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No Money Down – How To Buy Property With Nothing Down
If you’ve watched TV after 11:30 p.m., you’ve seen people talk about courses on how to buy real estate with no money down. They depict vacation paradises, beautiful girls, fancy cars and huge mansions. All this is promised to you if you buy their course to make a million doing nothing! You can spend “just three payments of $99.99” to learn about this exciting field if you want…or…I’ll tell you for free!
However, one thing I must mention first is that no information, combined with NO action, produces any results. If I come to your house and show you everything in person and answer all your questions, and then you do nothing…..that’s a waste of time. Yours and mine!! On the other hand, if you combine knowledge with hard work, persistence, and most importantly, GUTS, you will succeed, whether you buy courses, read free books at the library, or get information from me, right. Here!
I mention GUTS because everything has a price. If you have a million dollars, you can buy an apartment building without any problems. Just pick one that you like, has a good return and passes a building inspection.
If you didn’t have a million dollars, what would you do? Be prepared to do the hard work, finding the right deal. Be prepared to turn down several offers and maybe even get laughed at. Get ready to hear some cocky real estate agent tell you (as one told me) “Boy, I’ve been in the real estate business for thirty years now, and let me tell you there’s no such thing as a no money down deal. .” Be willing to work on a deal and spend time on it only to have it fall apart.
You will be paying your down payment in the form of “brain sweat equity”. You will pay by having more knowledge than others in the field of creative real estate, and by searching long and hard to find motivated sellers who want to get rid of their property and are therefore willing to help you. More importantly, you will pay by enduring the inevitable “start-up glitches” in any business or enterprise. If it were easy to do, everyone would be doing it, and there would be no assets left! It’s the difficulty that makes it so easy, once you know what you’re doing!!
OK, so here we go, but first you need to know one thing: EVERYTHING IN REAL ESTATE IS NEGOTIABLE!! Let me say that again, because that’s the basis of how creative real estate works–everything in real estate is negotiable!
What does this mean? Are there any boundaries? No!! Can you contract someone to sell for 25 years with little or no down payment and no credit check? Yes!! Ten ads in the paper only offer such a deal or one? Probably nothing! What does this mean? Everything is negotiable! If you can find a motivated seller, who pays monthly to own the property, doesn’t have the skills to fix it up, has moved out of town or out of the country, he might go for it! Note that I didn’t say I would go for it, but maybe!
Think of yourself when you had a car that you wanted to get rid of because it was a piece of junk. If someone approaches you and asks, “How much?” If asked, you’d say “$1000, firm.” But you knew deep down that all you wanted was relief from the headache!! And if you have to wait a month or two and no one buys your car, suddenly you’re not so adamant about the price! And if the alternator needs to be replaced before the car can be driven, you’ll soon want it off your hands!! Now, you’re ready to accept monthly payments, maybe hold something as security, etc. You want it!
The same goes for real estate assets! They go from being our pride and joy to an albatross around our neck–then we’re willing to do anything to get rid of them!
These guys aren’t going to jump up and down and say “I’m willing to take a no money down deal on my property”! They’re going to be depressed, like the guy who brings gunk in the back yard sitting around for months. They need some convincing, but if you get a “don’t” then the hardest part is done! Then you make an offer, look closely at each property to see if you can get the property (here’s the full report!) If you can get the property–sometimes you don’t want it! Then until you find someone, it’s a matter of making an offer in person or through a realtor
Ready to deal. The first time is the hardest, because no matter how many times I tell you (or the TV guys) that it can be done, you’ll think “Not to me, not here in __________, not anymore, not with me, not with the zoning laws and zoning rules, not with my personality, not with me.” Not with the brain etc.
You wouldn’t believe it! Look at all the people in TV commercials-all shapes and sizes-they have one thing in common–they went out and did it!
It just takes courage and persistence!!
Here is a “stream of consciousness” of ideas on how to buy with $000.00 down, but remember the whole time that everything in real estate is negotiable!
1) The easiest way to buy without money is to make an agreement to sell to the seller. If the seller doesn’t need the money, monthly payments for 25 years are possible, and instead of buying a 4% bond, he can be assured of a 6,7,8% return secured by his home.
2) If you have good credit and don’t want to put money down in your property, try to get a mortgage first, the seller has a big second for the balance. The seller gets, say 75%, and takes 25%.
