long term cash flow strategy $0.00 out of pocket!!! WITH DETAILED WAYS OF MAKING IT HAPPEN!!!!!!!

Luiz, I am trying to wrap my mind around your idea here and I have some questions, What are you doing with the 8k deposit? Is that going in your pocket? I lost my train of thought here, I will reread and post more questions.

well you could use that for rehab, instant money in your pocket, you could pay all the interest upfront to the investor, and have instant cash flow. you could hold on to that money for the entire term jst in case the customer decides he will no longer make the payments, that will buy you time to find another buyer. basicaly you can use that money for what ever you think would be important to you, personaly i would keep 5 payments from that money in the bank and not touch it just in case the buyers choose to move on, and the rest i would enjoy it! i holpe this was helpfull.
ps sorry it took sooooooo long to reply i had forgotten where i posted this but i will keep up with any further questions.

Good job Luiz! You never quit! You said you felt mentally defeated but worked yourself out of it. Dean talks about "plateaus of success" & this is definitely one of them. Also congrats on the creative thinking!

Quiting is just not an option, i have been doing lots of research, i am not going to quit, i need to make this work, my family depends on it, we're tired of renting from people. so many nice houses right here in my neighborhood that once sold for 350k with 2.5+ acres, now are going for only 70k asking price! i'm sure there are still room to work it down! i see what people who are making deals sees and i am eagered to make something happen soon! but i first need to get my team set up!
when it happens i will post and i will also have it detailed how it worked out!
have a wonderfull day

I think this is an excellent idea Luiz!

First and foremost I am proud of you for picking yourself up and looking past the negativity and self-doubt. As Dean would say you "thought a little differently." -- Great Job!

The thing I like about it the most is that not only do the numbers work out (always a good idea), but you looked at it from an investors perspective.

I mean, I don't know anybody that would turn down a 10% return on their investment, AND you give them SECURITY by placing the deed in their name. 10% ROI AND security in the form of a deed? Who wouldn't want that??? Most people I know would love to make 2.5%... even 3% ROI and you can offer an investor 10%!

The other thing I like about this is it gives you flexibility. Obviously, you ran your numbers using a payoff period of ~35 months. However, like you said, you could adjust this to 48, 60, etc. and tailor it to what the buyer can afford, and what kind of ROI(%) your investor would require.

For example, if the buyer couldn't afford to pay you $1333.33/month (that would be a 60-month term)you could agree to a 72 month term at a lower monthly payment of $1111.11/month (assuming you agreed to sell the house for $80,000). You'll still generate enough money each month to pay your interest payment, (to your original investor) it will just take you a little longer to pay down the principle -- not sure on the actual numbers but this could work if you found an investor that was willing to accept a lower ROI (%), OR if you decided to sell the home for less than $80,000.

Great work Luiz!

Rob

I just looked at the numbers again and wanted to point out that if the buyer initially pays you a 10% down payment of $8,000 (on a sale price of $80,000) he/she will only have to finance $72,000.

If they agree to pay $1333.33/month they will have paid off the home in just over 54 months...

Ok yes you are right however you want to charge the buyer some interest and if you charge tham only $8,000.00 in interests, for the full term of 60 months and they get the house deed on their last payment, that became a win-win situation for you, the money investor and the home buyer right???? i mean there isn't a bank loan out there the home buyer can get aprooved for, and if they would be able to buy it they wouldn't get a title in their hands for about 30 + years and they would be paying about 3 times the amount they financed in just interest. a mear $8000.00 wouldn't hurt a thing! be creative with this there are lots of routes you can choose to take and you would still be helping out a family with bad credit.

Yes there are multiple ways of working with numbers in this type of investing, and you could even cut your gross profit all together to simply put a deal together, i mean 5,000 dollars are 5,000 dollars lol, or you could up the term afew more years and generate extra income by lowering their payments and upping your interest rate, longer terms higher interest lower payments! what ever works for the buyer. being creative helps alot in this business! and thank you so much for commenting on this idea, and adding to it!

