David Lindahl Presents: "How To Profit From Real Estate When You're Too Busy Already Copyright MMX RE Mentor, Inc All Rights Reserved 100 Weymouth Street, Rockland, MA 02370 781-878-7114 www.rementor.com
If you know one of those "free spirits" who refuses ever to use a recipe to bake a cake or grill a steak, then this is not for them. (I guess they know it all by now.) However, if you can follow a simple recipe, then you can follow my system for cooking up wealth. Inside this extremely detailed outline, I break down the business into a simple, 7-part, step-by-step system for finding, buying, and selling real estate for a profit, even when you re too busy already! Detailed Success Outline Secret #1: No money? No problem 27 Ways to Invest in Real Estate With No Money Down I ve been buying and selling multi-family buildings for over 14 years now. In the process of building my real estate fortune, I ve used many techniques to structure the purchase of a property with no money down. I don t want to mislead you into thinking that every deal can be done with no money down. Some deals will not provide cash flow if you put no money down. Here s a real secret: Even when good deals require money down, it doesn t have to be your money! In the weeks ahead, we ll be covering 27 methods to finance your deals. Even after you re wealthy, you ll be using many of these methods so you can control as many properties as you can while tying up little or no money of your own. Here is a summary of the techniques we ll cover: 1. Owner Financing The most common way to buy a property with no money down is to use owner financing. This occurs when the current owner agrees to finance either all or some part of the purchase price, instead of getting the cash now. 2
We will cover the four types of owner financing to that you could ask for. 2. Borrow From A Private Lender For Down Payment If you ve got a great deal, but don t have the money for a down payment, find a private lender. This is any individual that has extra money set aside that you can use for your purchase. Where these people are hiding in plain sight in your community. How you approach them, and exactly what to say to them that s easy and natural. After you get one or two lined up and you start to use them successfully, watch what happens: They will tell their friends, who will tell their friends, and so on. It s human nature to brag at cocktail parties or at the gym about what a great investment they just made. Before you know it, you will have all the funds you need, and your business will explode. 3. Signature Loan I ll share with you some guidelines to follow when taking out this type of loan at your local bank for the down payment. 4. Subject To Just like single family houses, you can take over multi-family properties subject to the existing mortgages. This means that the mortgage stays in the current owner s name, but the deed is transferred to your name. Why this can be a great way to take over a property with no money down. I ll go over when this situation usually arises, and how to negotiate a successful subject to deal. 5. Equity-Share or Debt-Share Investor This means you will share any equity which is created in your property with an investor who will give you the money for a down payment. You can also structure a transaction where the investor provides only debt, and does not share in the upside or equity of the property. I will explain how both arrangements work. 3
In fact, I will also outline how it might even be possible for me to become a partner in your deal. 6. Equity Share Owner This is where you are not attracting other investors, but you do an equity share deal with the owner. The owner transfers title to an entity in which the two of you are partners. The property is refinanced for the purchase price. The owner gets out as much of his equity as he can, and becomes an equity partner for the rest. I will explain the typical way these deals are structured. 7. Repair Allowance When using a repair allowance, you inspect the property and determine what needs to be done in repairs. You add up the cost and have that money given back to you at the closing. I ll show you how this can provide money that you otherwise wouldn t have had. You can use this money for a down payment. I have a student who bought a property for $800,000 and got a $100,000 repair allowance. Not only did he use that for his down payment, he did some repairs that needed to be done immediately. He s planning on using the rest as a down payment for another property! 8. Refinance With Seller Carrying Back A Second Mortgage This scenario is very similar to the Equity Share Owner situation but the owner does not become an equity partner; he becomes a second mortgage holder. This saves you a great deal of money in the long run, because you do not give up 20% of the profit and 20% of the equity. I ll go into more detail on how these arrangements work. 9. Create Paper How it s possible to create a note secured by a second mortgage on your house or other real estate in the amount of the seller s equity. 10. Trade Just as they did in the old west, you can barter the down payment for anything else that you hold ownership to. This includes equity in other real estate, notes you own, personal property, services the list does not end. 4
