the secrets of free and clear deal investing
DESCRIPTION
“How do I know I’ll make a profit if I sell early?”TRANSCRIPT
The Secrets of Free & Clear Deal Investing
Session 3
with Richard Roop
The Secrets of Free & Clear Deal Investing
How do I know I’ll make a
profit if I sell it early when I
paid more for a house than
it’s currently worth?
The Secrets of Free & Clear Deal Investing
Example:Single family homeFree and clear$250,000 after repaired value$10,000 repairs
The Secrets of Free & Clear Deal Investing
Exit:$259,500 resell with terms$1,300 rent to tenant buyer$13,000 down (5%) or$360 a month or$6,000 down and $200 a month
Typical
The Secrets of Free & Clear Deal Investing
Profit goals:$50,000 minimumOr $6,000 per year on termWhichever is greaterWith $10,000 cash upfrontAnd reimbursement of expenses
The Secrets of Free & Clear Deal Investing
Inputs:No appreciation for 48 months3% thereafter$200 rent credit for 12 months36 month typical term
The Secrets of Free & Clear Deal Investing
Offer #1 with interest$274,000 as is
$15,000 down9 year note$800 Payments at .88% AFR rate$190,600 balloon due in 9 years
The Secrets of Free & Clear Deal Investing
$44,000 private lender first$400 a month18% loan to value$10,000 to you extra$1,400 to you for marketing$10,000 repairs$9,000 for all buy and hold costs$15,000 down to seller
The Secrets of Free & Clear Deal Investing
$71,000 profit over 9 years$10,000 cash now$6,000 when occupied$5,000 cash flow$50,000 cash later
Profit locked-inMove the note orDiscount the note
The Secrets of Free & Clear Deal Investing
What if I sell early?Pay seller off at a discountPre-agreed discount scheduleCollect your target profit for short termOr move the note
Discounted Early Pay Off
What if I sell early?Use a lower resell price nowUse $239,500 instead of $259,500Offer $253,000 instead of $274,000But market for $259,500 now
Discounted Early Pay Off
What if I sell early?After 3 yearsSeller takes $166,800Instead of $236,800Or move the noteYou make the $50,000 3 year target
Equity Position
What if I sell early?Use a lower resell price nowUse $239,500 instead of $259,500Offer $253,000 instead of $274,000But market for $259,500 now
Equity Position
What if I sell early?Equity negative of $45,500 to startEquity negative of $21,300 in 3 yearsAbility to move note or discountProtects your profit target and seller
What would you do with $200,000 in cash if note moved?
What if I sell early?Use a lower resell price nowUse $239,500 instead of $259,500Offer $253,000 instead of $274,000But market for $259,500 now
What would you do with $200,000 in cash if note moved?
What if I sell early?$50,000 target in 3 years$17,400 from cash now and cash flow$32,600 from early cash out, discountOr move the note
Take your target cash profit and reinvest the rest…
What if I sell early?Use a lower resell price nowUse $239,500 instead of $259,500Offer $253,000 instead of $274,000But market for $259,500 now
Take your target cash profit and reinvest the rest…
What if I sell early?Move the note in 3 yearsCollect $199,400 in cash laterKeep $32,600 cash laterReinvest $166,800For remaining term of 72 months
Pay off or avoid 10.00% private loans and replace with .88%
interest!
What if I sell early?Use a lower resell price nowUse $239,500 instead of $259,500Offer $253,000 instead of $274,000But market for $259,500 now
Pay off or avoid 10.00% private loans and replace with .88%
interest!
What if I sell early?$166,800 used to pay of 10% debtFrees up $166,800 in equity$590 extra income per month after seller paymentBonus profit of $18,600Total profit is now $68,600!
Pay off or avoid 9.00% private loans and replace with .88%
interest!
What if I sell early?Use a lower resell price nowUse $239,500 instead of $259,500Offer $253,000 instead of $274,000But market for $259,500 now
Pay off or avoid 9.00% private loans and replace with .88%
interest!
What if I sell early?$166,800 used to pay of 9% debtFrees up $166,800 in equity$450 extra income per month after seller paymentBonus profit of $8,600Total profit is now $58,600!
Pay off or avoid 9.00% private loans and replace with .88%
interest!
What if I sell early?Discount noteMove the note and reinvest
Pay off debtFund your own deals as lender
The Secrets of Free & Clear Deal Investing
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The Secrets of Free & Clear Deal Investing
Session 3
with Richard Roop