1 / 150

The Art Of Owner Financing

hester
Download Presentation

The Art Of Owner Financing

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The content available on this presentation is provided for informational and educational purposes only, is not intended as an offer or solicitation for the purchase or sale of a financial instrument, a real estate investment or securities of any kind and should not be relied upon as an investment recommendation or advice. Mitch Stephen, his family, employees, associates, companies and or assigns makes no representations or warranties as to the accuracy, completeness or timeliness of the information presented by any speaker and has taken no independent steps to verify the resume of the speaker or his/her information. The information is not intended to provide legal, tax or accounting advice. Use of any information, materials, and opinions given or discussed is at the User's own risk. Users are encouraged to discuss the information with any legal, accounting or other professional deemed necessary to understand the risks and uncertainties implicit in investing in real estate.

  2. The Art Of Owner Financing

  3. My personal results & the hypothetical examples in this presentation are for illustrative purposes only.Most people who get real estate investing training do not make any money.

  4. This IS NOT Your Daddy’s World Volatility in The Stock Market(If you were NOT in & Out ) Current CD Rates(The Reverse Affect of Low CD Rates) The Failure of Great Institutions(Enron, Goldman Sacks, GM) The Coming Inflation(Where Do YOU Want Your Money?)

  5. What if I Could Show You… …How to create immediate income while creating monthly cash flow? …How to create huge wealth without using any of your own money? …How to quit your job and retire in 5-8 years? …How to get paid five times on every deal? …How to keep the cash flow on your rentals but drop the hassles?

  6. Mitch Stephen Experience: 18 Years 1200 Houses

  7. Mitch Stephen • In 1996, I had 25 rentals and they were killing me • I was about to quit real estate for good • It got so bad, I was forced to get some help • They showed me what I was doing wrong

  8. Success Can Come From Anywhere …CASE IN POINT….. I am a High School Graduate I didn’t Find Myself Until I was 36 Years Old I made Very Little Money I Did NOT Have Money I DID Work Hard…Still Do. I DID Value Integrity…Still Do

  9. Education Does NOT End When You Graduate Think & Grow RichNapoleon Hill Self-Made In AmericaJohn McCormick Nothing DownRobert Allen Richest Man In BabylonGeorge S. Clason The Greatest Salesman In The WorldOg Mandino

  10. WHY ARE YOU HERE TODAY??? • Supplemental Income? • New Career ? • Preserve Capital ? • Grow Your Retirement? • Charity

  11. FINANCIALFREEDOM • Happens when your wants and your needs are exceeded by your cash-flow • Mathematical • I Controlled the Bar • Not Rich • Wealth Would Come After Financial Freedom • My Immediate Goals Shrank

  12. TAKE CONTROL OF YOUR OWN FINANCIAL FUTURE • The Average American Spends32% on Taxes • The Average American Spends 34% on Interest • This Leaves Us 33%of Our Income --------------------------------------------------- Learn To Mitigate Your Taxes(IRAs – Solo 401K – Live on PreTax $ - Own Your Own Biz) Learn To Minimize Your Bad Debt (Kiosaki) Learn To Maximize Your Investments(Take Control Of Your Own Finances)

  13. Living on Pre-Tax Dollars • W-2 employee Grosses$100,000 • Pays tax on $100,000 and is left with $80,000 • Buys a truck for $50,000 and has $30,000 left over • Company Grosses $100,000 • Company Buys truck for $50,000 has $50,000 left over • Pay taxes on $50,000... Gets to drive company truck • Gets to deduct $0.69 per mile

  14. Agenda • Apps and Websites • Landlording vs. Owner Finance • Assessing Value • My Formula • Finding Houses • Structuring Offers • Case Studies • Contractors • Selling Houses • Acquisition Methods • Building an IRA • Student Case Studies • Selling Notes • Protecting Note Buyers • Safe Act - Dodd/Frank • Accountability

  15. Apps and Websites • Trulia • Zillow • Flashlight • Level • Tracker (GPS Coordinates) • iTranslate • Loan Shark • Area Codes • Home Snap • RentOMeter.com • County Appraisal District (CAD.org) • USPS.com (Zip Codes) • Square.com • Laser • RehabValuator.com • FAVORITES: Audible.comService Bell