I just noticed one more thing after looking at these numbers.

Please keep in mind I'm not trying to deflate you expectations or trying to curb your enthusiasm in any way. I think you have a GREAT, let me repeat GREAT idea! I just want to clarify, bring to your attention a few points.

Remember I'm looking at your idea from an investors perspective.

You mentioned in your earlier post that you would pay an investor a 10% ROI on an initial investment of $40,000. That would be $4,000/year.

I think it is VERY important to note that what you are really doing (and you did mention this in your post above) is paying 10% on the investors REMAINING principle. You'll see what I mean in a moment.

I may have made a mistake in my math but I think the numbers are close.

So, if you add up ONLY the interest payments during the first year (12 months) they total: $3,434.41... not quite $4,000. Now add up the interest payments during the remaining 2 years.

Year 1 interest payments: $3,434.41
Year 2 interest payments: $2,118.66
Year 3 interest payments: $668.82

From an investors perspective I see that I'm actually making less and less each year...

Looking at the ROI% per year yields (dividing each interest payment by $40,000):

Year 1: $3,434.41; 8.5% ROI
Year 2: $2,118.66; 5.2% ROI
Year 3: $668.82; 1.6% ROI

Total interest payments to Investor over 3 years: $6,221.89

Calculate 3-Year Average ROI: $6,221.89/$40,000/3-Years = 0.0518

3-Year Average ROI = 5.18%

So from an investors perspective, if I loan you $40,000 I'm really only going make an ROI of 5.18%, or $6,221.89 over the next 3 years... You will have paid me back my original $40,000 plus $6,221.89 in interest payments at the end of 3-years... A true 10% ROI would be $12,000 over the next 3-Years.

***This happens because you're paying off the principal so darn fast!!!

Good for YOU, not as good for an Investor.

Now, let me be the first to say that a 5.18% ROI is still pretty darn good. You just have to find an investor willing to accept a 5.18% ROI. However, what if your investor wants more than a 5.18% ROI????

***Here's an IDEA to consider that would raise your investors ROI%.

Remember back when the buyer paid you 10% down ($8,000) when he agreed to buy the house? If you set aside $2,000 of that money initially, and pay out a little on the back-end of years 2 & 3 in the form of "additional" interest payments to your investor you could in effect "even" out the interest payments to your investor and increase his/her ROI.

Does this make sense?

If you did this with $2,000, you would essentially be paying your investor $8,221.89 over 3-Years.

$6,221.89 (original interest) + $2,000(extra) = $8,221.89, thus raising your investors ROI from 5.18% average over 3 years to 6.85% average ROI over 3 years!

If you paid your investor an extra $3,000 instead of an extra $2,000 (on top of your original interest payment schedule), you would raise his/her ROI% to 7.68%!

Now your making it more enticing for the Investor to loan you the $40,000 in the first place!!!

If you find an investor that is happy with 5.18% ROI your good to go. If you come across an investor that would like a little higher ROI you now know how to increase it a little bit!

It will come down to how much ROI your investor requires, and how much of the initial down payment you want to keep.

Good Luck!

Rob

NOTE: If I in anyway misunderstood what your numbers/method were in your original post and you already knew this just ignore this!

living and learning that is the reason we are all here and i sure apreciate you actually taking the time and explaining how to come up with the actual interest rate figures for the full term! I LOVED THE LESSON!!!! i got schooled and i love it!!! and yes i worded remaining balance. but either way i learned something from this and all posts and coments are welcome never rejected my mind works like a sponge when it comes to this, lol so keep the comments coming if anyone has any ideas please let us all know.

Haha,

My mistake. I thought you put in in there somewhere!

Not trying to "school" anybody

I think you truly have a great idea and your enthusiasm is contagious!

Just wanted to make sure we (and others who will read this in the future) were clear on the actual ROI% for the investor.

