There are a number of situations in which it might be better to control a property as a lender rather than as a title holder. When? Anytime you want to avoid liability associated with real estate ownership. Or when a lien might attach to the property held in your name. Or when a lender threatens foreclosure in the event a property were to be titled in the name of another party. Let's look at these one at a time.

Continue reading “Convertable, Demand, Wrap-Around note”

 The seller of a property under contract can sell the contract on another installment contract which wraps around the original contract. The 'wrap around' contract can embody completely different terms and conditions of sale, thus enabling a contract buyer/seller to build in additional profits and 'spreads'.

Continue reading “Wrap-Around Contracts”

If you'd like to really explode interest rate yields, let me explain a technique called a 'split wrap' loan. It is the quintessential technique for multiplying yield.

Once upon a time I happened to hit it lucky and found an entire neighborhood eager to sell their homes because a major employer was rumored to be shutting down. If we recast the deal in current terms, a typical one of these houses would have been worth $100,000 with an assumable 8% loan in the amount of $60,000. It could be bought for $80,000 with $20,000 down. A private mortgage lender offered to lend the down payment under the following circumstances:

Continue reading “Split “Wrap” Financing”

 All of the above strategies are fine when the economy is inflating, but what about when interest rates and equities are deflating? Over the past several years or so, we've seen falling market interest rates, leaving many would-be sellers with existing high interest rate loans stranded high and dry with no buyers willing to take over their payments.

Continue reading “Under-Wrapping the Interest Rate”

 Suppose in a 10% interest rate market, you buy with no interest. Can you see that this is an excellent way to transfer equity from a seller to a buyer. Wouldn't a Single Payment Note be even better? The trick is to get the lender to accept zero interest and/or zero payments. Some times all you have to do is ask - especially when there's any form of distress. On the other hand, more often, on occasion, you've got to learn to be a little more subtle by setting up a structure that can provide zero interest.

Continue reading “Buying With Discounted Paper”

 Single family houses offer three primary investment benefits: They can be bought and financed to provide net rental income without regard to appreciation potential and still make a lot of sense. I know a Californian who has bought a dozen or so houses in a small town in Iowa. There is very little appreciation because the population isn’t growing, but there is a strong rental market because of a local college. The houses he paid $15,000 for a few years ago are still worth about the same, but they stay rented for $500 per month. Even allowing for 40% shrinkage due to operating costs, that boils down $3600 per year net return, or more than 20% yield on his cash investment. He’ll have recovered his entire investment in less than 5 years and from then on, it will all be gravy whether or not the houses ever appreciate, or even sell for that matter.

Continue reading “What Should Single Family House Investors Do Now?”

Opportunity is a funny thing. It almost always resides in the mind in the form of a number of possibilities that can be wrung out of any situation. In order to be recognized and acted upon, it must first be formed and shaped by the attitude of the individual. That's where the "power of positive thinking" comes into play.

Continue reading “Recognizing Opportunity In Uncertain Times”

 Whether things are looking up or looking down, everybody seems to be focusing on the past or future instead of the present; despite the fact that everything that you experience happens in the present. Most of the people who are in trouble today are in debt. Those who have no debt don't seem to be affected very much. Why are so many people in debt? Because they were convinced when they borrowed money that they would be able to repay it by either refinancing or reselling their homes at some point in the future. When they found out that this wasn't going to happen, they spent most of their energy lamenting the actions they had taken in the past rather than to start actively looking for ways to get out of financial trouble.

Continue reading “Look Towards Taking Advantage of Today’s Opportunities”

Amidst all the hand-wringing about people losing their homes to foreclosure, or investors seeing their equities wiped out and their debt beginning to exceed the value of their houses, an important fact seems to be overlooked: In probability, homeowners were able to buy their homes with very low down payments. Their monthly payments were probably less than the rents for comparable properties once all the tax savings were factored into the mix. And they totally controlled the quality of life in houses where they weren't answerable to a landlord. So what is looked on by the media as a personal tragedy boils down to having enjoyed a lifestyle that they couldn't afford for a time, and now they must return to Kansas and confront real life.

Continue reading “Getting Back on the Investment Horse”

 Today, more than ever before, cash is king. In many States, only those with certified funds for the full offered price in hand can even bid at foreclosure sales. Very few REO purchases can be financed by non-owner occupants. To have much chance of success, Short Sale offers have to be accompanied by written loan approval by another lender, or by proof of cash funds. Where is this cash going to come from?

Continue reading “Cash Is King”