the secrets of free and clear deal investing

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The Secrets of Free & Clear Deal Investing Session 3 with Richard Roop

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“How do I know I’ll make a profit if I sell early?”

TRANSCRIPT

Page 1: The secrets of free and clear deal investing

The Secrets of Free & Clear Deal Investing

Session 3

with Richard Roop

Page 2: The secrets of free and clear deal investing

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?

Page 3: The secrets of free and clear deal investing

The Secrets of Free & Clear Deal Investing

Example:Single family homeFree and clear$250,000 after repaired value$10,000 repairs

Page 4: The secrets of free and clear deal investing

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

Page 5: The secrets of free and clear deal investing

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

Page 6: The secrets of free and clear deal investing

The Secrets of Free & Clear Deal Investing

Inputs:No appreciation for 48 months3% thereafter$200 rent credit for 12 months36 month typical term

Page 7: The secrets of free and clear deal investing

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

Page 8: The secrets of free and clear deal investing

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

Page 9: The secrets of free and clear deal investing

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

Page 10: The secrets of free and clear deal investing

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

Page 11: The secrets of free and clear deal investing

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

Page 12: The secrets of free and clear deal investing

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

Page 13: The secrets of free and clear deal investing

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

Page 14: The secrets of free and clear deal investing

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

Page 15: The secrets of free and clear deal investing

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

Page 16: The secrets of free and clear deal investing

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

Page 17: The secrets of free and clear deal investing

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

Page 18: The secrets of free and clear deal investing

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

Page 19: The secrets of free and clear deal investing

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

Page 20: The secrets of free and clear deal investing

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!

Page 21: The secrets of free and clear deal investing

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

Page 22: The secrets of free and clear deal investing

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!

Page 23: The secrets of free and clear deal investing

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

Page 24: The secrets of free and clear deal investing

The Secrets of Free & Clear Deal Investing

Review previous sessions

Join us for future sessions

Call us for supportYour partner – RoopYour coachProgram Advisor

Deena at [email protected]

Page 25: The secrets of free and clear deal investing

The Secrets of Free & Clear Deal Investing

Session 3

with Richard Roop