  16. RENT vs. PAYMENTS LANDLORD BE THE BANK Landlording vs. Owner Finance

  17. LANDLORDING • PROs • Appreciation • Depreciation • CONs • Liability & Lawsuits • Taxes • Insurance • Low Commitment • Phone Calls • Wear & Tear • Turnover • Who’s $ Is It? • Non-Liquid? Landlording vs. Owner Finance

  18. BE THE BANK • PROs • Less Liability • Improvements • No Phone Calls • No Tax Increases • No Insurance • Less Turnover • Large Commitment • It’s YOUR $$$$ • Liquid Asset(Sell The Note) • CONs • No Depreciation (Write-Offs) • *No Appreciation??? (Double $ When You Buy) Landlording vs. Owner Finance

  19. 7 Way Win • Our Sellers • Our Buyers • Investors • The Neighbors • The School District • Contractors • You

  20. S.A.F.E Act / Dodd-Frank Safe Act / Dodd-Frank

  21. S.A.F.E Act / Dodd-Frank • Scott Horne – Attorney • (972) 271-1700 • Grant Kemp - Compliance Assistant • (972) 804-9385 - cell • Grant@TexasPrideLending.com • Dallas, TX Safe Act / Dodd-Frank

  22. Your #1 Asset: Your Ability to Establish Value Assessing Value

  23. How to Establish Your “Owner Financed” Price Back into your local rents to establish a finance amount Subtract the Property Taxesand estimated Insurance $1,075 …………………Rent -$ 100 …………………Taxes -$ 75 …………………Insurance $ 900 …………………For P&I $900/mo. @ 10.5% for 240 months = $90,000 $90,146.05 (to be Exact) Add your down payment + finance amount $90,000 + $9,000 = $99,000 Owner Financed Price Assessing Value

  24. ????? VALUE ???? Choose Your Words Carefully “OWNER FINANCED VALUE” NOT……….MAI Appraiser ValueNOT ………………CMA Value NOT……………….BPO Value “OWNER FINANCED VALUE” Assessing Value

  25. RENToMeter.com • House and Apartment Rental Comparisons • Estimating too much for rent? • Estimating too little? • RentoMeter is the easy way to compare your rent with other local properties Assessing Value

  26. MY Formulas • Establish your Owner Fin Sale Price • Acq Price + $2,000 x 2 + 10% Dn Pmt = Own. Fin. Value • Maximum Allowable Offer (MAO)Own Fin Price x 50% - Cost of Repairs

  27. Finding Houses • RealAcquisitions.com • MyHouseDeals.com • Wholesalers • NewWestern Acquisitions • NetWorth Realty • Letters • Signs: “We Buy Houses” • Delinquent Taxes • Pre-Foreclosures • Foreclosures • Abandoned Houses • Mailman / Ice Cream Truck • Bird Dogs • Nuisance and Abatement Finding Houses

  28. FINDING HOUSES BANDIT SIGNS FIND VACANT HOUSES Nuisance & Abatement - Driving For Dollars (Nexus-Lexus) ESTATES / DIVORCE NETWORKING WITH REALTORS (Auto-responders / Funnels) NETWORKING WITH WHOLESALERS (Signs w/ Google Voice numbers)

  29. FINDING HOUSES BANDIT SIGNS #1 Way to Economically Generate Leads – PERIOD!(Out Sourcing) I wrote 12 Pages on Using Plastic Signs (1000Houses.com/ODWresources) How to Keep People From Messing with Your Signs Sign Police

  30. FINDING HOUSES ESTATES / DIVORCE Attorneys – Public Filings – Obits Estate Sales – Estate Auctions (Good excuse to show Attorney’s what you do – PRIVATE LENDERS?) The Best Estates are Old Estates That Never Got Closed out Finding Houses

  31. FINDING HOUSES NETWORKING w/ REATLORS You Only Need 10 Never Sign an Exclusive Agreement Run From negative realtors! Do Not Get them Involved in Selling Owner Financed How Many Realtors in This County? Board of Realtors? List? Website? Distribution List – Slow Drip – 10 a Day Don’t always be Selling - Talk About Your Success Make Friends…Lunch w/ 1 per Week Don’t Chisel Them – BONUS THEM!

