Test your investing criativity!!!!

General Real Estate Investing
1

Hi everybody!

How criative is your investing? Would like to want to test it?

So here it is:

Let’s say there’s a single family house (MV = 160,000). Suppose you got it under contract for $137,000.

The owner refinanced the house 2 years ago, so now they owe $130,000.

The seller, that just wants to get the mortgage payments off his back, will carry financing 100% (zero interest! !) so, it is a “subject to” deal.

You convinced him the you will rent/lease out the house for $1300, so you will sure have the money to cover his payments - $1000/month. (basic, huh?)

You can sell the property easily for $155,000, but you don’t want to pay off the mortgage (let’s say for the next six months), because there’s an “early pay fee” of $5K.

You also want to use the money - 155K! - to fund other deals you have in mind.

Also, you can call someone else - like another investor - if really necessary, to get the deal done.

How would you structure the deal, so:

  1. You can cash out the house, of course, paying no fees/taxes! (Or as less as possible!);

  2. The owner wouldn’t know about the sale, or how much your are selling it for. Then, instead of paying off the house to them ($137K), you can keep the small monthly payments(1K)? (And, then you can use the money in other deals).

  3. The lender - the holds the current mortgage against the house - will not know about the sale, for the next months - because of the early fee (5K).

  4. The owner can’t know that you are selling the house - and for how much - because, he will then want you to pay off the mortgage and he gets out of the deal.

  5. You can sell the house without letting your buyer and the home owner meeting each other - or knowing about the deal. The owner thinks you are rent/leasing it out - the buyer, thinks you are the owner - or at least that you legally represent him.

  6. After couple months, you get the money from other deals and pay it off. The lender get’s the money, you got your cash, the buyer got the house, and the owner doesn’t need to worry about the payments no more. Everybody lives happily ever after!

How would you do that, huh?

Put your brain to test, have fun, and hopefully this example can help other investors!

Do not back off… exercises like this can help you make thousands down the road!

See you later with the answer!

Peter.

2

You convinced him the you will rent/lease out the house for $1300, so you will sure have the money to cover his payments - $1000/month. (basic, huh?)
If its a sub2 deal I don’t have to convince him of anything. I just tell him that his payments will be made until I find a buyer.

You can sell the property easily for $155,000, but you don’t want to pay off the mortgage (let’s say for the next six months), because there’s an “early pay fee” of $5K.
Sell the property on a 1 year lease option.

3

draegarfrog:

Yeah, but you want the money - $155K- now. That’s the whole point.

Good try, though!

4

Ok, I’ll humor you because I’m bored.
“The owner wouldn’t know about the sale, or how much your are selling it for. Then, instead of paying off the house to them ($137K), you can keep the small monthly payments(1K)? (And, then you can use the money in other deals).”
First of all, unless your buyer has cash just laying around and is an idiot, he’ll have to get a loan. The lender will run a title check and have the property appraised. Once they run a title check they will see there is a lien on the property. When and if you close with a title company the money from the lender will go to the buyers account to payoff the loan. Whatever is left will go to you or the seller.

“The lender - the holds the current mortgage against the house - will not know about the sale, for the next months - because of the early fee (5K).”
They will know because the new lender will want the account number for payoff.

“The owner can’t know that you are selling the house - and for how much - because, he will then want you to pay off the mortgage and he gets out of the deal.”
The owner doesn’t need to know how much you are selling for and yes he will want his mortgage paid off.

“You can sell the house without letting your buyer and the home owner meeting each other - or knowing about the deal. The owner thinks you are rent/leasing it out - the buyer, thinks you are the owner - or at least that you legally represent him.”

You are in the wrong business my friend! Study up some more. Make sure you pay attention to ethics, honesty and integrity. It will take you a long way.

5

draegarfrog:

Well… first of all… I aprecciated your humor! Tnx!

Second, well… integrity is something I do not forsake for a quick buck, you can be sure about that.

And for last, if you can’t find an answer for the test, it’s okay, you will not ruin your reputation for not thinking “out-of-bun”! You might lose some money, as you reject “complicated” deals, that’s true, but , I believe you will not lose too much more than that. It happens all the time!

There’s an answer - that allows you to keep your honesty, integrity and ethics - and a lot of cash as well!

I’ll post it here later. Let’s give some time to other people try it, as well. Afterall, that’s the beauty of life, isn’t it? Diversity.

Thanks for trying.

6 
 "Creative" is the correct spelling.  I'm sure that putting this house under contract with hard lenders or angel investors would be pretty easy if they had a reason to trust you.
7

I’m thinking of a numer between 1 and 1,000,000…

…no, that’s not it!