Keep us posted on how it turns out!

Best of Luck!

Rob

No problem Rob i will let you know as soon as something happens!
thanks for all your input! have a wonderfull evening.

LUIZ

Hey Luiz you mentioned you put together a list of 50 buyers before you started...i'm wondering which method you used to attract the buyers so quickly...

this is a very good strategy if You can find an investor, I will sure keep a copy and arrange it to fix my own term.

In order to play with the big ones;You must think like the big ones!Luiz i do like your heart,I am just looking for that wholesale deal/Not as many as you at one time.
Great action working the playing field,Luiz!

ok most of the people i spoke too are friends, who told friends and so forth, but i was honest/transparent with all of tham!! ok i might have an edge on selling things for i have been a car salesman every since i was 16! so i can relate to people i sat down with them all and i used the same line with every one of tham!! and here it is!!

if i told you that i could get you a house and a loan on the house that you will be able to pay it completely off in 5-6 yrs with a low payment of only 1333.33 per month requiring a little money down usually 10% of total cost, and have a Deed in your name would you be interested? if yes; i have afew questions to present to you this is basicaly a very forward questionaire so please be as acurate as possible with your answers.

Q: Are you looking to buy a house??
A: yes but my credit is shot and financing is just not possible for me right now.

Q: what if i could make that possible for you would you buy a house from me?
A: yes but i dont have any credit!

Q: So is credit the only thing keeping you from buying a house right now?
A: yes

Q: Is there someone else i should be interviewing and would be a decision maker on such purchase?
A: yes my wife, yes my husband, no.

(if yes i would ask for a better time to come back so that i could lay out the strategy for both of tham and answer any questions they might have, if no i would continue)

Q: do you and your partner have a job?
A: yes.

Q: how long have you been at the job?
A: 2 years- 5yrs - etc

Q: how much money does your house hold produce per month after taxes?
A: 4500

Q: would you mind if i contact your employer?
A: not at all, Q: but why would you do that.?
A:so that i could confirm that you are in good standards with your employer and with no risk of being laid off.

Q: do you currently have a car payment?
A: yes, no

Q: how much are your monthly payments?
A: $ 250.00 per month

reason this question is important is becouse if they have a job that pays tham 2500 per month total house hold income and 800 is car payments it would make no sence for me to risk being stuck with the house, or burning an investor's trust.

Q: are you able to come up with 10% down for the purchase of your new house??
A: yes, no, depends how much.

by the way i use a legal pad and write everything down they tell me.

ok total cost of the house is 80 thousand dollars you would be required to put 10% of that as a down payment it equals to $8,000.00
Q: would you want to put that or would you like to put more money down?
A: yes i could,no i couldnt, i would put 10,000.00 down

if no:
Q: how close can you get to 10%?
A: oh i only have 7k or 6k or 5k

just keep going, be enthusiastic, and always shake your head yes when you want to hear a yes its contagious! i promise you they will be shaking their heads yes also! try it out! lol

i dont know if you noticed all these questions are qualifying questions, and by the first question i can tell if the person is serious about it or not depending on the yes i get!
its something people perceive to be too good to be true, so you have to be transparent and let tham know listan i am working with afew investors in the area and they are doing owner financing etc.

the more forward and transparent you are with your buyers the better off you are, this is a people's business so you must be welcoming etc. i once had a group of friends who i had set up an appointment to come over to my house and discuss nothing but this! it was great i had every single one of tham wanting to buy a house right there and than!!

the only thing that is keeping me from doing this is that my priest friend pointed me out to a real estate agent who knows how to make business plans not the money man. i am still looking for investors and i have read the newsletter Dean has sent us i am using the strategies from it to find investors!

i holpe i elaborated this enough! i holpe i didn't make it more complicated than it actually is. lol i tend to do that some times

PS: I AWAYS ASK FOR REFERALS!!! THAT IS THE BEST STREAM TO BUILDING THE BUYERS LIST!!!!!!
hope this helps;-)

thank you, yes there are many ways you can arrange your terms! jst remember that the money down is very important becouse this shows you that the buyers are commited to make those payments every month! Good luck in your investments

that actually sounds good!!! lol thank you for your comments and support. and yes thinking big is the key! i am aming for the sky!!!

