Cash Flow for Life #3 September 2014

Transcription

1 Cash Flow for Life #3 September 2014 NOTE: Hold CTRL when clicking a link so it opens in a new browser window. Dear, Cash flow, cash flow, cash flow, I said as my 4-year-old son looked up in my eyes. We were playing Robert Kiyosaki's game: Cash Flow. After having to overcome 3 decades of conditioning that taught that the only way to make money was to buy something that went up in value, I have directed my children to another way to build wealth. Instead of stacking dollars, turn each one into your slave. Accumulated income with each investment, business and allocation of capital keep stacking income. We all have to be reminded of this. Too many times do we all get suckered into things like, buy this asset now, in order to flip at a later date for a much higher price. Don't get me wrong, I like speculative investments too. But this should be 10% of your investments. The other 90% should be focused on building your income streams. Last month, we discussed a strategy that has helped me increase my net worth by over $150,000 in just the past 60 days. And in all honesty, my family has a new deal that -- if closed next week -- will take that number to over $200,000. Since the start of our Smart Money Letters, we have been brutally honest; saying things that don't fall in line with most newsletters. Things like you won't get rich from stocks or that most of your investments should be in safe, reliable companies; not speculative bets. We are serious about wealth building, which is why I consider our extra income 1

2 ideas, forever stock portfolio, True Hedge strategy and now our Cash Flow for Life letter to be the best in our entire industry. Thousands have been spent at seminars for the exact information I plan to give to you today. Only this comes with no up-sale. All I want in return is your feedback (good or bad) on how our investment ideas are working out for you. Finding the Best Deals with Seller Financing Let s get down to business. So you read last month s Cash Flow for Life update, but you're having trouble finding deals. Okay. So let me help you cut through most of the competition and, at the same time, discover where sellerfinanced deals are more plentiful. While searching craigslist -- or any other website useful to real estate investors hunting for cash flow -- the single-family residence is where most of your competition will be. It is also where the deals are the hardest to find and the terms are the least lucrative. Single-family houses are the most liquid type of property in real estate, so finding a seller who is looking to give you a good deal is difficult since they can always sell a home for wholesale on the open market for cash or to a conventional buyer who is using traditional financing. I am a big believer in getting started. Taking action, in my opinion, is more important than educating yourself through reading, lectures or videos. Once you get started, that is when the real education begins anyway. To fast-track your success into cash-flow investing in real estate, you are going to want to search for multi-family housing & commercial property. Multi-family housing is 2 to 4 units. These are your duplex, triplex and 4-plex s. Commercial property is 5 or more units, or a building that rents to a business. Seller-financed deals are much more plentiful in this space since the buyer pool is dramatically lower than the single-family home market. In fact, the more units you are trying to buy the higher likelihood that seller financing is available, and may even be advertised. 2

3 You see the sellers of these properties often have to wait years before making a sale, so any seller who is motivated is willing to get creative in order to help the buyer take over the title to the property. In the past few weeks I have seen a 4-plex selling for $20,000 with just $8,000 down in central Texas. The seller was highly motivated and the property had been red tagged by the local government, so it clearly had some work. Another property I found in south Texas was 26 units for sale for just $180,000. The property was completely vacant due to fire damage, but the seller -- who couldn't sell the property -- was advertising, "seller financing available." Even if you had to put another $180,000 to fix this property, the math is simple. This is a cash-flow monster; with units renting for about $500 each in that area! Why Seek Out Seller Financing 1. The option of a low or no down payment. Many sellers just want out. A real-life example is a 4-plex I am buying for $173,000. The retail value is $240,000, but the seller is living a nightmare due to bad management. The seller has about 30 units in all and has decided to manage them all. This has made their life a living hell. At this point, they just want out. So for $30,000, they are handing the keys over to me and I am assuming their loan legally. If I were to purchase this with a conventional loan, I would need $52,000; so I am saving $22,000! My return on capital is about 33% annually, excluding all capital appreciation and instant equity. 2. Avoiding the banks. I don't know about you, but I hate the underwriting process. It's annoying and I would prefer to never deal with a banker again. 3. Let the free market reign. Seller financing is creative, with an endless amount of ways to structure a deal. 4. I am looking for the ugly, un-financeable properties; so this is where I am going to find them. 5. Not that I care, but an added advantage to seller-financed deals is that they do not show up on your credit report. Never be afraid to ask about seller financing. Just last week I saw a great deal in Toledo, Ohio. It was selling for $62,000. I told them I would close in 3 days for $50,000 if they would hold a mortgage for 90% of the purchase price, and to my surprise they said yes! If you don t ask you won t get Remember, all businesses -- including real estate -- have the purpose of providing solutions. Seek out sellers and become their solution. 3

4 Word to the wise: just because they say yes doesn't mean you take the deal. Upon further research, I backed out of the Toledo, Ohio deal I just mentioned. Never forget that cash flow is king. If you have to pass on a deal, then so be it. Don't waste good capital on average deals; deploy good capital when great opportunities present themselves. Please send your questions to Daniel@FutureMoneyTrends.com We will respond to everyone s questions in our next Cash Flow for Life report. Feel free to send us any scenarios or deals that you may be reviewing. Our goal is to use these lessons as a teaching tool for all of our Smart Money Members. Kind Regards, Daniel Ameduri FutureMoneyTrends.com/Members 4

5 LEGAL NOTICE This work is based on SEC filings, current events, interviews, corporate press releases and what we ve learned as financial journalists. It may contain errors and you shouldn t make any investment decision based solely on what you read here. It s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the worldwide web), in whole or in part, is strictly prohibited without the express written permission of Future Money Trends LLC. 5