The All-Money-Down Technique

So how does the all-money-down technique work by purchasing a home with cash? First of all, allow me to repeat that I actually didn't have any cash, but I had a substantial quantity of equity out of Terry's house and several houses that I owned put together to give me a significant cash down payment. Banks and mortgage companies alike will take cash from a home-equity line of credit as cash to purchase a house. At least they did in 1997 under the financial guidelines of the afternoon. What you have to remember about mortgages and lending is the guidelines vary continuously, therefore this technique I used in 1997 may or might not be able to be used in the future. When it is or is not able to be utilized again doesn't really matter to me personally as I think that there'll always be a way to buy property with limited money down sooner or later. There'll always be a method to acquire property but exactly how this will be completed later on I'm not completely convinced.

I started purchasing homes in the Mayfair section of Philadelphia with the prices in the $30,000 to $40,000 per house price range. I'd buy a home with three bedrooms and one bath on the second floor with a kitchen, dining room, and living area on the first floor and a basement. What we call a row home in Philadelphia would consist of a porch out front along with a garden the width of the home. Most row homes in Philadelphia are somewhat less than twenty-two feet wide. For all those of you who are not from Philadelphia and can not picture what a Philadelphia row home resembles, I suggest you see the film Rocky. Twenty-two houses on each side of each block will really test your ability to be a neighbor. Matters which will usually cause an argument with your Philadelphia neighbors frequently stem from parking, sound your children make, in which you leave your trash cans, parties, and the overall look of your home.

In 1998 my girlfriend and I moved in together and to the suburbs of Philadelphia called Warminster. After residing on a road in Tacony, similar to Rocky did, I really looked forward to having space between my home and my neighbor. I told Terry to not even think about talking with the people who lived next door to us. I told her when one of them comes over with a fruitcake I will take it punt it like a soccer into their garden. I believe I was afflicted by Philadelphia row home syndrome. My neighbors in Warminster turned out to be wonderful people, but it took me two months before I was prepared to learn that.

So you just bought your row home for $35,000 at Mayfair, and after $2000 in closing costs and $5000 in repair expenses, you find a fantastic tenant who would like to rent the house. After renting the home using a positive cash flow of $200 a month, you finally have an outstanding charge of $42,000 on your home equity line of credit which is going to need to be repaid. When buying the house, I did not receive a mortgage as I just purchased a house for money as it's said in the business. All currencies I spent on this house were spent by the home-equity credit.

The move now is to pay off your home-equity line of credit so you can go do it . We now go to your lender with your fixed-up house and tell the mortgage department which you want to do a cash-out refinancing of your real estate investment. It can help to explain that the area you buy your house in should have a wider selection of pricing as the area of Mayfair did in the mid-90s. The pricing of houses in Mayfair is very unusual as you would see a $3000 gap in home values from 1 block to another. This was important when doing a cash-out refinancing because it's fairly easy for the bank to find I just bought my home for $35,000 regardless of the fact that I did many fixes. I really could justify the fact that I've spent more money on my house to fix it up, and by putting a tenant in, it was a profitable piece of property from an investment standpoint.

If I was lucky as I was many times over doing so system of buying homes in Mayfair and the appraiser could use homes a block or 2 away and return with an evaluation of $45,000. Back then there were apps allowing an investor to purchase a home for 10 percent down or left as equity carrying out a 90 percent cash out refinance lending me back roughly $40,500. Utilizing this technique let me get back the majority of the money I set down on the property. I essentially paid only $1,500 down to this brand new home. Why did the mortgage companies and the appraisers keep giving me the exact numbers I desired? I assume because they wanted the business. I'd only tell the bank I want this to come in at $45,000 or I am just maintaining it financed as is. They always seemed to give me exactly what I needed within reason.

