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Prepay Interest with Equity
Q. I want to get rid of a property and buy another that came on the market. The seller will finance it but the payments are higher than what I am paying now. How can I do this? A. Use all your equity in your existing property except for the 24 months worth of payments as a down payment on the new property. Give the seller the entire equity now with the understanding that the extra equity will be counted as your payments for the next 24 months. . . .
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Payor's Santa Clause
Q. There is a property I would like to buy because the seller will carry financing but I'm concerned that values might go down further. How do I protect myself from going underwater? A. There are many ways from variable rates and payments to "The Santa Clause". It is included in the original purchase contract and provides for a meet or beat opportunity if the seller decides to discount and sell the note later on. The Payor gets first crack to buy at the best cash offer rate. With this discount built in, you can collapse your financing down to the reduced market. . . .
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Forgiven Note
Q. I am looking for a way to legally increase the value of the estate distributions allowed through gifting. I own some valuable real estate I would like to use if it can be done. A. I have used the "Forgiven Note" formula several times in several different applications to accomplish this task. You can use it as described below, gifting the down payment in the year of sale. . . .
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Reverse Humpty-Dumpty
Q. Due to the credit crunch I can not get a loan but want to pick up some of these bargains, how do I do it? A. Options, my friend, options! They are an old idea whose time has come again. Check out "Reverse Humpty Dumpty" for the explanation. . . .
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Off With the Blanket
Q. I made an offer on a property and asked the seller to carry financing. He said he would but only with half down which I don't want to do. Any suggestions? A. Sure, give the seller what he wants which is more security by having him secure his equity with a blanket mortgage. When you have retired the debt to the level he proposes, use 'OFF WITH THE BLANKET'. . . .
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Native American Partners
Q. With the drop in real estate values, how can I make my free and clear land more valuable? A. The quickest way to improve bare land value is to increase your zoning density, however with development stalled and anti growth attitudes on the rise you may want to consider an unusual approach by using the concept of "NATIVE AMERICAN PARTNERS" which, when coupled with seller financing on the take out can be a very attractive opportunity for all concerned. . . .
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Just Steps to Cash
Q. My credit score is the pits. I have a large equity in my property but can't get a loan. Can you help me? A. Do a two step to get to cash as outlined in 'JUST STEPS TO CASH'. It has been used successfully for years! . . .
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Nothing-Down User / In-lieu Paper
Q. I can't sell my specialty property because it requires an operator. My current managers would like to buy it, but they don't have a down payment.What do you think I should do? A. The best buyers are people who know the business well. If you carry financing for your managers you can keep the note for income or trade it forward and complete a 1031 exchange into a new property using "IN LIEU PAPER" formula! . . .
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Variable Size of Payment on Note
Q. I have a client that wants to buy an income property to run for cash flow. He lost his job and needs to replace his earned income. The low ball offers he has me write keep getting rejected. Is there another way to approach this situation? A. Absolutely! Due to the shortage of commercial loans available today many sellers will carry the financing. What you need to do is determine the amount your client needs to live on and treat it as an operating expense on the property. Then apply the remainder to servicing the note each month. If the note has fixed interest, when the income is low, the unpaid interest accrues, but on months that the income is higher the principle and arrears interest gets rapidly paid down. . . .
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Two Buy-Sells for Financing
Q. I have been learning about equity exchanges from your training program because most of my listings are willing to use their equity to buy something else, but how do you explain equity trades to a lender? That is the biggest problem I've encountered. A. You don't teach a lender new concepts in this market. Use logic in the way you write your deals. It is common for Buyers to write purchase contracts subject to the sale of their existing property, expecting their sale to generate the cash down payment, they proceed to qualify for the loan on the new property. In an equity exchange, the seller of the property who receives this contingency offer becomes the contractual Buyer of the contingency property with both properties closing simultaneously. Both properties are appraised, each buyer does his own loan qualifying, 2 separate escrows are run and each parties equity transfers from one closing file to another. This is truly what happens in almost all real estate transactions. . . .
