Chapter 64 Carry Paper to Make It Happen from Addicted to Real Estate by Phil Falcone

Feb 25th, 20121 Comment

Chapter 64 Carry Paper to Make It Happen

In April of 2009, I bought a townhome near where I live for the sole purpose of flipping it. The property had gone to sheriff sale and was getting an upset price somewhere in the range of $125,000, but there were no takers. If a property doesn’t get sold at a sheriff sale, it then becomes an REO or a real estate offering. This is what a property is called after it is given over to a realtor to move the property through the standard channels using the MLS. I was able to initiate a deal for $118,000 to purchase this property. It was a multiple-story townhome with two bedrooms upstairs and one full bathroom. Downstairs the property had a half bath, a kitchen, laundry room, and living room. The size of the property is 600 sq. ft. on each floor for a total of 1200 sq. ft. It came with an association fee that covered the landscaping costs along with the roof and the parking lot.

I started renovation on the property, and it took six weeks to redo most of the house. I put the house up for sale for $168,900 after sitting on the market for about two months and received a full price offer with a 6 percent sellers assist. This realtor who represented the buyer in this case turned out to be my old friend who sold me my first two properties in 1989. He recognized my name as the listing agent and the owner of this property and knew he would be able to successfully deal with me provided there were problems on this real estate transaction. Since they were giving me a full price offer and I totally renovated the home, there wasn’t much to argue about. There wasn’t anything for them to demand being fixed, but they did request that I pay for a home warranty.

The problems started when the appraisal was done, and the building was valued at $158,000. Now the buyer was giving my realtor friend a hard time because he felt as if he clearly was directed to massively overpay for building. Furthermore, we had financing issues because the buyer did not have an additional $10,000 to put up to put this deal together. With the buyer threatening to walk if I didn’t come up with a solution, I put my thinking cap on between myself and my old friend, the realtor, and we came up with the following solution.

I was planning on making approximately $15,000 off the sale of this property at the original sales price. The deal that we agreed to do was I would carry a second mortgage for $10,000 on a thirty-year amortization at the same interest rate that the original loan the buyer was planning on getting. The only difference would be the second mortgage will be due in five years in full. I wasn’t thrilled about only receiving $4349 in profit with a $10,000 second mortgage note, but considering I was in the middle of two other flips, it seemed like the logical solution to the problem. I also went back to my realtor friend and told him that I was taking a huge hit; therefore so was he, as I asked him to take a discounted buyer broker fee for me. I also backed out of my home warranty deal saving myself $400.00.

When you use home equity line of credit money to buy properties and flip them, you need to keep selling those properties and replenishing your line, or you’re out of business. Taking $4349 profit is better than being out of business, so I made the deal. If the buyer pays me the $55 a month every month for five years and then pays me the full amount, I actually do rather well. Fifty-five dollars a month turns out to be $660 a year for five years; it turns out to be $3300. At the end of the five years, he owes me almost $9200 anyway because I’m charging interest just like mortgage companies with a small amount of principal being paid off with each payment. If he pays in full, I get the $9200 + $3300 for a subtotal of $12,500 collected on this loan plus the original $4349. So in summary, if he pays everything that is agreed to pay, I will collect $17,500 in profit off this deal by the end of the fifth year. But what happens if he doesn’t pay?

Make sure it’s legal to have a second mortgage on a deal like this considering it may be in the paperwork for the primary mortgage that no secondary mortgage would exist. If the buyer doesn’t pay, as a second mortgage holder, I have limited options. I could file a lien against the house, but I cannot force a foreclosure nor do pretty much anything about it. It also doesn’t look likely that the house would even be able to sell for $168,000.

You see his down payment and the seller assist on the appraised figure of $158,000 got them a mortgage somewhere in the range of $148,000. Considering the house was just appraised for $158,000 that would leave little equity in this property to foreclose on anyway. So theoretically in a worst-case scenario, I received my $4349 of profit at settlement and never received another penny. I would have a second mortgage lien on the property in the amount of $10,000, and it is possible that the house would sell ten years from now for $190,000. At that point, I could collect my money.

A much better scenario for me would be to sell the house for full price and walk with the $15,000. However carrying a second mortgage or carrying paper to get the deal done makes sense sometimes. Keep in mind this option as a tool in your toolbox that you one day can pull out to make a deal happen.

You Really Missed it!

Jan 26th, 20121 Comment

Tuesday night’s Addicted to Real Estate Meet-Up was chock full of great information, but you missed it!

What did you miss?

How to buy houses with NO BANKS, NO MONEY, and GET PAID TO KEEP THEM!

The presentation featured 12 powerful home buying techniques to help you close the deal. Included were:

1- Seller Financing
2- Subject to
3- Private $
4- Seller Financing and Subject To
5- Seller Financing and Private $
6- Private $ and Subject To
7- Private $, Subject To and Seller Financing
8- Wholesaling
9- Foreclosures
10- Lease options
11- Equity Partnering
12- Wholesaling to Yourself

The 90 minute meeting covered all these techniques, but even better, you now have the opportunity to finally learn these in-depth and really “Get Busy Buying”.

At the meeting, we unveiled the “The Addicted to Real Estate Buyer’s Briefcase” a complete package for closers. The package consists of an actual briefcase, complete with all the forms and training you will ever need to buy houses with NO BANKS, and NO MONEY. With the briefcase you will be COMPLETELY prepared for ANY home buying situation, and you will have all the tools at your fingertips to get the deal done!

You get ALL of the following with the The Addicted to Real Estate Buyer’s Briefcase:

• Complete text on each topic
• Educational videos (educational videos for each topic)
• Accompanying workbook to reinforce what you learn
• Sales videos (videos to help prepare you to make the presentation to the seller)
• Sales scripts – know what to say to every seller
• Powerpoint seller presentations on disk
• Flipbook seller presentation
• FORMS – All the forms you will need, as well as easy to follow instructions and images about how to fill them out
• Complete audio CD’s of the educational series
• Complete audio CD’s of the sales series

The package is currently in development and will be ready in Spring 2012.