Great job on putting your plan together, you will make a difference in people's lives with your strategy. FL is one of the best places to do this so you're in the right location to get those real low deals for your plan to fall through. I will continue to follow on your progress & wish you all the success on getting started with investing, Felicidades!!!

Everyone Can Make A Difference!
John A.

Grasias, Thank you john i also hope that other people will put this strategy to work. but i am sure that once i have my firt deal go through many more will follow from there! i was even thinking if maybe the local banks would be interested in investing in such deals... What do you guys think??

I think this is a great strategy. Creatively brilliant. I'm going to have to try this. The only way way we can fail is if we fail to take action. Applied knowledge is power. Rob's input was also very informative.

i have a facebook account and i added Dean as my friend and one of his addies (an investor) has asked me to join her facebook and so i did she had lots of good info and i even found out a way to find an investor's club near me all i did was go to this web site http://www.reiclub.com/ and all you would have to do is select your state and go from there, its free and requires none of your info! i found one in fort myers its about 25minutes from me so i will join and keep every one posted!

Good luck out there guys and thanks for all the great comments and ideas.

Luiz

Luiz,

Just finished reading Dean's new book and now am reading all the info. in this forum. I like your strategy and may try to incorporate some of it when I start. I have been around real estate investing for some time so I would like to offer the following:

Your buyers will have to insure the house and pay property tax. This will be in addition to the monthly payment they pay you. This may be a deal breaker because it will make their total monthly payment higher.

With the 10% down money you get, did you consider setting aside 5k from each deal and after 8 deals, you could finance the house yourself and collect the principal plus the interest.

Just a thought

yes that is the beauty of this strategy, you can move the numbers arround to what suites you best.
thanks for posting.

and good luck in your investments

Luiz,

Several years back I had a similar idea (hated the whole amortization over 30 years thing) and wanted to help families in a realistic way. You've done just that!!!!!!

Wouldn't it be awesome to develop a business that could eventually close down the traditional mortgage system and replace it with your model? I would be all over it! Imagine the help we could offer to home buyers! To me, it's just the moral thing to do. I just don't have those contacts...yet.

Thanks for putting a piece of the puzzle together for me as I am determined to find a way to make it work.

Rick

I was wondering if the process of getting property to rent that is banked owned possible. I read the concept of getting some property. But what if you dont have the connections and you are strarting this process by yourself. Is there a simpler way to get property you want to rent for long term income with no money down and bad creit-like 550 or below. I know it is going to take work, but is a there another way?

you may want to find private money to start then present each investor with your business plan and how they will be paid. As you do a few deals you may want to approach a local small bank or perhaps a credit union.

Hope this helps

Later Fred E

Hell of an idea Luiz! Dont know how I missed this post. Keep going brother. With that strategy, you'll become an RE millionaire sooner rather than later. I'm going the assignment route at the present time but your idea will get a thorough test run once I get a couple of assignments under my belt.

thanks, and good to know you are moving forth with your venture. I am also looking into assignment of contract, I know Dean explains to run with one route, but you find more opportunities when you run different routes. I am also looking for houses that are seller financed, because that will generate monthly cash flow, and at times you can simply rent the house at a very low price witch will go for the payment of the house,pay off the house with other peoples money and have a house of your own with time, and you can use this same strategy i mentioned in this thread to sell it! either way House1 let me know of any progress you may have in your venture,and Happy Hollidays to you and yours.

Luiz

It would be owesome, tell me what have you been working on Rick, is it working for you? you can send me a private IM if you feel more confortable.
thanks for your Inthus!!!!

good luck in your venture.

Luiz