This whole process took three to four months during that time I might have saved several million dollars. Between the money I saved in my occupation and my investments and cash out refinancing, I had replenished most or all my funds from my own home-equity line of credit which was now almost back to zero to begin the process again. And that is exactly what I supposed to do. I utilized this system to purchase four to six houses a year utilizing the exact same money to buy home after home after home over and over again. In fact, the technique is really a no-money down or little money down strategy. At the time perhaps I had $60,000 in available funds to use to buy homes off of my HELOC, therefore I would purchase a home and then replenish the money. It was a terrific method that has been legal, and I could see my dream of becoming a real estate investor full-time coming into an eventual reality even though I was not there yet.

During the years from 1995 to 2002, the real estate market in Philadelphia made slow gains of maybe 6 per cent as every year went . I began to monitor my net worth that was 100 percent equity, meaning I had no other kinds of investments to look at when calculating my net worth. Broadly , the first five decades of my real estate career didn't go well because of the bad choices I made purchasing buildings and the decline in the marketplace. Furthermore, my lack of knowledge and experience in repairs made it a demanding. The second five years of my real estate career which I only finished explaining didn't make much money either. I encouraged myself primarily through my profession as a salesman, but I could see the writing on the wall which down the road property was going to be my own fulltime gig.

Realty Professionals of America

I have an office building which has a real estate company as a tenant named Realty Professionals of America. The company has a terrific strategy where a new agent receives 75 percent of the commission and the broker gets just 25 percent. If you don't know it, this is a fairly good deal, especially for a new realtor. The company also supplies a 5 percent sponsorship fee to the broker who sponsors them every deal they do. Should you attract an individual who's a realtor into the company which you've sponsored, the broker will pay you a 5 percentage sponsorship from the broker's end so the new realtor you sponsored may still earn 75 percent commissions. Along with the aforementioned, Realty Professionals of America provides to increase the realtor's commission by 5% after achieving cumulative commission benchmarks, up to a maximum of 90 percent. Once a commission benchmark is reached, a broker's commission fee is only decreased if commissions at the following year do not reach a decrease baseline amount. I keep 85 percent of my deals' commissions; plus I receive sponsorship checks of 5 percent from the commissions that the agents I sponsored earn. If you'd like to learn more about being sponsored into Realty Professionals of America's wonderful plan, please call me directly at 267-988-2000.

Getting My Real Estate License

One of the things that I did in the summer of 2005 after leaving my full-time job was to make plans to get my real estate license. Getting my real estate license was something I always wanted to do but never seemed to have the time to do it. I'm sure you've heard that excuse a thousand times. People always say that they're going to do something soon as they find the time to do it, but they never seem to find the time, do they? I try not to let myself make excuses for anything. So I've made up my mind before I ever left my full-time job that one of the first things I would do was to get my real estate license. I enrolled in a school called the American Real Estate Institute for a two-week full-time program to obtain my license to sell real estate in the state of Pennsylvania. Two terrific guys with a world of experience taught the class, and I enjoyed the time I spent there. Immediately after completing the course at the American Real Estate Institute, I booked the next available day offered by the state to take the state exam. My teachers' guidance to take the exam right after the course turned out to be an excellent suggestion. I passed the test with flying colors and have used my license many times since to purchase property and lessen the expenses. If you are going to be a full-time real estate agent or a business real estate investor, then you almost have to get a license. While I know a few people who don't think this, I'm sure it's the only method.

I worked on a single bargain at $3 million where the commission to the buyer's real estate agent was 75,000. By the time my broker chose a talk, I walked $63,000 commission on that deal . With the average cost per year of being a realtor running about $1200 per year, this 1 deal alone would've paid for my real estate license for fifty-three years. And of course all the other fringe benefits like having access to the multiple listing service offered a lot of realtors within this nation. While there are different means to acquire access to the multiple listing services or a different program similar to it, a real estate license is a terrific thing to do.

Some of the drawbacks I hear over and over again about getting your property license is the simple fact that you need to disclose that you are realtor when buying a house if you're representing yourself. Perhaps I'm missing something, but I really don't find this as a negative in any way. If you are proficient in the art of negotiation, it is just another hurdle that you have to deal with. I guess you may end up in a lawsuit where a court of law may assume as you're realtor you ought to understand these things. I really don't spend my entire life worrying about the million ways I could be sued any more than I worry about getting hit by a car every time I cross the road.