Since the mortgage market meltdown, sellers are having trouble selling BUT buyers are having trouble buying also. Many of the loans for less than A-paper buyers are gone. This has created a growing demand for rentals and the need for creative seller financing. Cha ching! The ultimate strategy has the answers.
When you’ve created 0% financing on a house you bought, how quickly do you want to pay it off? Never! Then how can you sell? You sell to a tenant buyer and insist they close with wraparound owner financing. Or you find a buyer with more money down and close NOW with wraparound owner financing. On a “wrap” you make a mortgage payment to your seller while collecting a mortgage payment from a buyer. You keep the difference. Let me illustrate:
Example #1:
Giving a seller Cash Now — Getting all the Cash Flow
The house is worth $220,000, it’s in good shape and owned free and clear. Your market is slow so you figure within 60 days you can only find a buyer who’ll pay $220,000 if you finance $200,000 at 6% with $1,000 a month interest only payments. It would be easy to show the seller that $200,000 is fair when taking into account only 10% for normal transactions costs but the seller insists on full price or $220,000 with $20,000 down. Could you pay that? Yes you can. The only question is when.
What if you paid the seller $20,000 now and $200,000 as a lump sum balloon payment due in 5 years? They get their price PLUS some cash now. What do you get? You get $1,000 a month for 60 months or $60,000 with no landlording! At the end of 5 years you still owe $200,000 to the seller and your buyer still owes you $200,000. This is a free and clear money machine!
Example #2:
Giving the seller Cash Flow — Getting Cash Now and Cash Later
Same scenario but now you buy with no money down and pay the seller $1,000 principle only payments each month instead. In this case you keep the $20,000 from your buyer. That’s cash now to you. Then in 5 years you owe the seller $160,000 but your buyer owes $200,000 for a $40,000 backend.
For more FREE information about Free and Clear Cash Flow Investing visit
www.free-and-clear-cash-machine.com
July 16th, 2009 at 4:54 pm
this is really works!