their investing faster, build their cash flow, experience not only financial success but a personal growth too.
Those without confidence seem too afraid to do anything bold, move at much slower pace, achieve minor results, if any results at all.
If fact, most of the time these people don't know what to do. They try something, it doesn't work, they can't think of any other options or ideas to get it going again.
Well, the thing about confidence is - it's not God given.
When we venture into a new stretagy of real estate investing - we hardly know - we don't have much confidence - it's natural.
We gain confidence as we learn about the subject and apply what we learned.
There are only 2 fundamental ways to learn:
1) By doing, making mistakes, adjusting, persisting, coming up with solutions for a multitude of problems and continuing to move forward.
2) By doing everything the same way as above, except shortcutting the learning curve by absorbing the experience (ways to avoid mistakes) and smarts (ways to focus on things that produce results in leaps and bounds) of others who've gone before.
Why re-invente the wheel, just perfect it.
Which way of learning do you think successful real estate investors use?
You see, we can't avoid making mistakes altogether. But if you had a choice, would you rather not make basic fundamental investing mistakes? instead of repeating the same old mistakes over and over again?
There are hundreds of different things that have happened to a lot of beginner real estate investors in our industry and they have figured out how to deal with them (or better yet to prevent them). Here again, Why re-invente the wheel, just learn from others mistakes.
That's a no-brainer. Yet it's amazing how many people would rather befriend ignorance, by making and learning from their own mistakes all the way through thier real estate investing life
That's a long and tough road.
And yet other's who start in real estate investing just don't seem to get it?
They're stuck in a rut, can't get started, sabotage themselves, etc.
In my view, the difference is in their level of confidence.
Those who have confidence move at a much faster pace, achieve success in their investing faster, build their cash flow, experience not only financial success but a personal growth too.
Those without confidence seem too afraid to do anything bold, move at much slower pace, achieve minor results, if any results at all.
If fact, most of the time these people don't know what to do. They try something, it doesn't work, they can't think of any other options or ideas to get it going again.
Well, the thing about confidence is - it's not God given.
When we venture into a new stretagy of real estate investing - we hardly know - we don't have much confidence - it's natural.
We gain confidence as we learn about the subject and apply what we learned.
There are only 2 fundamental ways to learn:
1) By doing, making mistakes, adjusting, persisting, coming up with solutions for a multitude of problems and continuing to move forward.
2) By doing everything the same way as above, except shortcutting the learning curve by absorbing the experience (ways to avoid mistakes) and smarts (ways to focus on things that produce results in leaps and bounds) of others who've gone before.
Why re-invente the wheel, just perfect it.
Which way of learning do you think successful real estate investors use?
You see, we can't avoid making mistakes altogether. But if you had a choice, would you rather not make basic fundamental investing mistakes? instead of repeating the same old mistakes over and over again?
There are hundreds of different things that have happened to a lot of beginner real estate investors in our industry and they have figured out how to deal with them (or better yet to prevent them). Here again, Why re-invente the wheel, just learn from others mistakes.
That's a no-brainer. Yet it's amazing how many people would rather befriend ignorance, by making and learning from their own mistakes all the way through thier real estate investing life
That's a long and tough road.
Tuesday, November 21, 2006
Homebuyers are motivated by a dream
It is the dream of every North American to own a home someday.
We are specifically talking about homebuyers who applied for mortgages but were rejected.
They may even have tried to get a mortgage for "people with bad credit" -- and were still declined.
What about those who did not even try to apply, because they don't believe they could get a mortgage.
These homebuyers want to switch from throwing away their hard earned money on rent to building equity in their own home.
There are several important factors that motivate these homebuyers to get them to make the transition from rental to home ownership:
1) Pride of ownership.
2) Knowing that nobody can ask them to leave and sell the house from under them.
3) The opportunity to remodel the house to their liking.
4) The opportunity to tell their friends and relatives 'they bought a house'.
These homebuyers are concerned with both price and payments, but mostly to the extent as to whether or not they can afford the payments and ultimately qualify for a mortgage.
The most important thing for them is the fact they can buy and own the home now.
Therefore, our job as smart real estate investors is to offer these homebuyers the opportunity of home ownership with owner financing
Owner financing is an item in low supply and a relatively high demand.
Profiting From Financing
When you help homebuyers with finance who can't get a mortgage on their own to get into a home you get to make a good profit.
Why?
Because, as I mentioned before, when you are providing a commodity in scarce supply you can ask and receive a premium on the price and payments.
Is this fair deal for all parties? Absolutely.
You are offering the homebuyers the opportunity that doesn't exist for them otherwise.
The only other choice they have is to wait until their credit situation changes and until they save enough money for a down payment.
This alternative is actually much more expensive for them than doing business with you.
Waiting and saving could easily take them 3-4 years.
