Discover The #1 Best Source of Financing & How to Get 100% ROI On Your Deals
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Video 1: Could you use an extra $300,000 - $400,000?
It starts with, “Where do I start?” Let’s start with the simplest, easiest way to make money, and that’s in real estate. Sixty-six percent of the American public owns a house. Sixty-five percent do it by accident. Imagine if they knew what they were doing.
Here’s how that generally goes. We go buy a house. Why? We don’t buy it for an investment purpose; we buy it because we’re going to start raising a family now. So we figure out, whether through a realtor or whatever, how to put some money down and go get a mortgage.
If financing is tight and you have no credit then you have to use seller financing, or a lease option, or a dozen other ways that I will show you in this ten step training series on how to do that for yourself. You could figure that out on your own. You don’t even need me to do that.
So you buy a house, and here’s how it typically goes. We buy a house for $100,000. We put X down, or little down, or no down. We do sweat equity, we fix it up so we don’t have to put money down on it, and we pay it off over the next 20-25 years. Now the house, 25 years later, is worth $300,000 and it’s now free and clear.
We sell that house and that $300,000 is the biggest single lump sum of money most Americans will ever lay their hands on in a lifetime! If you do it once, why couldn’t you do it twice? What if we showed you how to do it with rental property where the tenants now pay the rent and you take their rent and pay the mortgage payments, so they’re not coming out of your pocket? Now you have someone else paying this house off!
What if you did nothing more than buy one more house and at the end of these 20-25 years you have an extra $300-400,000? Not the end of the world, but that could significantly change the economic outcome and the economic product of somebody’s life.
Video 2: How to take advantage of compounding and generate a 100% ROI
Let’s go to this first training session. One of the first lessons that I learned was about compounding. I never knew anything about the way money worked. So I’m going to give you this lesson right here. The object of this lesson is to learn how to compound money. Here’s what we want to do: we want to compound money at as close to 100 percent return as we can.
In other words, let me just give you the answer. Remember we talked about buying a duplex? Let’s say I buy a duplex. Each side rents for $1,000, so I’ve got $2,000 coming in. I deduct tax, insurance, water, sewer, vacancy, and maintenance for the month, and then deduct my mortgage payment. So I have X amount of dollars left over.
Now let's say I buy a duplex for $100,000—let’s just take that number—and I put a $5,000 down payment. Let’s assume, after I deduct all of my expenses, I only have $80 of positive cash flow. So we take $80 times 12 months in a year. It’s about $1,000. If it costs me $5,000 in down payment, and I get $1,000 back net, my $5,000 divided into the $1,000 is a 20 percent return on my money. We’re falling short of this 100 percent.
But now, keep in mind, we also have equity built up, and we also have forced appreciation. So if I buy this $100,000 duplex, let’s say I put $5,000 into improvements—paint it, clean it, jazz it up—and all the other duplexes in that neighborhood are worth $125,000. So now I put $5,000 in and I have a property that’s valued at $125,000. I’ve now raised the value $20,000.
So if I put $5,000 down, I have 20 percent in cash flow, and I can get as much as 400 percent return on forced appreciation. Again, that’s magic that we used just getting started. Then, of course, we have equity built up into appreciation, so you actually have five returns in real estate.
When you put your money into the bank, you get one return: in interest. In most other investments, you get one return. That is the magic of real estate; dollar for dollar, your investment generates much greater returns. When I bought the first book all I considered was the 20 percent return. I was getting 200, 300, 400, 500 percent returns, and I didn’t even know it.
Video 3: Here’s a better way to invest
We’re looking for a distressed property and a motivated seller. That can come in the form of a duplex, a triplex, a trailer, a mobile home, a manufactured home, a hotel, or even a rooming house. There are all types of opportunities.
Remember, I’m going to train you on what you need right now. Starting off, people need cash and cash flow. What I want to talk to you about first of all is building your financial independence. That really is finding some multiple units, duplex, triplex, four unit, six unit, ten unit buildings.
I’m adding up rents, deducting expenses. I’ve given you that formula in the Quick Start Manual and Guide. We’re looking to get our $2000 to $5000 a month in positive cash flow coming in that we know we can count on every single month.
I’m just going to tell you that when I first got started, one of my mentors was a guy named Mark Haroldsen. Mark was here yesterday. He actually flew in from Utah to work with us on these training programs.
Mark is the guy who wrote the first book that I read, which is called How to Wake up the Financial Genius Inside You, a great, great book. It had some really good tips. Some of them, I’ve used over my lifetime. This is something I learned 30 years ago, have used for a lifetime, and it’s still useable today, leveraging of compounding of money, how money works.
Think about that for a minute. How does money work? We just think we get dollars and we spend them. There’s a way to get your money to make you money; get the money to do the work instead of having to put an hour in for a dollar.
Video 4: The single, best source of financing right now…
Seller financing is critically important, and that is what I think you should be looking at primarily. The partner info that I give you here is going to be great, but seller financing you can find every day.
Three-, four-, and five years ago, when the market was doing really well, there was little seller financing because you could borrow money all day. Banks are tight now, as you well know, which is part of the economic cycle.
