Archive for December, 2007
« Previous EntriesTechniques for Building Value and Protecting Your Real Estate (13-18)
Sunday, December 9th, 20071. BUY PAPER AT A DISCOUNT AND TRADE AT FACE
One of the best estate-building techniques is buying paper at a discount and, with careful negotiation, using it as the down payment to acquire real estate. With this technique, you can pick up immediate profits while moving from a declining debt investment (paper) to an appreciating [...]
Techniques for Building Value and Protecting Your Real Estate (5-12)
Sunday, December 9th, 20071. SUBDIVIDE BEFORE PURCHASE
This technique is based on the principle that smaller portions command higher prices. If you are acquiring property that can be easily divided, consider doing it concurrently with acquisition, so that at closing you have two parcels instead of one.
This builds in future value and increases flexibility when you are ready to [...]
Techniques for Building Value and Protecting Your Real Estate (1-4)
Sunday, December 9th, 2007For many, every investment action is ultimately directed toward building value and protecting what is owned. In a sense this is the objective you may have in mind when applying the methods in this book. There are techniques, though, which specifically seem to satisfy these purposes. They include ways to create value by dividing property [...]
Methods of Using Leases To Acquire And Finance Real Estate (7-12)
Sunday, December 9th, 20071. PACKAGE THE LEASES AND SELL OUT
This approach is designed to give you a rapid turnover of capital by packaging the entire project (including leases, financing, land, plans, and the construction contract). Virtually all of this is done on paper, with a minimum of out-of-pocket expenses. The cash comes when the package is sold to [...]
Methods of Using Leases To Acquire And Finance Real Estate (4-6)
Sunday, December 9th, 20071. MASTER LEASE AS SECURITY FOR DEVELOPMENT
A master lease is an overriding lease of a building (usually an office or shopping complex). It is used to guarantee a return to the owner in a sale lease-back transaction, and in some cases, to secure permanent financing. The developer of a project may underwrite its sale to [...]
Methods of Using Leases To Acquire And Finance Real Estate (1-3)
Sunday, December 9th, 2007Land may be the backbone of real estate, but leasing is the muscle. Real estate starts with land and becomes a business with a lease. Land is a store of value. Leasing is a method of extracting the stored value.
It’s the use of real estate that produces income. By definition, when you’re working with the [...]
More Private Financing Techniques (16-18)
Friday, December 7th, 20071. GET MORE CASH FROM AN INSTALLMENT SALE
Sometimes the only way you can acquire property is to help the owner overcome problems with the terms you offer and with the tax consequences of what he wants. If the seller wants installment reporting but must have more cash in the year of sale than the 30% [...]
More Private Financing Techniques (11-15)
Friday, December 7th, 20071. DIAMONDS PLEDGE OR CUTTING THE DOWN PAYMENT IN HALF
Diamonds of investment quality can be expected to appreciate an average of 17% per year. If you can find the right partner for your real estate deal, they can be bought wholesale.
Instead of paying cash as a down payment, buy diamonds wholesale and use them to [...]
More Private Financing Techniques (7-10)
Friday, December 7th, 20071. WALK THE MORTGAGE
This technique has many applications. Walking the mortgage is a process of substituting different real estate as security for an existing mortgage. The mortgage is modified or rewritten so as to encumber different real estate. The objective is to free property that can be easily refinanced. It is a technique that can [...]
More Private Financing Techniques (3-6)
Friday, December 7th, 20071. SECOND MORTGAGE OR SECOND TRUST DEED
When a buyer assumes an existing loan the seller will often be forced by reason to carry back a portion of his equity on a second mortgage or trust deed. In this approach to private financing you get a deed to the property subject to the existing loan.
Rather than [...]
More Private Financing Techniques (1-2)
Friday, December 7th, 2007One of the most rewarding aspects of acquiring real estate is saving a transaction that almost fails. Anyone who has been associated with real estate no doubt has seen a fair share of earnest negotiations end in disappointment. And it’s twice as frustrating when both sides want the deal to succeed but can’t seem to [...]
Techniques For Negotiating The most Advantageous Private Financing (16-19)
Wednesday, December 5th, 20071. ADD THE INTEREST TO PRINCIPAL
A property which does not have adequate cash flow to cover the debt service of a second mortgage allows you the opportunity to pay interest only, with no amortization of the second mortgage principal. When experiencing extreme cash flow problems, part of the interest not covered by income can be [...]
Techniques For Negotiating The most Advantageous Private Financing (12-15)
Wednesday, December 5th, 20071. SELL WITH OPTION TO BUY-BACK
If you’re having difficulty getting a seller to part with his property, offer him an option to buy it back. This can be a solid form of protection for someone who thinks he may be selling too soon, and it’s a small concession for you to make when the alternative [...]
Techniques For Negotiating The most Advantageous Private Financing (8-11)
Wednesday, December 5th, 20071. MORATORIUM ON DEBT SERVICE
If you are acquiring a one-tenant building and there is a question as to whether the lease will be renewed, some degree of protection can be insured by negotiating a halt to loan payments if the building becomes vacant. Usually you will have to put a limit on the time of [...]
Techniques For Negotiating The most Advantageous Private Financing (4-7)
Wednesday, December 5th, 20071. PRIVATE WRAPAROUND
One of the most beneficial ways for a seller to carry the balance of his equity is a wraparound mortgage. This can be structured by using a number of different instruments such as a mortgage, trust deed, or real estate contract. The particular document used can best be determined by your state law; [...]
Techniques For Negotiating The most Advantageous Private Financing (1-3)
Wednesday, December 5th, 2007One look at the variety of methods for negotiating the acquisition of real estate is enough to light fire in the heart of any serious entrepreneur. It’s also a fair test for anyone who questions the strength of his interest. There are probably as many people scared by unstructured opportunity as there are people turned [...]
Thirty-two Techniques For Acquiring Real Estate When You Don’t Have Cash (29-32)
Wednesday, December 5th, 20071. THE PERFORMANCE SECOND
The performance second is used in various applications, including acquisitions with and without cash. It is a downright test of the seller’s faith in the value of his property.
With this approach you agree to pay the seller’s asking price but make the payments on the second purchase money mortgage contingent on the [...]
Thirty-two Techniques For Acquiring Real Estate When You Don’t Have Cash (25-28)
Wednesday, December 5th, 20071. THE INSTALLMENT DOWN PAYMENT
This technique allows you to acquire property now by paying the seller’s equity with installment payments as you raise cash. The income from the acquired property offsets the down payment installments, permitting you to avoid a lump sum cash outlay at closing.
For example, if you negotiate quarterly down payment installments of [...]
Thirty-two Techniques For Acquiring Real Estate When You Don’t Have Cash (22-24)
Monday, December 3rd, 20071. BORROW AGAINST YOUR TRUST
If you have money that is tied up in a trust, consider the possibility of borrowing against it. You may not be able to bust the trust and you may not even want to. But if you are fortunate enough to have located sound investment real estate and need to raise [...]
Thirty-two Techniques For Acquiring Real Estate When You Don’t Have Cash (20-21)
Monday, December 3rd, 20071. ACQUIRE WITH A FIRST AND SECOND THEN SELL THE FIRST FOR CASH
If you are negotiating the acquisition of free and clear property and the seller wants more cash than you have, here’s a method of supplying it.
First mortgages are more easily sold, and sold at less of a discount, than second paper. In this [...]
