How to beat the banks at their own game

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When the banks won’t lend, why not beat them at their own game and lend from yourself? Or better yet, coordinate deals where you bring together private lenders with underperforming investments, and pair them with below-market real estate properties? The playing field has changed my friends, and for those who know how to take advantage of it, fortunes will be made!

Most people you meet are sick and tired of the rollercoaster ride the stock market has taken them on. And, many people are also wary of real estate with its plummeting values. However, nearly everyone understands the value of a ‘hard asset’ like real estate, if it’s explained to them correctly. The next time you’re talking to a potential private lender, ask them “How would you like a return OF your money as well as a return ON your money?” Most stock brokers never ask that question!

Nearly 97% of all IRA investments are in traditional stock and mutual fund accounts. The rest of this article is for the other 3% who want better control of their financial destiny, leveraging self-directed IRAs and creative finance to build their retirement portfolio.

There are three primary models for self-directed IRA investing:

  • Assignment of Contract to Purchase Real Estate
  • IRA Lending
  • Purchasing Long-Term Real Estate to Hold

Model 1: Assignment of Contract to Purchase Real Estate
This is the simplest form of investing: You find something that someone else would like to purchase (a house, condo, duplex, building, etc.), and place a Contract to Purchase on it, naming your IRA as the buyer with the right to assign the contract before closing. Basically, you’re finding something to buy wholesale, and selling it at retail! Any profit you make will be tax free forever if it is a Roth IRA, and tax deferred if it is a Traditional IRA (or a plan taxed like a Traditional IRA).  You can quickly build up investment capital with this method.

Model 2: IRA Lending
You can keep your IRA money working all the time at a predetermined interest rate with this technique. You loan trustworthy individuals with your IRA funds which is secured by real estate at a safe loan-to-value, earning a competitive interest rate.

Model 3: Purchasing Long-Term Real Estate to Hold
Most people aren’t aware that their IRA can borrow money to purchase real estate. This means you can allow your IRA to enjoy the same leverage as you (the IRA owner) might have. There is no limit to the number of houses your IRA can own.

These three models just scratch the surface, and as you can imagine, there’s much to learn to employ each strategy successfully. My goal is to get your wheels spinning so you can begin to see the possibilities of what is available once you know what to look for.

Combining creative financing and IRA investing provides an unbeatable strategy for today’s liquidity crisis . . . and it can be successfully used in all areas of the country. Walter Wofford will be teaching these topics and more on October 23-24 at the REI Rainmaker Retreat.

He has been successfully investing in residential real estate in the Jackson, Mississippi area. In his 29-year investing career, he has bought and sold over 1,000 houses and renovated 200 houses, upgrading whole neighborhoods at a time. He is a real-life real estate investor who works every day in the business and teaches basic and advanced IRA education involving real estate, notes, options and wraps throughout the country. Walter combines real estate knowledge with practical experience, and mixes it with a sense of humor that will keep you glued to his every word. And, he’s a hoot to listen to…come prepared to be taught AND entertained! It’s a rare case where you can have your cake and eat it too.

Profits Without Ownership: Sandwich Lease Options

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You may be asking yourself, “What’s a sandwich lease option?” It’s an incredible financial instrument for creating profits without ownership. Let me  explain.

It gets its name for the way everything is structured between the seller, you (the investor), and the tenant-buyer. You step in and negotiate a long-term option agreement with the seller, which gives you the right (but not the obligation) to close on the property within 1-5 years. Often, you also negotiate in the ability to assign the contract, and to let someone else other than you live in the property.

You then go find a potential tenant-buyer, perhaps someone who is a good person that has had a few financial knocks. Individuals who don’t qualify for traditional financing are prime clients for this sort of transaction. Often they will make ideal homeowners, but simply need a few years of documented on-time payments to help repair a spotty credit record. You then place them in the property with your own option agreement. If you structure it correctly, you can earn a spread on both the sales price and monthly payment amounts that you make to the original seller.

This is, of course, a highly simplified explanation of sandwich options. But my intent it to show you how it is very possible for you to start earning money through sandwich options.

By targeting areas with “pretty” houses in good neighborhoods, you will vastly increase the potential number of buyers you can attract. Since you don’t actually own the home, finding properties that are already in good condition is paramount. To make the most of your investment dollar, you will want to spend most of your money on marketing rather than repairs and clean-up. Additionally, properties in nicer neighborhoods minimize your risk exposure, as you won’t have to worry as much about vandalism or depreciating home values.

Sandwich options are an ideal strategy for the new investor because they carry limited risk and great upside potential. Further, they are an ideal match to the current market conditions. Motivated sellers and potential buyers with damaged credit are much easier to find. This technique of options has the potential to earn you a nice sum of money, but it does require work. Steve Zehala will be sharing with you a few other techniques that leverage sandwich lease options on October 23-24 at the REI Rainmaker Retreat. As with any investing technique, you need to find the right strategy that works best for you, learn it inside and out, and most importantly, TAKE ACTION!

The Time For Creative Financing Is NOW

Every day, I have would-be investors, real estate professionals, and others ask me about creative financing. It’s a topic which always generates a lot of curiosity, from investors and non-investors alike. Since it applies to nearly everyone, it’s a universal conversation starter. Folks from all walks of life are familiar with “the current financial crisis”. When you open the door to a converstaion by stating you’re involved in the real estate industry, one of the most frequent questions you’ll hear is “The real estate market…isn’t it doing terrible right now?”