Sellers, if they want to sell, have to hold the financing, particularly a seller of a cosmetically-distressed property. If you are looking to buy a duplex, a triplex, or what have you that has cosmetic distress, first of all, a bank is already tied on finance. Secondly, if it is cosmetically distressed and run down, a bank is not going to be motivated to provide new financing.
If the seller wants to sell, he has to hold the financing which is beautiful because you have no credit check, you have no points, origination fees. You may have a survey and appraisal costs for you, but you don’t have all the costs you have with a bank, so it is a much cheaper way to do it.
I just want to give you an idea on how workable this idea is. When I started at 20, I built up enough properties at 25 years old that I sold everything out and I moved to Florida, which is where I am right now. You are in my office right here in Florida.
I sold all my properties and took a low down payment which is how we want to buy usually. But I sold them that way because I became a motivated seller. I wanted to move to Florida; I wanted out. I am glad I did because here we have 342 days of guaranteed sunshine. The quality of life is second to none. It is just a beautiful, beautiful place to live.
I would love to have you come down to visit. Come to one of our trainings; where you spend three days with me personally. Maybe we’ll go out on my little sport yacht one day. Anyway, when I moved down here and sold my properties, I sold them to a management company, and they gave me a little down, and I held the financing. I had a payment coming in.
Video 5: There are two pieces to making money
One is the actual strategy and technique. I say this all the time, and I’m going to tell you that the real estate, in my opinion, is the easiest piece. You may be sitting home there watching me and saying, “Well, all that’s easy for you to say Russ, because you know.” Well, I can easily go back to when I didn’t know. I can easily go back to when I was searching the backs of magazines. It wasn’t the Internet, but today it’s all over the Internet. It’s the same thing.
Looking for how to make money possibilities. Me! I was sending away for every “get rich quick” ad you could imagine. I would send mostly for the free ones, but if it was $10 or $15 I’d send for it all day long. You know what? A lot of those didn’t work for me. Today, I go back in hindsight because I bought Mail-Order Millions; How to Stuff Envelopes to Make $300,000 a Year for the Rest of Your Life Without Getting Out of Bed. I probably wished that one would’ve worked.
The Jani-King franchise, you name it, I sent for it. Maybe you’ve done the same thing. One of my fears today is there’s much more proliferation of these things on the Internet because it’s like the Wild, Wild West. A lot of it’s not regulated. People say anything they want to say on the Internet. They promise you riches. Some of it is absolutely crazy and you have to know that.
Video 6: Why it’s so important to close on the first day of the month
I’ll give you an example. Whenever we buy a property, we always arrange the closing for the third day of the month. Let’s say I’m going to buy anything, duplex on up. I always want to close on the third day of the month. Why?
On the first of the month, the seller owns the property. Rents are paid in advance, so the seller has to collect the rents. Does that make sense? Yes. Two days later, on the third, ownership transfers to me. I’m going to own this property from the third to the thirtieth and then on.
If I’m going to own the property from the third to the thirtieth, and rents are paid in advance, shouldn’t those rents from the third to the thirtieth be paid to me? The answer is yes, they should. Here’s how it works. I’m going to take a building, say a five unit building. Let’s say the rents are $2000 a month.
If I close on the third day of the month, the rents for all the units are whatever that comes out to, $450 a month, whatever it might be. The gross rent on all five units are $2000. Let’s take that and divide that by 30 days in a month. I believe that gives me about $66. $2000 actually equals $66 a day, or thereabouts. I’m averaging.
Now, if we take the $66 times 27, that’s about $1800. That means the seller has to pay me $1800 at the closing. Even though I’m buying the property, the seller has to pay me $1800. If there’s $1800 in rent, how much do you think there is in security deposits? Generally, it’s a month’s rent, a month’s security.
Video 7: Understanding the REAL reason banks turn down loans
I didn’t understand how banking works. They make me think maybe it was my own mishap, or they made me think there was something wrong with me when there was absolutely nothing wrong, particularly in some of the cases when there was no credit problems or issues like that, so why are you turning me down?
Let me give you an idea. Banks lend money on a variety of different loans. Let’s say Bank A lends money on home loans – in other words, a loan for you to buy a house – a home improvement loan – you can come into this bank and get a home improvement loan – small business loans – maybe you can get a small business loan for copiers or whatever you need to start your little business up – boat and car loans, and income property loans.
I’m looking for an income property loan right now. Here’s how banking works. Let’s assume this is a small community bank, or any bank for that matter so they’re lending all these types of money. Let’s just assume they run some advertising or the market gets hot, so income properties right now seem to be the hot commodity, or land loans; whatever it might be.
Because the bank hits on a great marketing program, people come to this bank. They want to borrow money on income properties. The bank now has this great new loan that they’re making. People are coming in to qualify so they start lending lots of money to consumers here.
Remember, banks are regulated by the FDIC. Banks are federally regulated. What will happen is the orders will come in, and they will regulate banks. They’ll notice that the bank is not lending money in any of these areas, that its portfolio is lopsided on income producing properties.
