Posted by John Miller on May 07, 1999 at 19:24:34:
Thanks Joe, I’m starting to understand it better.
BUYER STILL LEAVES CLOSING WITH CASH? - Posted by JOHN MILLER
Posted by JOHN MILLER on May 04, 1999 at 12:09:45:
I HATE TO BE A PAIN, BUT CAN ANY SEASONED INVESTOR OUT THERE TAKE THE TIME TO EXPLAIN TO ME WHAT TECHNIQUE THOSE BUYERS ON THE CS INFOMERCIAL ARE USING WHEN THEY SAY THAT THEY TOOK A CHECK OUT AT CLOSING FOR THOUSANDS OF DOLLARS.
I’VE BEEN THROUGH MY CS KIT A THOUSAND TIMES AND IT HAS GREAT TECHNIQUES. I ALSO FANCY MYSELF A PRETTY CREATIVE PERSON, BUT I CAN’T SEEM TO FIGURE OUT WHAT TECHNIQUE A BUYER WOULD USE TO LEAVE A CLOSING WITH A CHECK IN THERE POCKET FOR THOUSANDS OF DOLLARS LIKE THOSE BUYERS ON THE INFOMERCIAL. IT CAN’T ALL BE EQUITY.
SO PLEASE TAKE A MOMENT AND FILL ME IN, I’M DYING TO KNOW.
SIGNED, IMPATIENT IN WERNERSVILLE, PA.
Another example - Posted by John Behle
Posted by John Behle on May 07, 1999 at 17:41:11:
There’s an article I posted called “$110k Profit from a $75k bad note” that is a cash back deal. With a little fix up (OK a lot) the property was worth almost double the initial appraisal. Within a few days of the closing and new loan to purchase, we took out an equity line. It was simply a matter of taking the same loan package to another bank that specializes in H.E.L.O.C. loans (Home Equity Line of Credit).
We then pull the cash out when needed to buy notes or good property deals. If we had wanted to, we could have pulled 50k cash immediately over and above our cash into the property. Zero down, 50k cash and plus about 100k equity.
Also, we’ve been talking about the “Paper Trade” in a post above that Robert started. That is a great technique for pulling cash out.
My personal belief is only to pull cash out if it is profit and is going to be re-invested. Over mortgaging properties is dangerous and some techniques people use border on un-ethical and illegal.
Re: BUYER STILL LEAVES CLOSING WITH CASH? - Posted by Tom ¶
Posted by Tom ¶ on May 05, 1999 at 14:28:40:
I recently did a deal where I bought a home that needs some minor repairs. I took a loan out for the property and a second loan from equity I had built up in another property. At closing I walked away with a check for $13000. The cost of repairs will be around $5k. I still have $7k left. I was able to do this because I got the property really cheap. I paid $28K, and I will sell it for $70-75K (FMV)after the repairs are finished. So, it can be done.
Okay, lower case- Buyer still leaves closing with cash? - Posted by Ken Thompson
Posted by Ken Thompson on May 04, 1999 at 13:04:01:
I hate to be a pain, but can any seasoned investor out ther take the time to explain to me what technique those buyers on the CS informercial are using when they say that they took a check out at closing for thousands of dollars?
I’ve been through my CS kit a thousand times and
it has great techniques. I also fancy myself a pretty creative person, but I can’t seem to figure out what technique a buyer would use to leave a closing with a check in their pocket for thousands of dollars like those buyers on the infomercial. It can’t be all equity.
So please take a moment and fill me in, I’m dying to know.
Signed,
Impatient in Wernersville, PA
1 way - Posted by pboone
Posted by pboone on May 04, 1999 at 12:21:01:
John,
Cash at closing can and is being done everyday by many people I will give you one way IF you can ask w/o the caps.
Pat
Re: BUYER STILL LEAVES CLOSING WITH CASH? - Posted by John Miller
Posted by John Miller on May 05, 1999 at 18:24:59:
I really appreciate your assistance Tom, but there is just one thing I don’t quite understand, you said you took out a loan plus equity in another place and used the combined amount to purchase the property for $28,000.00 and had money left over after the purchase?
Is that where the $13,000.00 came from? was it money left over after the purchase?
Neither simple nor easy . . . - Posted by JoeKaiser
Posted by JoeKaiser on May 04, 1999 at 23:46:35:
But infinitely possible.
I’ve got an example at my site in the Pushing the Envelopes forum. In a nutshell, bought a property from a highly motivated seller for $22k, lined up $40k from a hard money lender, and can pick up a check for about $17k later this week.
There are other ways but most involve the seller agreeing to a down payment and his equity in carryback financing secured by other property or subordinated to your new loan. In either case, you can pick up a lot of dough when your new loan funds but it’s more than a little bit “sticky” because you’ve now got a pocketful of cash you haven’t yet earned and the temptation to just walk away is too much for some people. Walking away means the seller loses the money you received at closing.
I know one guy who was so addicted to it that he walked away from 8 or 10 deals once he’d been paid. One little widow lady even died of a heart attack when she realized she wouldn’t have anything left once the dust settled.
Walking away from closing is very cool IF you’ve actually earned the dough by buying cheap. If you’ve just reshuffled the deck and taken all the good cards, it’s just way too dangerous unless you know what you’re doing and why. Too much pressure for me, frankly . . . I ain’t that smart.
Joe
Re: 1 way - Posted by John Miller
Posted by John Miller on May 05, 1999 at 21:45:27:
Okay, please tell me one way to do…look no caps.
Re: Neither simple nor easy . . . - Posted by John Miller
Posted by John Miller on May 05, 1999 at 22:09:21:
Thank you Joe, your assistance is greatly appreciated, there are just a few things I don’t quite yet understand (please bear with me I’m new). When you said “hard money Lender” what lenders fit that profile? Did they know you were only giving 22k to the seller and keeping the rest.
I recently talked to a seller who wants to sell his property for $70,000 and is willing to carryback $50,000 for 30 years at 8% interest if he can get a downpayment of $20,000. In effect, couldn’t I just borrow the entire $70,000 from a hard money lender or bank, pay the seller his $20,000 now, and pocket the difference of about $50,000. Every month I would have to meet two loan payments, right? one to the lending institution and one to the seller. Wouldn’t a deal like that consists of two seperate transactions or could it all be handled at one closing. would a title insurance co. help me set that up? and finally, whew! would either a hard money lender or bank allow me to do that. I actually have a fiancee’ who has owned her own house for ten years, she has a 1st and 2nd mortgage and very little equity, but I think we could get approved for that size of a loan.
Does a transaction like that sound possible?
Re: Neither simple nor easy . . . - Posted by Joe Kaiser
Posted by Joe Kaiser on May 06, 1999 at 20:33:38:
No, your deal wouldn’t work.
Hard money is a loan based solely on the equity of the property, and most lenders will loan up to 65% of value.
It’s a little expensive but the beauty of it is there are no docs. Once title comes back clean, my guy just drives by, snaps a couple pictures and let’s me know if he can swing it. Two days later I’ve got a check. He doesn’t care what I paid or when I bought it.
That’s why you can’t borrow the whole $70k. My guy would only loan $45k or so on that property.
Still, that’s $45k closer to where you need to go, now if you can just figure out the rest of it, you’re set.
Joe