Posted by JPiper on May 19, 1999 at 07:25:03:
There may be someone out there that has actually done one of these…it’s not me, and while I would never say “never”, my guess is it won’t be you either.
Why don’t you read some of the articles available on this site? In particular, pay close attention to lease/options. My guess is that this will get you where you want to go quicker than the munibond technique.
JPiper
Newbie seeking help - Posted by T. Barnes
Posted by T. Barnes on May 19, 1999 at 07:18:19:
I just formed a new corporation for buying a new home for my family and for investment purposes. As a Newbie, I have $1,500 to start with. How can I get lenders to fund SFH and other properties with very little money? I’m new at this and will try anything to succeed. I have heard of a technique by using muni-bonds to purchase RE. Thought this is a great way to go. Can anyone advise on the success with using this method of financing RE?
Please advise
From the Podium to the Pavement - Posted by John Behle
Posted by John Behle on May 19, 1999 at 10:58:39:
This is one of those techniques that sounds good, but doesn’t execute well. Few sellers or their agents are so naive that they wouldn’t or couldn’t find out the value of bonds. If they were that naive, I would suggest the best route in investing is not to take unfair advantage of people.
Bonds as opposed to discounted mortgages do not have a “range of value”. The circumstances where you can negotiate a successful “bond trade” deal are very rare and in most cases extremely un-ethical.
Getting a deal accepted could end up in a devastating lawsuit later. The naive seller finds out he’s been “cheated” (as they and likely the courts) will view it.
I don’t mean to be negative here, just realistic from experience and seeing people waste their time with this technique for years. As I said, there are rare circumstances where bonds have been used successfully.
Look for deals, not sexy sounding techniques. Build your toolbox of realistic and proven techniques and go find and fix a seller’s problems. Don’t grab a hammer and run around looking for nails. “He who is good with a hammer - thinks everything needs a nail.”
Learn to find deals and problems to fix.
Re: Newbie seeking help - Posted by Ed Garcia
Posted by Ed Garcia on May 19, 1999 at 10:20:03:
T. Barnes:
It?s one of those things that everyone has heard of , knows about,
but no one is doing.
The problem Mr. Barnes, is that we all have a tendency to take the
path of least resistance. There are so many other creative ways to do
deals that are easier to sell.
Can it be done, absolutely. The biggest player in the world of such a
vehicle was Michael Mulkin. That?s another story.
My suggestion, is to see what the market bares. As you find the deal,
The deal will tell you how to work it.
If there is little profit in your deal, then flip or lease option.
If it is a deal that you have a respectable profit structure in, then seller
carry back or borrow on one of your credit cards for the down, go to
North American Mortgage , and get a 90% loan with the 10% from your
credit card, giving you 100% financing on an None owner occupied deal.
Just a little food for thought on your first deal.
Ed Garcia
It is not that tough… - Posted by karp
Posted by karp on May 19, 1999 at 09:43:18:
to see why the MUNI Bond Idea rarely flies.
Let’s look at what you are really doing.
In essence you are saying “Let’s just bag all this stuff, Mr. Seller and let me give you 40 cents on the dollar”
In effect you are discounting his note before he gets a chance to create it…lol
Anyway, I like to experiment around and apply all kinds of Creative RE Techniques. I never got this one to work either.
Best of Luck,
karp
Re: Newbie seeking help - Posted by phil fernandez
Posted by phil fernandez on May 19, 1999 at 09:24:17:
Muni bonds, zero coupon bonds, any kind of bonds in exchange for the seller’s equity is a tough sell. I have never seen this accomplished in my 25 years of investing.
How do you explain to the bewildered seller this concept. The confused mind always says no. And will a seller be willing to wait 20 to 30 years to be able to cash in the bond.
What you need to concentrate on with your $1,500 seed money would be lease options and taking property subject to the existing financing. Little money neede for these.
You may also want to try wholesale flipping.
There are many great articles here describing each of the three above techniques.
Forget the bonds.