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Lot Line Adjustment
Q. I own a 3.89 acre lot in an area zoned for 1 acre minimum lots. If I could parcel to 4 lots I could pay off my loan and keep one free and clear to build my home. The planning department won't budge What can I do? A.You might get a map of the subdivision and locate an adjacent parcel that is a little over an acre. You might be able to purchase the extra footage required to get your four parcels by filing a simple lot line adjustment, even if it doesn't compliment your parcel much by way of utility. Failing that, be the first in line to purchase one of the generous lots and do the adjustment with yourself. The acquisition lender would have to approve the change of course. . . .
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Do a Trade With Uncle Sam
Q. There is a piece of government owned property that is an eyesore to the people in our rural area. It seems to be a source of pests and rodents. We want to buy it but all our attempts have been unsuccessful even though the original reason for government ownership no longer applies. Any bright ideas? A. Government workers are usually not money motivated to accomplish sales as it is not a benefit to them. However this economy is tightening purse strings everywhere and it might be the perfect time to do a bait and switch for some land they really want but don't have the budget approval to buy. In any event, such a proposal will get kicked upstairs for a hearing! . . .
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Lot Owner Subordinates
Q. I got an offer in on my client's lot proposing that the seller carry 100% financing behind a construction loan. Is that a usual thing to do? A. The benefits to that arrangement are spelled out in "Lot Owner Subordinates" but there are other serious complications that can arise with this economic climate. Many foreclosed properties are being marketed by Banks at less than their replacement cost which means there may be no proceeds from the take out loans to satisfy your clients interest. This is definitely "seller beware" territory. . . .
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Something for Pride
Q. I am paying on a note that the seller carried and would like to pay it off at a discount because right now my note holder needs cash. I made a fair offer but he won't take it, he says it's too low, but it is all the cash I have. What can I do? A. You do not necessarily have to pay off a bill with cash, you could add something else of value to your offer that might make the difference and even save some of your cash. . . .
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Subdivision, Holding Hands
Q. I sold my land to a developer who went belly up and now I have it back. In this market who would want to buy it? A. This is a terms market. If you stack the risk/reward as shown in "SUBDIVISION HOLDING HANDS" you will find many developers interested in doing a deal, even in this market! . . .
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Switch Gears For Big Bucks
Q. I have a huge equity in an executive rental that I exchanged into a couple of years ago. Can I move in and take the exemption of $500K for myself and my wife? A. Yes, the IRS has ruled that you may do that but to use the exemption, you must occupy for 5 years, but in this market filing a homestead is a good idea! . . .
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Viatical Settlement
Q. My Mother is dying, has very little money and we would like to move her close to us but don't have the money to make the down payment. A. You could use the cash value of her life insurance policy to make the down payment, or assign the benefits of her life insurance policy to the seller, but id both of those options seem too cold, you could use her cash value to buy a viatical to use as a down payment on the property, as shown in "Viatical Settlement". . . .
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Sell it, Then Lease it Back
Q. I own a building that houses my business and I need some additional working capital. Can I refinance and pull out some cash in this market? A. A commercial cash out refinance or a commercial second mortgage would be difficult to get at this time but there is another solution. You could sell your property as a single tenant NNN leased property as further described in SELL IT, THEN LEASE IT BACK and to keep from paying capital gains, do a 1031 into some residential properties at today's bargain basement . . . .
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Divide the Use
Q. I inherited a family vacation home at the beach that we all love but the expense is more than we can handle comfortably. Is there anyway to get help with the expenses without a sale? A. Since most vacation homes are fully furnished with utilities kept on even though use is only part time, you could use it as a vacation rental through an online advertising site like VRBO.com or Homeaway.com. If the complexities of property management are beyond what you care to commit to, you could subdivide the house and sell 3 quarter interests in the property to other families as described in DIVIDE THE USE! . . .