The auditors then take a look at this and say, “Wait a minute, we lopsided lending too much money in this area. If there’s a downturn in the economy, this bank will be in trouble.” As you know during this whole downturn and that economic fall that we’ve had, this happened to quite a few banks.
It’s been awhile that banks have gone out of business left and right but that has happened. You know that whole stimulus package that came to revive banks, General Motors, and some of the bigger companies and banks? This is exactly what happened.
The auditors, FDIC, or officers that are in control of the currency will stop the bank from lending any more money on income properties. In fact, they are told that if they lend any more money, they’ll receive fines. They can send in a receiver to actually take the bank over, which happens from time to time.
Video 8: How to invest no matter what economic cycle we’re in
Now, let’s say this is right for you. Let’s say you plan to change your destiny and work with me on this process. Then let’s talk about more of this strategy piece: Economic Cycles.
When I first got started in real estate – let’s go back years and years and years – it was worse than it is today. Interest rates when I started were minimally 8% on residential properties. If you go back to the 1980s, it went up to 12%, 14%, and 16% when I was buying some of these.
Remember me talking about the six-unit building? Some of the four- and five-unit buildings that I bought? I was paying as much as 16% or 17% interest. I remember my father-in-law, peers, relatives, and friends saying, “What are you, crazy, paying that much interest?”
I’m going to show you on a later training about how to compound, how it doesn’t matter what the interest rate is. If I pay 16% for my money but I can earn 100% return, does it matter what I pay for that money? Very soon you’re going to see it doesn’t matter whatsoever; in other words, when things were way worse than they are right now.
Now, I started buying also at that time period. I was in Schenectady, New York. That’s when Jack Welch took over General Electric – GE. Well the major employer in Schenectady was General Electric. He laid off 20,000 workers and there was 26,000 workers at that plant. He laid off 20,000 of 26,000 workers. It decimated the town. Still, though, the low-moderate income areas maintained 5% vacancy rates. Although my properties didn’t go up in value, it didn’t matter because I bought them for cash flow.
Remember, certain properties we buy for different reasons. I buy certain properties for cash flow: low-moderate income. Once I have cash flow, now I can upgrade to an upper socioeconomic property. I’m going to put more equity in it. It’s going to appreciate better, but I’m not going to have as much cash flow. Remember, I’m not buying those for cash flow; I’m buying those for appreciation.
Video 9: One type of money that you should never play with
Good luck never comes to people who need good luck. That’s why we never play with scared money. You see, doesn’t it always seem that those who have money, that have stuff, it seems to keep coming to them? It’s true.
When I train people in sales for example, trying to sell a house, or sell something, or real estate salespeople, I tell them as soon as you have the dollar signs in your eyes and it’s all about you, and not about the other guy, that’s when we get into trouble.
Video 10: You don’t have to go far to find a great deal
One of the deals that I’m working on right now is with my good buddy, Brian Hagg. We’re in my office right now, and this is probably not even ten blocks from here, which is amazing. Everybody’s out looking all over the world for stuff and elsewhere, and usually the diamonds are right in our own backyard. We think it’s better in L.A., it’s better in New York, or it’s better over there or in this neighborhood. I’m telling you, the diamonds? Once we know what we’re doing, folks, they’re right in our backyard.
I’m going to tell you. It’s ten blocks from here. It’s a property that’s about $175,000 or $185,000; I don’t remember.
It’s right down the road. It’s about $185,000 piece of property and it’s on a waterway in our town. It’s a very decent neighborhood. This is a property in good shape. It’s probably worth $329,000. We’re picking it up for $185,000.
Now, it’s cosmetically distressed. I wish we had the picture here because it’s overgrown; not horribly, but it needs paint, and it needs to have the roof pressure-washed. What we’re going to do is add a swimming pool now to increase its value.
First of all, if you go to low-moderate income areas, that’s a good market. The reason is that those are always already built out. Where most properties get into trouble, especially in a marketplace like this, is where developers are building new construction stuff. That’s because it’s all speculative.
When you go to low-moderate income areas, those neighborhoods are already built out, and there is a socioeconomic level of folks that are the working people. That’s who I was, you know what I mean? Most of us who are working a factory job, a union job, or an office worker – timed positions – that’s America, man. That’s what we’re made up of. Those are already built out, so that neighborhood is occupied by whom that neighborhood is occupied by.
I would challenge you right now. If you go to the Board of Realtors, you’ll find in your low-moderate income areas in your town, that there are probably 5% vacancy ratios. In other words, you don’t have the 30-40% vacancy ratio that you’re going to find in the new development stuff, the speculative stuff. That’s why low-moderate income is always stable; at least for me. That’s where my best cash flow properties have always been and probably always will be.
The one I’m talking about is in a nicer neighborhood. In this neighborhood, it’s probably the worst property on the block. Properties in that neighborhood are in nice shape. Fixed up, in nice shape, and with the swimming pool, et cetera, it will probably sell right around $329,000.
What we did was go to multiple listing. We went to the Board of Realtors, and we can find out what the average property in that neighborhood is selling for and how long it takes to sell. Right now, you’ve got a 60-day sale time on that, and I’m talking about in this market right now.
Remember, If you have questions please feel free to contact our office at 239-471-2121