Posted by de-ohio on July 26, 2003 at 12:44:03:
Congratulations, you are, in the real estate business. In an enviable position actually.
$180 per month cash flow, and substantial equity, not bad.
Now when you consider the cash flow after you pay off the house in nine years $______ monthly and you own a house worth $ _____ free and clear. Not bad. Not bad at all.
The way you can use this to your advantage the way we buy our properties. Eleven since Janurary.
You purchase a property and use the equity in your rental for the down payment. You can buy propereties for no money down, no cash out of your pocket. Bank finance 80%-90% and you have them take a second mortgage for the down payment against the rental property.
If you buy the properties right, significantly under FMV, you will have equity in each property, if you have enough you can continue this perpetually.
What we do is, buy rehab properties, rehab them, some we sell right away, some we rehab and keep. Rehabbing increases their value and creates a lot of equity that we can use for down payments.
Example; we purchased an abandoned 15 unit building with 12,500 sq ft retail space, for 180,000 we got the owner to carry the down payment. We borrowed another 100,000 to rehab it. After completion the building appraised for 525,000 giving us substantial equity to use for down payments on other properties we will buy.
Hope this helps