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August 31, 2020 @ 3:00 am

Ep 121 Pt.3 Deal Structuring Walk Through On Condos

Once again, it's back to the basics with deal structuring 101. On this series we come up with 3 different offers for a condo. Jeff wanted to use this example because people always ask if you can use creative financing on condos and the answer of course is YES! Here are the details and the offers we came up with....

Condo 2bed 1.5 bath. 1000 sqft. Seller owes 30K and is asking 170K. Monthly payment is $410 with $140 HOA. This could rent for $1150/month and ARV is 190K.

Option 1

7K down 170K PP. 163K financed at 2.5% simple interest for 4 years.

Exit: Sell to an owner occupant for 200K at 5.5% interest with 20K down for 3 years.

Option 2

10K down 180K Mirror Trust deed and note 410/m Piti. 7rs Plus 400 principle only. Sell 200K 20K down at 5.5% over 6yrs 

 

Option 3

Subordinate 35K down 175K pp 140K trust deed second 525 pmt for 5yrs Sell for 200K 5.5% on seller finance 20K down.

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August 24, 2020 @ 3:00 am

Ep 120 Pt.2- Deal Structuring Walk Through On Condos

Once again, it's back to the basics with deal structuring 101. On this series we come up with 3 different offers for a condo. Jeff wanted to use this example because people always ask if you can use creative financing on condos and the answer of course is YES! Here are the details and the offers we came up with....

Condo 2bed 1.5 bath. 1000 sqft. Seller owes 30K and is asking 170K. Monthly payment is $410 with $140 HOA. This could rent for $1150/month and ARV is 190K.

Option 1

7K down 170K PP. 163K financed at 2.5% simple interest for 4 years.

Exit: Sell to an owner occupant for 200K at 5.5% interest with 20K down for 3 years.

Option 2

10K down 180K Mirror Trust deed and note 410/m Piti. 7rs Plus 400 principle only. Sell 200K 20K down at 5.5% over 6yrs

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August 17, 2020 @ 7:31 am

Ep 119 Pt. 1- Deal Structuring Walk Through On Condos

Once again, it's back to the basics with deal structuring 101. On this series we come up with 3 different offers for a condo. Jeff wanted to use this example because people always ask if you can use creative financing on condos and the answer of course is YES! Here is the details and the offers we came up with....

Condo 2bed 1.5 bath. 1000 sqft. Seller owes 30K and is asking 170K. Monthly payment is $410 with $140 HOA. This could rent for $1150/month and ARV is 190K.

Option 1

7K down 170K PP. 163K financed at 2.5% simple interest for 4 years.

Exit: Sell to an owner occupant for 200K at 5.5% interest with 20K down for 3 years.

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August 10, 2020 @ 3:00 am

Ep 118 Pt.4- 4 Ways You Can Use Lease Options

This series is all about Lease Option and how to use them in different ways. The easiest way of controlling properties for little to no money down is using lease options.  Lease Options gives no ownership to the tenant buyer. The “Buyer” is just leasing the property for a period of time and then has the option to buy the property during or at the end of that period. 

Scenario 1: Wholesale a Lease Option. Using the example of a single family house with 250K owed, 1798/month PITI payment, asking 325K purchase price with  $2,000 market rent. If a property has little to no cash flow these are great prospects for a lease option because a Seller can ask for more than market rent and can pass on the responsibility of  repairs to the tenant buyer. These are great deals to wholesale to a tenant Buyer, collect an option deposit up front, and be done with the deal.

Scenario 2: Sandwich Lease Option on single family home. Using the same example property from the last scenario but with a 1600 payment, ask 315K and market rents are 2100/month. In this example we would offer the Seller a lease payment of 1750/month. Offer 315K to the Seller for 5 years and we find a tenant buyer that will lease the property for 2150/month. We find a Tenant Buyer for 335K, collect the option deposit of 10K up front and collect the monthly cash flow of 350. Then when the Buyer executes the option we collect the additional margin of 10K. This has to be done with a notice of interest recorded on title or chain of title going to you before being sold to your Tenant Buyer.