In an area with growing housing prices it means they could be paying $30-50,000 more for the same house you can sell them cheaper today.
Ultimately they will likely be paying escalating rents during those 3-4 years it takes them to get to the point of being able to qualify for a mortgage.
We are specifically talking about homebuyers who applied for mortgages but were rejected.
They may even have tried to get a mortgage for "people with bad credit" -- and were still declined.
What about those who did not even try to apply, because they don't believe they could get a mortgage.
These homebuyers want to switch from throwing away their hard earned money on rent to building equity in their own home.
There are several important factors that motivate these homebuyers to get them to make the transition from rental to home ownership:
1) Pride of ownership.
2) Knowing that nobody can ask them to leave and sell the house from under them.
3) The opportunity to remodel the house to their liking.
4) The opportunity to tell their friends and relatives 'they bought a house'.
These homebuyers are concerned with both price and payments, but mostly to the extent as to whether or not they can afford the payments and ultimately qualify for a mortgage.
The most important thing for them is the fact they can buy and own the home now.
Therefore, our job as smart real estate investors is to offer these homebuyers the opportunity of home ownership with owner financing
Owner financing is an item in low supply and a relatively high demand.
Profiting From Financing
When you help homebuyers with finance who can't get a mortgage on their own to get into a home you get to make a good profit.
Why?
Because, as I mentioned before, when you are providing a commodity in scarce supply you can ask and receive a premium on the price and payments.
Is this fair deal for all parties? Absolutely.
You are offering the homebuyers the opportunity that doesn't exist for them otherwise.
The only other choice they have is to wait until their credit situation changes and until they save enough money for a down payment.
This alternative is actually much more expensive for them than doing business with you.
Waiting and saving could easily take them 3-4 years.
In an area with growing housing prices it means they could be paying $30-50,000 more for the same house you can sell them cheaper today.
Ultimately they will likely be paying escalating rents during those 3-4 years it takes them to get to the point of being able to qualify for a mortgage.
Thursday, November 09, 2006
lease2ownbob
My good friend and Mentor Bob Hudson has a great blog on lease to own.
Bob and his partner Thomas have a good handle on how the lease to own strategy works, please visit his blog.
http://lease2ownbob@blogspot.com
Bob and his partner Thomas have a good handle on how the lease to own strategy works, please visit his blog.
http://lease2ownbob@blogspot.com
Wednesday, October 25, 2006
Benefits of Lease to Own
Build ownership in a home while you rent/lease it.
Easy credit approval, even with previous financial difficulty or bankruptcy.
Home ownership for self-employed individuals, despite business debt.
Live in your new home even though your previous home is not yet sold.
Flexible Lease-To-Own terms from 12 months to 36 months.
Simplified home mortgage financing at end of lease term.
Fixed purchase price of the home at inception of lease.
Minimal "purchase option fee" (down payment) compared to a traditional home purchase, which could require 10%-20% or more of the purchase price as a down payment.
No obligation to purchase in the event your situation changes.
Easy credit approval, even with previous financial difficulty or bankruptcy.
Home ownership for self-employed individuals, despite business debt.
Live in your new home even though your previous home is not yet sold.
Flexible Lease-To-Own terms from 12 months to 36 months.
Simplified home mortgage financing at end of lease term.
Fixed purchase price of the home at inception of lease.
Minimal "purchase option fee" (down payment) compared to a traditional home purchase, which could require 10%-20% or more of the purchase price as a down payment.
No obligation to purchase in the event your situation changes.
Tuesday, October 24, 2006
What happens next
Step 1: Locating your Home
Upon locating a home that meets your needs, you enter into a Lease-To-Own arrangement, which comprises a Standard Lease Agreement and also an Option To Purchase Agreement.
The Standard Lease Agreement is typical of any residential rental arrangement; however the Option To Purchase Agreement secures you the right to purchase the home at a future date and at a pre-determined price.
Rental/Lease Period
The Rental/Lease period is arranged for a period of time, usually up to 12 to 36 months, which may vary depending on how much time is required for you to be approved for your mortgage.
Step 2: The Mortgage Approval
Prior to the Purchase date, a Mortgage Specialist will work with you through our 'Do You Qualify Program'. This process walks you through the mortgage application and approval.
At the end of the defined lease term (12 to 36 months), you obtain financing to purchase the home. Since your option fee and any additional monthly amounts paid have built your equity in the home during the lease term, and you have been living in the home for the past year (or two years, etc.), and assuming your monthly lease payment history is good, and your other credit obligations have been corrected or maintained in good standing, the lendor will be more receptive to providing you a mortgage. Essentially, your credit management and lease-to-own arrangement present you as a better credit risk to lenders. In addition, no additional down payment may be required when you purchase the home because of the equity you have already established, compared to the value of the home.