What a fantastic opportunity for you to explain what you do! You can respond, “Actually, these are the perfect conditions for creative financing, which is what I specialize in. Most people wanting to buy a house have little cash, and can’t obtain a loan due to poor credit. And people trying to sell their homes are faced with rock-bottom prices, high commissions, and a really limited pool of potential buyers. With the creative techniques I use, I can leverage what cash or resources buyers and sellers have, and create options that help everyone out.”

You’ve turned the conversation around from one of gloom and doom to one of infinite possibilities. Today’s real estate investing market is budding with opportunities for creative financing.

The next question is often “Ok, how do I craft a creative financing deal?” That’s a great question! Below I have listed five prime situations that are ripe for a creative financing solution. Always be on the lookout for owners in these situations:

  • A property owner who wants to avoid or postpone paying capital gains taxes on their profits after a sale
  • Someone who would be forced to pay a penalty if they pay off their current loan early
  • Anyone who is in a distressed personal situation which prevents the regular maintenance of the property, leaving it in poor condition
  • Someone who needs to sell a property ASAP, but has little or no equity
  • An owner who is tired of dealing with the headaches, hassles, and stress of their property

There are many more situations which you can look out for, but these have the potential to be the most lucrative. Some key hallmarks which identify these situations are: “bring all offers”, “investor wanted”, “handyman special”, “creative offers accepted”, “seller financing”, “owner motivated”, “owner will carry”, and “lease option available”. If you want to test the waters, try checking out Craigslist.com and entering some of these terms, and see what pops up. You’ll be amazed at the opportunities that are hiding in plain sight!

Once you have the lead, the next step is to create the offer. Not sure where to start? You’re not alone. There’s much to consider when working to create a win-win transaction for the buyer, seller, and most importantly, YOU! As the real estate investor engineering the deal, you have a lot of responsibility on your shoulders. The silver lining is that you stand to get paid handsomely for your knowledge.

Since I get asked frequently how to get started in creative financing, Central Florida Realty Investors (CFRI) has asked me to hold a full-day seminar showing how I personally create profitable deals. Registration is open through this week, but you’ll have to register before Wednesday if you want to get the early-bird rate!

Click here to learn more or register

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We’ll talk how to find the owner’s motivation for selling their property. Then, we’ll review how to construct a creatively financed offer that meets both of your needs. Once you know how to invest in real estate using creative financing techniques, it’s like you hold the keys to the kingdom. You become a financial alchemist, able to take formulas for many different types of deals and mix them to get the perfect potion for each seller. So, get registered today! The next time someone asks you, “The real estate market…isn’t it doing terrible right now?”, you’ll smile and know exactly what to say next.

To your success…

Augie

A Ground Floor Opportunity

You can help build our next program…are you ready? You know I have a win/win philosophy for deals, and that’s what I have for you today! I want to work with up to five small groups to gather feedback on my current program “Buying Without Cash or Credit“, so I can evolve it into “The Ultimate Creative Financing System.” I am currently in the process of taking my home study programs to the next level, and gearing them for a national audience. And the best way I can think of to improve the content is to get feedback from you!

What Do I Get?

You will receive a 50% discount on “Buying Without Cash or Credit“, which retails for $697, and includes both audio CDs and DVDs that will be shipped to your home. You’ll receive a copy of “The Ultimate Creative Financing System“, which will retail for $1497, for FREE as my way of saying thanks for participating. Additionally, you will have access to a one-day exclusive training on my favorite subject, Creative Financing. Others may get to participate for $497, but honestly, I haven’t decided if I’ll invite anyone else. Either way, it’s yours as my way of saying thanks.

What Is Required Of Me?

I ask for your frank feedback to help me serve you and your fellow investors better. You will be required to purchase “Buying Without Cash or Credit” with your 50% discount code. Over the next 45 days, you must listen to the audio and view the videos of the current program at least three times, and make notes on the following:

  • Examine each technique and comment on its clarity and ease of understanding
  • Comment on how each segment can be more effectively communicated to make it user-friendly
  • Ideas on tools which would make the program more beneficial

In addition, there will be two mandatory online surveys, which you will be required to complete in order to receive your free copy of “The Ultimate Creative Financing System“. There may also be a conference call (or two).

Is There A Deadline?

Yes. The new product must be ready for delivery by November 1st, so time is of the essence! Due to the many questions I’ve received, I wanted to give people a chance to learn more. Therefore, I am extending a deadline to get involved to Saturday, August 28th at midnight. After that, we will start working with those who stepped up to participate.

I’m Interested. What Should I Do Now?

Add a comment to this post below, and include your email address. Don’t worry, we will keep the information private! Only we will see your request, and we’ll send you a discount code and URL to purchase “Buying Without Cash or Credit“. You’ll be on your way to earning over $2,300 in bonuses as my way of saying thanks!

Building Wealth – Episode 7 – The Special Sauce

My wife Audrey is an awesome cook; she has recipes for everything.  Even when she doesn’t have a recipe, she creates one.  Her thinking is that as long as we like the ingredients, it should turn out all right.  Knowing our favorite things is like having a special sauce.  Blend them together and good results are virtually guaranteed.

Possessing the special sauce can make a significant difference in your ability to achieve successful entrepreneur.  A pact can also be a recipe for a special sauce. PACT it is an acronym for Personal Action Coaching and Training.  It is also an acronym that describes how I choose to live. With Passion, Action, Commitment and Tenacity.  Its my special sauce.

Take the positive path, the high road.  Always do your best and projecting a positive, enthusiastic, up beat attitude.  You’ll be amazed by the results!

To your success

Augie