Scenario 3: Master Lease Option on Multifamily. Example 20 unit multifamily renting under market value at 10K/month. Market rent is 15K/month. Offer the Seller a Master Lease Option where they have no responsibility for maintenance or repairs and they get a guaranteed price 6K/month. Option price to purchase 1,800,000. Lease option deposit of 80K to be deducted from the purchase price. Create an agreement with the Seller for capitol repairs to be made within 30-60 days of master lease. Or Tenant Buyer makes the capital improvements up front and then deduct the cost from the option deposit. Record a notice of interest/memorandum on title to secure your interest and send a rent collection notice to all tenants to now pay rent to you. Option will terminate within 6 months of the passing of the Seller. Seller would be responsible for deposit refunds prior to the master lease. 

Scenario 4: Selling on Lease Options. Selling lease options has 5 paydays. The first is an option deposit paid up front by your tenant buyer, then cash flow over the term of the lease, then the margin on the back end when your Tenant Buyer executes the option. The 4th payday is depreciation of the asset which you can write off every year on your taxes, and the 5th payday is the appreciation of the real estate over time especially when your Buyer does not execute the option and/or the agreed upon purchase price is the appraised value at the time purchase.

Hope you enjoy, And to get special access to a step by step video on how to structure creative financing offers, text CFP to our hotline at 877-409-8090 or click HERE.

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August 3, 2020 @ 3:00 am

Ep 117 Pt.3 4 Ways To Use Lease Options

This series is all about Lease Option and how to use them in different ways. The easiest way of controlling properties for little to no money down is using lease options.  Lease Options gives no ownership to the tenant buyer. The “Buyer” is just leasing the property for a period of time and then has the option to buy the property during or at the end of that period. 

Scenario 1: Wholesale a Lease Option. Using the example of a single family house with 250K owed, 1798/month PITI payment, asking 325K purchase price with  $2,000 market rent. If a property has little to no cash flow these are great prospects for a lease option because a Seller can ask for more than market rent and can pass on the responsibility of  repairs to the tenant buyer. These are great deals to wholesale to a tenant Buyer, collect an option deposit up front, and be done with the deal.

Scenario 2: Sandwich Lease Option on single family home. Using the same example property from the last scenario but with a 1600 payment, ask 315K and market rents are 2100/month. In this example we would offer the Seller a lease payment of 1750/month. Offer 315K to the Seller for 5 years and we find a tenant buyer that will lease the property for 2150/month. We find a Tenant Buyer for 335K, collect the option deposit of 10K up front and collect the monthly cash flow of 350. Then when the Buyer executes the option we collect the additional margin of 10K. This has to be done with a notice of interest recorded on title or chain of title going to you before being sold to your Tenant Buyer.

Scenario 3: Master Lease Option on Multifamily. Example 20 unit multifamily renting under market value at 10K/month. Market rent is 15K/month. Offer the Seller a Master Lease Option where they have no responsibility for maintenance or repairs and they get a guaranteed price 6K/month. Option price to purchase 1,800,000. Lease option deposit of 80K to be deducted from the purchase price. Create an agreement with the Seller for capitol repairs to be made within 30-60 days of master lease. Or Tenant Buyer makes the capital improvements up front and then deduct the cost from the option deposit. Record a notice of interest/memorandum on title to secure your interest and send a rent collection notice to all tenants to now pay rent to you. Option will terminate within 6 months of the passing of the Seller. Seller would be responsible for deposit refunds prior to the master lease. 

Scenario 4: Selling on Lease Options. Selling lease options has 5 paydays. The first is an option deposit paid up front by your tenant buyer, then cash flow over the term of the lease, then the margin on the back end when your Tenant Buyer executes the option. The 4th payday is depreciation of the asset which you can write off every year on your taxes, and the 5th payday is the appreciation of the real estate over time especially when your Buyer does not execute the option and/or the agreed upon purchase price is the appraised value at the time purchase.

Hope you enjoy, And to get special access to a step by step video on how to structure creative financing offers, text CFP to our hotline at 877-409-8090 or click HERE.

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