Last week I told you about, in 1987, I, with my two accomplices April and Michelle, decided that a red drop of paint was blood and we set off to solve a mystery. We should have been charged with a B&E that day as we broke into the cage storage units in the apartments where we lived rummaging for “clues.” We did not get a charge but we did get a cat…two kittens in fact. #mom&dadyourewelcome #bestkidsever #surprisepets
I also told you about how talking to my sister Sunday afternoon about our imagination lead me right into how imagination is the wide-eyed love child of creativity. And let’s face it folks, creativity is really what separates successful investors from those who are just wish-sessful.
We discussed Owner Financing, Subject to, and Wrap around Mortgages. Click here to read up on what you missed. Now we are going to delve into the wonderful world of creative deal structures where you have the rights and responsibilities of the owners but not as much of the liability….oh and zero upfront cost. Thought that would get cha!!! #doesnttakemoneytomakemoney #nomoneydownrealestate
I will also focus on each of these aspects of investing individually in the next few weeks. Are you ready? This is the stuff that REI gurus charge tens of thousands of doll-hairs to share with you. Just kidding. They don't actually take doll hairs; they want dollars, and lots of em.
4. Non-recorded deed. We can talk first about a non-recorded deed because I find it to confuse many investors. This is basically the equivalent of buying a car from a “buy here pay here” dealership that holds the title until you pay off the loan. This is exactly the same thing.
I do not typically enter into this type of agreement as a buyer but as a seller I use it for protection when I am conveying a property with “owner financing” when a buyer has put down less than I am comfortable, generally 10-20% of the purchase price. We complete a title but it is “held in escrow,” or a file, until they have paid off the note or put more down.
5. Lease purchase. This has been probably the most common technique I have used over the years. So when you ask me “How many properties are in your portfolio?” that is a different question than “How many properties do you own?”
A lessee purchase awards the lessee the rights and responsibilities of the owner including all equitable interest above the agreed upon sales price. The lessor is awarded a residual income and the peace of mind knowing that they do not have to worry with maintenance, repairs, or vacancy for the duration of the term as that responsibility is absorbed by the lessee.
As the “buyer” or lessee I will not offer a down-payment but market the fact that the home will be maintained and paid for throughout the term of the agreement, generally 2-5 years. When I am in the “Seller” or lessor I require a non-refundable down-payment between $5,000 and 5% of the purchase price.
The two styles we discussed today do not require any closing cost because they are a contractual agreement between two parties not an actual sale.
The utilization of creatively financed acquisitions adds immense growth potential to your portfolio. Just like the two cats I found my detective day. One male one female; lots of growth potential for our pet-folio.
Sometimes growth means adding properties and income with no monetary investment. Sometimes growth means standing outside of the supermarket with a box of kittens.
Happy Investing My Real Estate Junkies!!!!!
I was born an entrepreneur. I am pretty certain that I was peddling passies in the hospital when the nurses left the room.All of the other kids in the neighborhood were riding bikes and playing with dolls I was selling jewelry out of a catalogue and creating a back yard consignment shop. At 21 I became a real estate investor and fell in love. This was/is/ and always will be my passion. I have been madly in love with flipping, holding, and writing offers on real estate that seem crazy for 18 years. Ladies and gents I am willing to share the love of my life with you. Maybe its polyamory maybe its jut because I can’t shut up about it. Either way I will be sharing every mistake I ever made and the lesson that came from it. I love questions. Please ask away!!!