Take the time to watch the video from the Meet-Up. It will be the best time you spend all year!

The Real Estate Assembly Line is meeting – RSVP NOW to save your seat

Jan 14th, 2012414 Comments

This is your invite to the The Real Estate Assembly Line meeting. Go here to RSVP.

http://www.meetup.com/REALtrust/events/46694102/

Come out to spend an evening discussing real estate investing strategies including Seller financing followed by a social event at the Bertucci’s restaurant next door. This month investors are encouraged to bring info on their business’s – B Cards and fliers may be distributed in the room prior to the meeting.

THERE IS A $5 CHARGE FOR THIS MEETING PAID AT THE DOOR.

With prices at all time lows and interest rates you can count on one hand… don’t you agree that the time is NOW to GET BUSY BUYING real estate?

Whether you are a n00bie or a seasoned pro, the decision you will make to start massively acquiring residential real estate right now could have a life changing profound effect on you and your family’s life. Don’t think you can’t do it. We will show you two guys who are and how exactly they put together the pieces of the real estate wealth puzzle…

Phil Falcone “Mr. Addicted2RealEstate” and Jeremy “We don’t need no stinkin’ banks” Ricci have launched a private real estate investment trust… REAL Trust. They say the REAL is not for “Real” estate, but the Real Estate Assembly Line!

How to get all the money you need (plus some) to invest in real estate without BANKS
How to stop flipping houses and start investing in houses (…and still feed your family!)
The 3 simple steps to creating MASSIVE wealth with silly little houses
The “smack yourself in the forehead” single greatest resource for private lenders
The hidden gem investment that you’ll never hear about from your financial planner
and… what kind of a deal is a R.E.A.L. deal?
Join Jeremy and Phil for a “drinking water from a fire hose”, get off your butt jump start jam session on how to GET BUSY BUYING real estate! Are you ready to get addicted 2 real estate?

See you there… RSVP right now to reserve a seat.

P.S. There will be an after party across the street

http://www.addicted2realestate.com/category/blog/

http://www.joinrealtymark.com/

The Real Estate Assembly Line is meeting – 1/24/12 @ 7PM – RSVP NOW to save your seat

Jan 5th, 2012385 Comments

Come out to spend an evening discussing real estate investing strategies including Seller financing followed by a social event at the Bertucci’s restaurant next door. This month investors are encouraged to bring info on their business’s – B Cards and fliers may be distributed in the room prior to the meeting.

Click here to RSVP
http://www.meetup.com/REALtrust/events/46694102/

THERE IS A $5 CHARGE FOR THIS MEETING PAID AT THE DOOR.

With prices at all time lows and interest rates you can count on one hand… don’t you agree that the time is NOW to GET BUSY BUYING real estate?

Whether you are a n00bie or a seasoned pro, the decision you will make to start massively acquiring residential real estate right now could have a life changing profound effect on you and your families life. Don’t think you can’t do it. We will show you two guys who are and how exactly they put together the pieces of the real estate wealth puzzle…

Phil Falcone “Mr. Addicted2RealEstate” and Jeremy “We don’t need no stinkin’ banks” Ricci have launched a private real estate investment trust… REAL Trust. They say the REAL is not for “Real” estate, but the Real Estate Assembly Line!

Click here to RSVP
http://www.meetup.com/REALtrust/events/46694102/

How to get all the money you need (plus some) to invest in real estate without BANKS

How to stop flipping houses and start investing in houses (…and still feed your family!)
The 3 simple steps to creating MASSIVE wealth with silly little houses
The “smack yourself in the forehead” single greatest resource for private lenders
The hidden gem investment that you’ll never hear about from your financial planner
and… what kind of a deal is a R.E.A.L. deal?
Join Jeremy and Phil for a “drinking water from a fire hose”, get off your butt jump start jam session on how to GET BUSY BUYING real estate! Are you ready to get addicted 2 real estate?

See you there… RSVP right now to reserve a seat.

P.S. There will be an after party across the street

Click here to RSVP
http://www.meetup.com/REALtrust/events/46694102/

304 E Eleanor Street Philadelphia PA 19120 – Only $60,000 – Buy this Now

Dec 22nd, 20111 Comment

304 E Eleanor Street
Philadelphia Pa 19120

1st floor – 3 Bedroom 1.5 bath rented for $750 -but Tenant moving out within the next 30 days
2nd floor – 2 Bedroom 1 Bath rented for $600/month – tenant wants to stay and rents are current. month to month lease
Taxes: $1,000/ year
Tenants pay gas, electric, cable. Landlord pays water.
Rental Income minus taxes, insurance, water per year 2nd floor condition is good, 1st floor condition is fair, needs $2500 in some patch and paint cosmetic work.

Price: $60,000
Repair: $2500
ROI: 23%

CALL PHIL @ 267-988-2000

CALL PHIL @ 267-988-2000

CA$H DEAL. BE READY WITH PROOF OF FUNDS. I HIGHLY RECOMMEND THAT YOU EITHER DRIVE BY OR GOOGLE MAP THE PROPERTY ADDRESSES AND DO YOUR OWN RESEARCH BEFORE CONTACTING ME ABOUT GETTING IN TO SEE ANY PROPERTY. ONCE YOU ARE READY TO BUY AND HAVE YOUR PROOF OF FUNDS READY, THEN I CAN ASSIST YOU.
1) Have your proof of funds ready to be faxed, and
2) be ready to close in 1-2 weeks.
Call Phil @ 267-988-2000

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