…no, that’s not it either!

You’re fixated on a single answer that you’ve developed in your mind…

…no, that’s not it either – only 999,997 guesses to go!

Keith

8

It’s a silly example anyway. You’re buying at more than 88% of the market value ($155K is that’s what you can sell it for) in a declining market - NOT SMART! Additionally, this property is a negative cash flow property. Finally, this is not subject to if the seller is carrying it at 0 percent interest unless that’s what the original loan was.

The smartest move for the creative mind is to just say no to this deal!

Mike

9

Man, this is lame, but as above, being bored, I’m drawn to the stupid stuff.

Okay, first, the total monthly payment on this property from a $130K loan is more than likely going to be alot higher than $1K/month. In fact, it’s probably closer to the $1300 per month that you’ll be leasing it for, so no cashflow (even perserved cashflow).

Second, a sub2 deal is not 0% interest. You pay the interest on the mrtg just as the original homeowner did. Maybe you’re referring to the $7K difference as interest free, who knows. Your delivery lacks a bit.

Third, you asked how would I structure the deal. Okay, assuming your numbers, I would take my $13K in profit and move to the next deal.

Fourth, I’m real curious how you plan on doing a deal as described without losing any honesty, integrity and ethics as well as performing it in a fully legal manner. Heck, from your own post, your honesty, integrity and ethics are already in question. You plan on borrowing (or obtaining) $155K against the property without paying off the 1st mortgage and without informing the seller/homeowner. You plan on using that cash to fund other deals, thereby using the money available to pay off that original loan. And you completely fail to mention that besides the $1k/month original loan payment, you’ll now have another higher monthly to deal with as well. I seriously doubt that your $1300/month rent payment will cover both.

On another note, I took the time to review your website listed in your tagline. I find it hard to believe that you get many leads from something that has that many syntax and spelling errors in it( what is “criative” anyway). Seriously, my suggestion is that you either take the time to review your work, run spellcheck occassionally, or hire someone to edit your stuff.

Of course, maybe the answer to the question is within the website. Could this be it: " We believe this wil not solve your problems. If the root of the the problem is not threated, the symptoms will eventually come back."

Do you have to threaten them to give your their house or do you threaten them to get the $155K?

Truly, the suspense is killing us!!

Raj

10

How hard is this?

You are doing the contract where the Home owner is paying the mortage for six months. Meanwhile renting it for 1300 and keeping the cash!

You also got a Limited liabilty Power of Attorney that allows you to sell the property and sign for the Home owner and collect funds on his behalf.

And you are selling the property in a land trust!!!

Do I get the extra credit Points here?

11

How do you keep the original lender from not knowing about the sale? Even selling the property in a land trust would the new lender not want to see a clear title? Also, using this method it seems you would end up owing twice as much since you would have the original lien of 130K plus the new lien for 155K. What am I missing here?

12

petersuperti,

C’mon man…give us the answer. Teach me something new.

13

Sorry, REO, I see no bonus points. You missed a key element. Mr. Superti has already “convinced” the seller that their payments will be made because he has “leased” out the property. If the seller is making the payments for 6 months, then that doesn’t work.

Also, even selling in a landtrust, unless you have managed to find a cash buyer willing to give some stranger $155K to move into the property, it’s going to be hard to close this scam…huh…deal without one or both of the lenders finding out what’s happening.

Chris, I don’t believe that you’ve missed a thing except how to scam and defraud the seller, the buyer and the lenders.

draegarfrog, I wouldn’t hold your breath.

Raj

14

Hey Keith is it 582,239

15

Nope…guess again!

16

The correct answer has got to 34, Keith.

If you mix 2 quarts of water with 2 packs of mix for 30 seconds you get…

KOOL-AID!!!

Raj

17

You guys are killing me.
I guess you scared off draegarfrog.

18

raj and others…you’re being too hard on petersuperti…

I found the Webster’s definition for “criativity” and it makes perfect sense:

[/b]criativity: the ability to influence the thinking of others through airborne microscopic transfer of mind altering alien larvae[b]

So…by the time the alien larvae implant themselves into the brains of the seller and the buyer, you can swing the deal anyway that you want…what’s not to understand?

Roger…you got him so bad, he probably won’t even come back! Too funny. I’m glad you guys police the nonsense on these posts so newbies like myself don’t get sucked into foolishness.

Thanks!

19

And, here, I thought he just couldn’t spel so gud!

Keith

20

Now tht is fune!