I ll explain how you can use your imagination and get really creative. 11. Use Part of the Seller s Property as Collateral to Borrow Down Payment Often a multi-family building will have several different parcels associated with it. I ll show you how to get the down payment by putting the property under contract and coordinating the sale of one of the parcels to use as your down payment. A student of mine from Augusta, Georgia, used this technique to buy a 100-unit complex. The property was built with the intention to sell as condos, so each unit was separately deeded. He sold 40 of the units to other investors, making enough profit to purchase the other 60 units, free and clear of any debt! 12. Sell off Dirt, Timber, or Plants Here s how I once lost a million-dollar profit in real estate: When I was starting out, I offered to partner with a wealthy friend to buy a 48- acre parcel that I thought we could subdivide together. Not having money, I offered sweat equity and the fact that I found the deal as the basis for my partnership. After inspecting the property, he decided to buy it behind my back because it had four huge piles of gravel on the property. It was a special type that we use for our septic systems in New England. So he bought the property for $340,000, and sold the gravel for $2 million. What you may be able to do is buy a property and sell off the special dirt, trees, plants, or other resources to finance the deal. This is not theory it happened to me. 13. Substitution of Collateral If you are purchasing a property below value (property A) and own a property that is being used as collateral for the financing that is on it (property B), you may be able to transfer the collateral from property B to property A. This would free up the equity in property B to be used as the down payment. I ll give you the ins and outs of doing just such a deal. 14. Issue Stock How you can form a corporation and issue stock to sellers for their equity. It solves their management problems and starts a real estate business for you. They get an equity position in the company. 15. Acquire with future profits 5
I ll explain how you can acquire a property at an agreed price, with the seller s equity to be paid out of future profits as the project is turned around. 16. Tax Credits The government has a program that involves low-income housing tax credits. These credits are like gold because they allow you to get substantial reductions on your taxes as long as you follow certain guidelines. You can even take those tax credits and sell them at a discount to corporations that are looking reduce their taxes. The money you get can be used as a down payment for the property. Sometimes you get so much money, you can use it for a down payment for several properties! I ll cover how these deals work, and how one of my students bought a 170-unit building using tax credits. He got a $22,000 a month positive income from that property. 17. Hard Money When you re investing in multi-family properties, hard money is also called mezzanine financing. If the deal has certain characteristics, many mezzanine lenders will finance you with no money out of your pocket. Why? Because the value is in the property. I ll explain what these lenders are looking for, so you can get a quick yes when you bring them a deal. 18. Family Loan Do you have a family member with big bucks? Family members may also have a lot of equity in a property that they can loan you some money from. Perhaps others have a lot of money in an IRA that they would love to get a higher rate of return on. I ll explain the best way to approach family members to be part of your deals. If you do this right, everyone wins. If you don t get my guidelines, then you re gonna have a pretty awkward Thanksgiving dinner. 19. Acquire with a First and Second, Then Sell the First for Cash How to buy a property with the seller carrying back both a first and second mortgage. There s an important twist to this arrangement and I ll explain how to make it work. 6
20. Land Sale/Leaseback I ll show you how to offer to acquire a property subject to finding a purchaser who will buy the land under the building out of escrow, and lease it back to you subject to the existing financing. Cash from the land sale goes to the seller as down payment. You get depreciation on the improvements and you can also deduct lease payments. 21. Assume the Mortgage; Seller Keeps the Land It s possible to buy the improvements while the seller retains ownership of the land, which you lease from him. The seller gets out of the responsibility of management and receives land-lease income. You get income and depreciation with no down payment by assuming the existing mortgage. 22. Pledge Future Income as Down Payment If you have a secure job or future investment income, I ll show you a great way to have the seller wait for the full down payment, along with ways you can give the seller additional security. You get immediate ownership and the seller eventually gets the down payment. It s a win/win deal. 23. Lease Interest as Down Payment I ll outline how to offer one year s income in the form of free rent as a down payment. The seller gets continued use of the property for one year in lieu of cash down. You get ownership but with no outlay of cash. 24. The Performance Second You ll discover how the performance second is a great way to test the seller s faith in the value placed on the property. You can buy at the seller s asking price with payments on the second mortgage subject to the income on the property. If income is less than the seller has represented, then the payments he receives on the second will be less than he would like. But if the net income is greater, the payments increase. It will all become clear after I lay out the details. 25. Broker as Lender If you are working with a successful broker, don t count her out as a lending source. Considering that she will receive a commission out of the down payment, there is often the possibility that she might like to make a sound investment at a high interest rate, using in part the cash she receives as commission. That s cash she will not receive if your deal doesn t go through. 7
Because I ve been a real estate broker for years, I am in a position to explain the best way to make your broker want to be part of your deals. 26. Line of Credit I ll show you several ways to establish a line of credit secured by you personally, but also sometimes secured by several other types of assets. 27. Seller Insures Buyer s Loan Often a seller has faith in the buyer (you) but the lender may not. I ll explain how to arrange for the seller to insure a portion of your loan. In this setup, a seller may guarantee the top 10% of your loan by depositing that amount in the bank. When you pay down the loan by 10%, the seller s funds are automatically released. You may wonder why a seller would do such a thing. I ll discuss how it happens all the time. Secret #2: Know nothing about real estate? How to profit even when you have zero experience Why sometimes zero experience is better than lots of experience. The three things you absolutely must be doing throughout your real estate career and they re things which require no experience. The key skills you should hone at your own comfortable pace in order to be super-successful. I ll share with you specific scripts I ve created, tested, and refined so you don t have to bother with all that you can go straight to success. How the real estate market is always changing, and how best to stay on top of those changes without spending a bunch of time doing so. Secret #3: Short on time? How you can do your first deals even when you only have scraps of time 8
