The All-Money-Down Technique
So how does the all-money-down technique work by investing in a home with cash? To start with, i want to repeat that I must say i didn't have any cash, but I had a significant level of equity from Terry's home and several homes that I owned put together to give me a considerable cash down payment. Banks and mortgage companies alike will accept money from the home-equity credit line as cash to purchase a home. At least they did in 1997 beneath the financial guidelines of your day. Everything you must remember about mortgages and lending is that the rules change constantly, which means this technique I used in 1997 may or may not be able to be utilized in the future. Whether it is or neglects to be used again doesn't really matter to me as I think that there will be a way to buy real estate with limited money down ultimately. There will always be a technique to acquire real estate but exactly how which will be done in the future I'm not completely sure.
I began purchasing homes in the Mayfair section of Philadelphia with the prices in the $30,000 to $40,000 per home cost range. I would buy a home with three bedrooms and one bathroom on the second floor with a kitchen, dining room, and living room on the first floor and a basement. What we call a row home in Philadelphia would contain a porch out front and a backyard the width of the home. Most row homes in Philadelphia are less than twenty-two feet wide. For those of you who are not from Philadelphia and can't picture what a Philadelphia row home appears like, It is advisable to watch the movie Rocky. Twenty-two homes on each side of every block will really test thoroughly your ability to be considered a neighbor. Things that will most likely cause an argument together with your Philadelphia neighbors often stem from parking, noise your children make, where you leave your trash cans, parties, and the looks of your home.
In 1998 my girlfriend and I moved in together also to the suburbs of Philadelphia called Warminster. After living on a street in Tacony, much like Rocky did, I really looked forward to having space between my home and my next-door neighbor. I told Terry never to even consider talking with the people who lived next door to us. I told her if one of them comes over with a fruitcake I am going to take it and punt it just like a football directly into their backyard. I believe I was suffering from Philadelphia row home syndrome. My new neighbors in Warminster turned out to be wonderful people, nonetheless it took me eighteen months before I was willing to learn that.
So you just bought your row home for $35,000 in Mayfair, and after $2000 in closing costs and $5000 in repair costs, you're a good tenant who would like to rent the house. After renting the house with a positive cash flow of $200 per month, you now have a superb debt of $42,000 on your home equity line of credit that will must be paid. When purchasing the house, I did not get a mortgage as I just purchased a home for cash since it is said available. All monies I allocated to this house were spent from the home-equity credit line.
The move now could be to repay your home-equity credit line in order to go do it again. We now visit a bank together with your fixed-up property and tell the mortgage department that you would like to do a cash-out refinancing of your real estate investment. It can help to explain that a nearby you purchase your premises in must have a wider selection of pricing because the neighborhood of Mayfair did in the mid-90s. The pricing of homes in Mayfair is quite unusual as you would see a $3000 difference in home values in one block to the next. This was important when doing a cash-out refinancing because it's pretty possible for the bank to see that I just bought my property for $35,000 regardless of the fact that I did so many repairs. I possibly could justify the truth that I've spent additional money on my home to repair it up, and by putting a tenant in, it had been now a profitable little bit of property from an investment standpoint.
EASILY was lucky like I was many times over doing this system of buying homes in Mayfair and the appraiser would use homes a block or two away and come back having an appraisal of $45,000. In the past there were programs allowing an investor to purchase a home for ten percent down or left in as equity doing a 90 percent cash out refinance giving me back roughly $40,500. Utilizing this technique allowed me to obtain back the majority of the money I put down on the house. I basically paid just $1,500 down because of this new home. Why did the mortgage companies and the appraisers keep giving me the numbers I wanted? I assume because they wanted the business. I'd only tell the bank I need this ahead in at $45,000 or I am just keeping it financed as is. They always seemed to give me what I needed within reason.
This whole process took three to four months during which time I may have saved several thousand dollars. Between the money I saved from my job and my investments and cash out refinancing, I had replenished most or most of my funds from my home-equity credit line that was now almost back again to zero to begin the procedure again. Which is exactly what I designed to do. I used this system to purchase four to six homes a year utilizing the same money to get home after home after home over and over again. In reality, the technique is really a no-money down or little money down technique. At that time maybe I had $60,000 in available funds to use to buy homes off of my HELOC, so I would purchase a home and then replenish the money. It had been a terrific technique that has been legal, and I could see my imagine being a real estate investor full-time coming to an eventual reality despite the fact that I wasn't there yet.