  32. FINDING HOUSES Networking w/ Wholesalers Know Them all! Never Sign an Exclusive Agreement Beware of those that are Consistently High on Values and Low on Expenses Real Estate Clubs – Email List Bandit Signs - Distribution List – Slow Drip Don’t always be Selling - Talk About Your Success Make Friends…Lunch w/ 1 per Week If They Can Find Deals – YOU Can Find Deals Finding Houses

  33. FINDING HOUSES VACANT HOUSES Nuisance & Abatement Get off the beaten Path…Letters vs. Personal Visit Does Your County Have a List? Can You Get One? Driving For DollarsSub This Out if Your Working Full-Time100 in 1 Day….$1.20/per HousePhoto – Email – w/Address & ZipPay someone to mail them DO NOT Throw Away Those Return Letters/Cards! Finding Houses

  34. FINDING HOUSES FINDING the OWNERS of VACANT HOUSES (Lexus-Nexus / RealAcquistions.com) FOR SALEYour Phone #(1000Houses.com/Finding OwnersOfAbandonHouses)

  35. 3 Offers / $60k Home • Cash offer • $30k (including repairs) • Large DnPmt w/ Subordinated 2nd • $25k Dn • $35k in the 2nd position (seller financing) • Small DnPmt (seller financing) • Interest-free loanEXAMPLE: $50K - $5K = $55K divided by 120 mo. = $458/mo • (This is an interest free loan) 137/mo = $400/mo

  36. Structuring Offers • All Cash Offer • Lowest Price • Owner Finance w/ 2nd Lien • Large dnpmt/ subordinate to 2nd position • Owner Finance w/ Small DnPmt / Own Fin • Example: No interest loan (next slide) Structuring Offers

  37. FINDING HOUSES REMEMBER… You Make Your Money When You Buy!(How Many People Go Over Budget on heir Rehabs?)

  38. FINDING HOUSES ALSO REMEMBER… You Lose It In The REHAB! Finding Houses

  39. BUY – No Fix – OWNER FINANCE! Case Study #4

  40. Buy -NO FIX UP -Owner Finance $15,000 ………………….. Acquisition Price $ 2,000 …………………...ME $17,000………………... Borrowed…8% Interest Only. $114 /mo Case Study #1

  41. Sold • $38,000 ………………….. Sales Price • $ 3,000 …………………... Down Pmt • $35,000 ……Owner Finance @12% for 12 years • $420 / mo Case Study #1

  42. Buy NO FIX UP Owner Finance • $15,000 ………………….. Acquisition Price • $ 2,000 …………………...ME • $17,000………………... Borrowed…8% Interest Only. $114 /mo • Sold • $38,000 ………………….. Sales Price • $ 3,000 …………………... Down Pmt • $35,000 ……Owner Finance @12% for 12 years ….. $420 / mo • TOTAL CASH FLOW ………………… $306/mo • I’ve collected 6 payments on time… 6 x $306 = $1,836

  43. N. San Felipe (AFTER)I FOUND A NOTE BUYER Case Study #4

  44. SOLD THE NOTE FOR $30,570 !!!WHY WOULD A NOTE BUYER PAY FULL PRICE FOR THIS NOTE?Investment secured by Collateral w/ a Huge SpreadThey make 12%

  45. INCOME • $2,000 …….. upon acquisition (Borrowed money) • $3,000 ……………………………………… Down Payment$1,836 ………………………….…………………..Cash Flow$30,570 ………………………………………………Note Sale$37,836 …………………………..TOTAL INCOME -$17,000……………………………..BORREWD MONEY$20,836 ………………………………NET PROFIT !!!

  46. $20,836 • NET PROFIT !!! • On A Property Purchased For $17,000

  47. BE THE BANK • PROs • Less Liability • Improvements • No Phone Calls • No Tax Increases • No Insurance • Less Turnover • Large Commitment • It’s YOUR $$$$ • Liquid Asset(Sell The Note) • CONs • No Depreciation (Write-Offs) • *No Appreciation??? (Double $ When You Buy) Case Study #1

  48. How Much • APPRECIATION • do you want? Case Study #1

  49. Let’s Talk APPRECIATION!$15,000 ………………….. Acquisition Price$38,000 ……………….………………Sale Price Case Study #4

  50. What Caused This Massive Overnight APPRECIATION?Mowing the Yard? Paint the House? Remove the Dog Poop? New Carpet?Nope – Nope – Nope – Nope – Nope!!!! Case Study #4

More Related