3) Again with good credit, try a personal line of credit for first, short 2nd, and the rest–especially if the gap is only $10-15,000. This can even work for low-cost properties where the first mortgage is combined with a PLC for the rest–be smart enough to go to another bank for the PLC and tell them you’re going to invest with the money–and don’t assume you’re doing a no-money-down deal. Don’t tell the bank!
4) On-time payment—the seller wants $5,000 down, for example. How about $400 a month for a year? You’re still paying it, but over time—maybe the property will generate enough extra money to pay it off!
5) Back Taxes – I’ve done deals where I’ve taken back taxes due– you can pay them at your own pace, within reason!
6) Free Rent- I’ve done deals where the seller has office space in the building and got 2 years of free rent as a down payment! Can also work for multiple families.
7) Adjustments are made for that month’s rent at closing–close on the 2nd or 3rd to maximize it–and for damage deposits, taxes due for the duration of the seller’s ownership, utility bills due, etc. This can add up. Up to a huge amount!
8) Since the bank starts mortgage payments one month after closing, you can use the first month’s rent with just 2 weeks of interest adjustments and the second month’s rent applied to the mortgage payment.
9) Insurance policies, stocks, bonds, mutual funds etc. Borrow on If you allow the bank to secure the mortgage, they will be very comfortable.
10) Rack your Visa, MasterCard and American Express cards. A bit crazy, but I assume it’s a great investment!
11) Borrow from friends, relatives, bosses (holiday pay?) Maybe cut them down as partners!
12) A partner is a surefire way to get accepted for a big bank loan, prepare an adequate down payment, etc. Always seek out people who are interested in this area and ask them what prevents them from buying an investment property. If time, skill, etc.–then you fit! All that’s holding you back is money – and have you found this great asset?
13) Syndicate a group of people–say 9 investors and you get the last 10 to put the project together–they’ll provide the financial backing for the loan, and maybe even a down payment! Anything is possible, remember? It’s a lot of work to find these guys, but so worth it! Start with dentists and doctors, lawyers, everyone you deal with!
14) Rent to Buy–Perhaps you make payments for 3 years and then make a downpayment–Meanwhile, the property may appreciate in value, rent may increase, and so on.
15) Option to Purchase–Seller retains title and receives all proceeds. A trade for an option could be for example a commodity or service trade for an option where you simply pay the right amount (make it really legal!) to buy an asset at a certain amount in X years.
16) Create your own idea of trading a good or service for a down payment!
17) Foreclosure Property–Perhaps before it goes into foreclosure you offer to keep making payments and give the seller something for his equity, sometime. (Soon he gets nothing!) Lots of work, lots of books and announcement services available.
18) Fix damaged property–contract with bank–example: it is worth $75,000, clean up and fix it for 100,000–bank offers 75,000 mortgage based on future value–you have to fix- -sweat equity like
19) Lease property (ie an office building) from the owner and rent it out to tenants–must be very legal and usually requires a strong effort to raise rent!
20) Pay someone to cosign for a loan
21) Get the realtor to carry his commission as a note–they hate it, but if necessary.
22) Balloon Payment – Nothing less, balance in three years
23)Private money from mortgage brokers–Ask them about it! High interest rates, but..
24) Refinance the property before or after you assume it
25) Find a partner where he takes a writeoff for negative cash flow and you manage the property–this can also work on buying your personal residence–the investor is happy with $200 per month of negative cash flow in exchange for taking care of your property, always the renter (you). And investors split the profits when selling.
That should be enough to turn some gears in your head. The most important part is to keep trying and be creative. Combining parts of one idea and another and always checking what the seller wants will lead you to solutions. Always find ways to make both of you happy. Everyone wants all the cash, right now–not everyone gets it! Think of a junk car in the back yard and find ways to help another person–they want to sell!
Most of all, keep watching! If someone sticks around hoping they get a certain price or certain terms, that’s not a failure on your part. If they can – great!! If not, check back in a few months. Many properties are still sitting there and have more receptive sellers after the property ends up “sitting in their yard, rusting” (or negative cash flow and maintenance and property management headaches). Try and try again!
Check online for new information and more opportunities, network with other investors, ads can be used to signal what you are looking for, want partners, etc. Visit your public library for more real estate and business information. Keep your mind working and searching–searching for assets and more information–an idea may be beneficial to you–go to seminars when they come to your town–and a total “Eureka!” Midnight screamed.
Buying with a low down payment is obviously a lot easier than buying with nothing down, so be sure to save your money to make it easier on yourself. Even a no money down deal may require cash for legal fees, closing costs, etc.
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