The dangerous belief that you need to dump your current source of income in order to pursue real estate. Why you should not believe this nonsense from other gurus. How 30 minutes a day is all you need to get started. Forget about coming home, changing clothes, and going out to knock on doors to find deals. How my system allows you to use direct mail and other sources to find good, fresh deals. The exact form of marketing materials you can use to attract profitable deals. Why you need to start assembling a Dream Team of advisors earlier than you think you need them. The misconception most people have that I ll get a team together after I m wealthy and successful. How that idea is holding them back from making real money, and how you can start to get your team together on an absolute shoestring budget. Who exactly should be on your Dream Team. The specific scripts you need when recruiting your team members. Secret #4: Live in a lousy real estate market? So did I. Here s the great news: I found a way to make fat profits anyway. Let me show you how to do it, too. Why you should forget about what the newspapers are saying about real estate in America or even in your state or city. Why lousy markets are the absolute best time to make a fortune in real estate. How to know when you re in a temporarily depressed market that soon will turn around, versus a long-term dog of a market you should stay away from. The best kinds of real estate to own in each phase of the real estate market cycle. Specific lessons of what I did wrong in different markets. By knowing what I learned from my costly mistakes, you can easily avoid 9
them. The level of cash flow you can expect from different types of properties in various phases of the market cycle. Secret #5: Can t wait for profits later, but need cash flow NOW? My system is a Cash Cow you can milk every month. The very best type of property to buy for substantial cash flow. Why too many investors work too hard. They don t build their real estate business on the right foundation, but instead mistakenly think that big fortunes are made only through hard, slogging work. The four types of properties you will find in almost every market. How to get good-quality RIGHT managers to manage your properties. The type of property you should really stay away from until you re very rich. Otherwise you ll toss and turn throughout the night, sweating about these deals. What a value play is, and how it can set you up for a lifetime of cash flow and wealth. When it makes sense to wholesale or flip a deal, and when it doesn t. Why fear and inaction can be just as dangerous as foolhardiness. How to navigate between them and make money with confidence and without big risks. The giant myth most real estate investors think is true about hiring management companies to run their properties. How this myth will keep your competition poor and make you rich. Your Number One Responsibility when building your real estate fortune. My Tried-And-True Wealth Formula. Why you should not start your real estate business way outside your comfort zone. How you can stay comfortable and confident and still make money. 10
Secret #6: Worried about the recession? Get this: The worse the recession gets, the better my system works! (It s working great right now.) Why you should regard recessions as your friend. In fact, why you should look forward to the next recession as your next major profit opportunity! Why your local real estate market can be absolutely horrible and you can still make money in real estate. (I know this sounds crazy, but I ll prove it to you.) In the Wild West, a few people could put their ear to a railroad track and hear the train coming from miles away. I ll show you how to hear the next major markets that will be roaring in a few months after you have already bought properties in those markets at low, low prices. The very best time of all to buy real estate. What you must be continually doing throughout your real estate career, and how this will make you more money than anything else you could do. Secret #7: Don t like to work hard? How one single deal can make you financially set for life. Where is it written that you have to work a solid year in order to make a great income for that year? What if you could do one single deal and make enough to replace your previous income for this year, and every year after? And what if each deal you did was just as large? In effect you could decide how many multiples of your current income you d like to have. I will give you specific examples of how my students have done just that. How you can succeed in real estate if you ve never gone to college, 11
never had a job outside the house, and never started a business. The best sources for current, realistic, proven real estate investing advice. What a repositioning is, and how you and your competition probably drove past one of these great hidden deals today. What a momentum play is, and why they are some of the sweetest real estate deals on the face of the planet. (Plus how to make one of these deals happen.) If you re not getting at least $200,000 per year from my system, well, you re just not following the system! Why you can have an achievable goal with my investing system of between $500,000 and $1 million per year, every year. What successful people regularly do. This one characteristic is perhaps the most important trait of all. It s something you can do right now, regardless of your current situation. 12