During the years from 1995 to 2002, the real estate market in Philadelphia made gradual increases of maybe 6 percent as every year went on. I started to track my net worth that was completely equity, meaning I had no other styles of investments to look at when calculating my net worth. In most cases, the first five years of my real estate career did not go well as a result of bad decisions I made purchasing buildings and the decline available in the market. Furthermore, my lack of knowledge and experience in repairs made it a rough. The next five years of my real estate career that I just finished explaining didn't make much money either. I supported myself primarily through my career as a salesman, but I possibly could definitely start to see the writing on the wall that down the road real estate would be my full-time gig.
Realty Professionals of America
I own an workplace that has a real estate company as a tenant called Realty Professionals of America. The business includes a terrific plan where a new agent receives 75 percent of the commission and the broker gets only 25 percent. Unless you know it, this is usually a pretty good deal, specifically for a new agent. The company also offers a 5 percent sponsorship fee to the agent who sponsors them on every deal they do. In the event that you bring an individual who is a realtor in to the company which you have sponsored, the broker will pay you a 5 percent sponsorship from the broker's end in order that the new realtor you sponsored can still earn 75 percent commissions. In addition to the above, Realty Professionals of America offers to improve the realtor's commission by 5 percent after achieving cumulative commission benchmarks, up to a maximum of 90 percent. Once a commission benchmark is reached, an agent's commission rate is only decreased if commissions in the following year do not reach a lower baseline amount. I currently keep 85 percent of all 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 find out 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 summertime of 2005 after leaving my full-time job was to create plans to obtain my real estate license. Getting my property license was something I always wished 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 take action soon as they discover the time to take action, but they never seem to discover the time, do they? I do not let myself make excuses for anything. So I've made up my mind before I ever left my full-time job that certain of the initial things I would do was to get my real estate license. I enrolled in a school called the American PROPERTY Institute for a two-week full-time program to acquire my license to market real estate in hawaii of Pennsylvania. Two terrific guys with an environment 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 another available day provided by the state to take hawaii exam. My teachers' advice to take the exam soon after the class ended up being an excellent suggestion. I passed the exam with flying colors and have used my license often since to buy property and decrease the expenses. If you're going to be considered a full-time property investor or a commercial property investor, you then almost have to get a license. While I know some individuals who don't believe this, I'm convinced it is the only way.
I done one deal at $3 million where the commission to the buyer's real estate agent was $75,000. By the time my broker took a share, I walked with $63,000 commission on that deal alone. With https://www.tumblr.com/alliance-group-real-estate per year to be a realtor running about $1200 per year, this one deal alone would've paid for my real estate license for fifty-three years. Not forgetting the rest of the fringe benefits like having access to the multiple listing service offered too many realtors in this country. While there are other ways to get access to the multiple listing services or another program similar to it, a real estate license is a great way to go.
A few of the negatives I hear over and over again about having your real estate license is the fact that you will need to disclose that you are realtor when investing in a home if you're representing yourself. Maybe I'm missing something, but I don't see this as a negative at all. If you're skilled in the art of negotiation, it's yet another hurdle that you have to deal with. I suppose you could result in a lawsuit in which a court of law could assume because you are realtor you have to know each one of these things. I don't spend my entire life worrying about the million ways I could be sued any more than I be worried about getting hit by way of a car each and every time I cross the road.
The Addict
From his first investment property over twenty years ago to his relentless search for the next good deal every day, Falcone is a non-stop real estate investment machine!
Get Addicted
Sometimes addiction is an extremely good thing. In this book Phil Falcone, the ultimate real estate addict, will show you how to achieve amazing success as a genuine estate investor:
� Delve into the facts of actual deals he negotiated and learn why his methods were so effective
� Discover why his residential to commercial real estate strategy will create ultimate wealth
� Learn how he used apparent liabilities (OCD, insomnia, and workaholic behavior) to help him achieve his goals
� Explore why he can't stop buying property, and how you can begin controlling your personal financial destiny through real estate