It’s odd that people love to brag about their net worth at the same time as they complain about needing more cash flow. Of course, when they get more cash flow, they complain about having to pay more taxes. Each of these topics are important for different reasons. Net worth is a measure of wealth. After tax Income determines lifestyle, so learning how to create income without learning how to keep it from being eaten away by taxes does little to improve lifestyle. They go hand in hand. For now, let’s look at ways to create more income; first when buying and selling, and then as long term investors.

Continue reading “Real Estate Income Generators”

One continually hears about creative financing, but it rarely materializes.  I was once in Novia Scotia discussing the purchase of a summer home.  The real estate agent proudly proclaimed that creative financing terms were available on one of them.  The terms were:  half this year and half next year.

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The house had been sitting forlornly vacant on a full acre of suburban land when it was spotted by an entrepreneur. A cursory search of the title records revealed that it was owned in the name of a couple. A search of the telephone records of a three country area revealed that each of the partners had a telephone in a different area code.

Continue reading “Discounting a 2nd Mortgage”

1. Exchange negative cash flow for positive cash flow by selling your houses to your existing tenants with attractive seller financing with wrap around loan spreads. You already know which ones pay on time and which don’t; so sell to the good ones. In the absence of willing lenders, a growing number of desperate home sellers have started advertising their houses in trade for other, more affordable or more suitable houses. Bear in mind that when you trade your house, you’re really trading only your equity. When equities are unequal, the party on the short end either has to come up with cash, or with a new loan to balance out what is given with what is received. Some builders will happily take houses in trade so long as you can qualify for enough loan to pay off their construction loans. This could help those who can’t find the financing that a builder could provide.

Continue reading “10 Tips to Get Your Out of a Tight Spot”

 De-financing" is a term that describes the process of reducing debt and increasing cash flow without the need for cash. Let me give you an illustration. In the last housing downturn, I had a "keeper" house that only had about 5 years remaining on a 5.5% loan. It was worth about $100,000. I also had 8 other houses that had similar loans with balances ranging between $8,000 and $12,000. The mortgage department of a single lender who had retained these loans in its portfolio had been shut down by bank regulators because of growing loan defaults. They were continuing to service all these loans even though the revenue from interest was minimal.

Continue reading “Definancing Bad Debt to Salvage Your Equity”