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Discount the Note at Closing
Q. I have had my house in escrow and just found out the buyer can't qualify for a loan. Is there anyway to save this deal? A. Yes. Carry the note yourself. If you need to get cash, "DISCOUNT THE NOTE AT CLOSING" so you get your sale, your cash, and the buyer gets the property. . . .
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Spend Your Inheritance Before You Get It
Q. I will be receiving an inheritance in the near future but want to take advantage of some of the real estate bargains available today. Is there anyway to accomplish this? A. Yes, you can "SPEND YOUR INHERITANCE BEFORE YOU RECEIVE IT" by following the formula instructions! . . .
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Airspace Easement
Q. I am buying in a new subdivision and paying a premium for a view lot. Is there any way I can be sure that no one builds and blocks my view at a later date? A. The only way to be absolutely sure is to buy an "AIRSPACE EASEMENT" as described in the formula. . . .
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Exchange Encumbered Property as Free & Clear
Q. I have a free and clear property and would like to trade for a property I really like but it has very little equity and I really don't want to carry the financing. What can I do to balance my position? A. You can initiate a trade proposal that includes the seller of the property you are buying placing a new loan on your free and clear property, and then use the proceeds to pay off the balance owing on the new property. The detail on this is in "EXCHANGE ENCUMBERED PROPERTY AS FREE & CLEAR". . . .
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Borrow Against Note Taken
Q. I put my property on the market because I needed cash. The only offers I am getting are for seller carried financing which doesn't meet my needs. I got a quote for selling my note and will get very little for it. Is there another way to go? A. Absolutely! The process is called hypothecation. It means that you can borrow the cash you need secured by the note and deed of trust you carried. This is fully described in "BORROW AGAINST THE NOTE TAKEN". . . .
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Blanket Mortgage
Q. I would like to by the property next door and although I have a lot of equity no one is doing cash out refinances now, so I don't have a down payment. Is there another way to do this? A. Yes there is. You can use your equity to by the property by putting it in a portable form. Check out "BLANKET MORTGAGE" for a complete explanation. . . .
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Exchange Vacancies
Q. What can I do to gain some passive income? I am an experienced property manager but I don't have much down payment and may not qualify for a loan? A. Property management skills are worth money, and you can use them either as an employee or for yourself. If there is a high vacancy factor in your area this can be a perfect opportunity for you to "MASTER LEASE AND EXCHANGE VACANCIES" thereby earning the passive/qualifying income you are looking for . . .
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Reverse Exchange
Q. The property I have wanted for years is on the market now at a really good price and I want to do a 1031 exchange. My property has not been listed and I can't count on a sale in this slow market in time to get the one I want. Can You help me? A. Yes, I can There is no reason why you cannot either trade your equity directly as a down payment, or if the seller won't or can't take your property, do a 'REVERSE EXCHANGE'. . . .
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Corporate Note
Q. With credit tightening and my business needing to keep its cash, how can I buy a new business property and take advantage of the market pricing? A. In the best of times obtaining corporate non recourse financing is difficult with conventional lenders, however, any seller can finance your purchase of their property. If you are willing to originate a new loan, You can keep all your cash in reserve by using the "CORPORATE NOTE" formula. . . .
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Split the House
Q. I have inherited an older house from my parents that used to be the big estate house on 40 acres, which were sold off many years ago. We love it but the neighborhood has been rezoned and a bunch of smaller rental houses and apartments have been built around us. This means we are over improved for the area and the property won't appraise for near what we think it is worth. Any ideas? A. Sometimes less is more. Rather than trying to market against the trend, go with it! Try using SPLIT THE HOUSE. You may make more than you imagined! . . .
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The Missouri Waltz
Q. I got a funny offer on my property, this guy wants to trade a property he owns for mine. I'm selling because I want to buy something else, not what he has, but I don't want the buyer to go away. This is the first full price offer I've had in 7 months. What can I do? A. If you already know what you want, there are a couple ways to solve the problem. First, you could take what he is offering, and use it as the "down payment" to buy your new property. If you are concerned that your seller won't want it and it will spoil the negotiations on your purchase, try THE MISSOURI WALTZ! . . .
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