Step 3: The Purchase Date
The “Lease Option” is your right to purchase the home on (or perhaps before) the agreed upon Purchase Date. As long as you hold this “Option” agreement, the home cannot be sold to another person without your consent.
The Purchase Date is your Closing Date. This is the day you officially take possession of the home.
What is Required?
To get you in the door of your new home, the following would be required:
Find your home
To set up a Rental/Lease agreement, initially you will need to provide the 1st and last Month’s Rent/lease.
This rent/lease amount covers the standard housing expenses. Depending on the type of property, utilities would be separate.
A Down Payment(earnest deposit):
This is usually 2 or 3% of the purchase price of the home. Usually $10,000 +, however arrangements could be made with as little as $5000!
Verification of Income:
A job letter and proof of income (recent pay stub, T4 or Notice of Assessment)
After you have moved and settled into your new home, a Mortgage Specialist will contact you to arrange your 'Do You Qualify' Mortgage Consultation. During the consultation, the Mortgage Specialist will advise you of any additional information that will be required for a successful mortgage approval and closing date.
The Standard Lease Agreement and the Option To Purchase Agreement are fulfilled and terminated when you purchase the home.
You now own the home!
Upon locating a home that meets your needs, you enter into a Lease-To-Own arrangement, which comprises a Standard Lease Agreement and also an Option To Purchase Agreement.
The Standard Lease Agreement is typical of any residential rental arrangement; however the Option To Purchase Agreement secures you the right to purchase the home at a future date and at a pre-determined price.
Rental/Lease Period
The Rental/Lease period is arranged for a period of time, usually up to 12 to 36 months, which may vary depending on how much time is required for you to be approved for your mortgage.
Step 2: The Mortgage Approval
Prior to the Purchase date, a Mortgage Specialist will work with you through our 'Do You Qualify Program'. This process walks you through the mortgage application and approval.
At the end of the defined lease term (12 to 36 months), you obtain financing to purchase the home. Since your option fee and any additional monthly amounts paid have built your equity in the home during the lease term, and you have been living in the home for the past year (or two years, etc.), and assuming your monthly lease payment history is good, and your other credit obligations have been corrected or maintained in good standing, the lendor will be more receptive to providing you a mortgage. Essentially, your credit management and lease-to-own arrangement present you as a better credit risk to lenders. In addition, no additional down payment may be required when you purchase the home because of the equity you have already established, compared to the value of the home.
Step 3: The Purchase Date
The “Lease Option” is your right to purchase the home on (or perhaps before) the agreed upon Purchase Date. As long as you hold this “Option” agreement, the home cannot be sold to another person without your consent.
The Purchase Date is your Closing Date. This is the day you officially take possession of the home.
What is Required?
To get you in the door of your new home, the following would be required:
Find your home
To set up a Rental/Lease agreement, initially you will need to provide the 1st and last Month’s Rent/lease.
This rent/lease amount covers the standard housing expenses. Depending on the type of property, utilities would be separate.
A Down Payment(earnest deposit):
This is usually 2 or 3% of the purchase price of the home. Usually $10,000 +, however arrangements could be made with as little as $5000!
Verification of Income:
A job letter and proof of income (recent pay stub, T4 or Notice of Assessment)
After you have moved and settled into your new home, a Mortgage Specialist will contact you to arrange your 'Do You Qualify' Mortgage Consultation. During the consultation, the Mortgage Specialist will advise you of any additional information that will be required for a successful mortgage approval and closing date.
The Standard Lease Agreement and the Option To Purchase Agreement are fulfilled and terminated when you purchase the home.
You now own the home!
Wednesday, July 19, 2006
Perhaps you are a newlywed, or have recently been promoted, or your family is growing and you need a larger home. Regardless of your situation, you have recognized that renting the way you have been is no longer working out, and now you want to own your first home…well you can!
Lease-to-own a home is the easiest way to transition from being a “Renter” to being a “Home-Owner”. Whether you have a poor credit history, or don’t have the down payment and closing costs typically needed to qualify for a new mortgage. Let’s look at how this is done…
How Does the lease2own Home Program Work?
The purpose of the program is to buy you the time needed to qualify for a mortgage.
Three Simple Steps Towards Home Ownership:
Step 1: Rental/Lease period.
Step 2: The Mortgage Approval
Step 3: The Purchase Date….
Home Ownership!
Lease-to-own a home is the easiest way to transition from being a “Renter” to being a “Home-Owner”. Whether you have a poor credit history, or don’t have the down payment and closing costs typically needed to qualify for a new mortgage. Let’s look at how this is done…
How Does the lease2own Home Program Work?
The purpose of the program is to buy you the time needed to qualify for a mortgage.
Three Simple Steps Towards Home Ownership:
Step 1: Rental/Lease period.
Step 2: The Mortgage Approval
Step 3: The Purchase Date….
Home Ownership!
Subscribe to:
Posts (Atom)