Creative Real Estate Investor’s Bailout Plan – 2
How to Prosper & Profit during Economic Chaos
Creative Real Estate Investor’s Bailout Plan
By Richard Roop
Part 2 of 2
(December 2008)
I’m announcing my semi-retirement.
In November of 2012 I could be elected president.
My campaign platform would be on solutions for housing, credit, energy and personal evolution. This means I have about a little more time to buy and sell hundreds of more houses as a creative real estate entrepreneur.
Becoming totally financially independent, comfortable living off my real estate investments, would allow me to offer my public service without a salary.
What would I do with the power from this office?
First, I will abolish the IRS and move to a national sales tax. Income will not be taxed, only spending. Therefore the more you save and invest, the more taxes you’ll be able to avoid allowing you to keep more of the money you earn. No longer will you work 4 months out of the year to pay Uncle Sam.
The Federal Reserve (in reality a private corporation) will be fired and abandoned. They will no longer print U.S. currency and loan it to our nation with interest. They will no longer control interest rates, leaving that to the free markets. Gold, real estate and other real assets will back our currency instead of just debt backed by “the good faith of the United States.”
Consumer debt and unnecessary spending will not be encouraged or rewarded. Purchases will most often be made in full or through barter and trade. The government will not tax most of these transactions. Instead we’ll create new tax relief incentives to anyone increasing their financial reserves, building their retirement account or investing in their local community.
Troubled corporations offering products and services no one wants will be allowed to go out of business. Our role will not be to employ people or keep them employed. In fact most federal workers will become independent contractors and entrepreneurs who will use technology to telecommute and work from home, then employing other professionals to help them be productive, efficient and self-reliant.
Congress will be closed down. The Electoral College will end. Lobbyists will no longer have a job. Politicians will need to retire, get a job or start a business. Lawmaking will be reduced in favor of eliminating useless laws and enforcing the good ones. National issues and government policies will be debated on the internet and decided by popular vote using public online surveys and ballots.
Our involvement in all foreign wars over global power and oil will be ended. The trillions of dollars saved will be used for national defense, developing free energy technology and paying off the national debt. We will no longer borrow to spend but actually have a balanced budget.
All media will be interactive becoming a source for education, involvement, community and enlightenment funded by subscribers, not advertising. An end to media hype, tabloid news and propaganda will make room for inspiring stories and useful guidance for living a more prosperous and purpose-driven life.
The public will spend most of their time being productive, creating value to the free market, enjoying their families and improving their emotional and physical health. People and communities will come together and stop relying on federal handouts. We will work together as a nation to increase the quality of life reaching out to every corner of the country.
Speculation, greed and corruption will be replaced by sound investment, productivity and innovation.
Building a Stronger Nation with Creative Real Estate
Instead of buying bad debts and loaning money we don’t have to bankrupt corporations, we will buy and invest in single family houses… since everyone needs a home. We won’t fund these purchases with taxpayer money. Instead we will take over the payments on existing mortgages and have sellers carry back their home equity in a note.
On deals where the seller (or the deal) needs cash, we will raise these funds from private investors. These investors will be secured by equity in our properties and be paid an attractive interest rate until the property is sold or refinanced.
Sellers will benefit as we cut out the middle men. We can offer a higher purchase price when the equity in the deal isn’t being whittled away by fees from real estate agents, banks and mortgage brokers.
The money saved buying in this way can allow us to buy at a discount and still offer a seller a fair and acceptable price, many times getting them what they might net selling conventionally, but without the hassle and uncertainty.
The difference between our discounted purchase price and our eventual resale price becomes a profit spread. When this spread is large enough, we will take out part of our future profits in cash, upfront.
From a cash needs basis, this will allow us hold longer-term and avoid having to do discounted flips for cash. But we will only borrow against our profit when the projected income on the house will cover the underlying debt and expenses.
If we cannot pull cash out when buying then we must only take over existing mortgage payments or create seller carryback financing terms that would allow the property to generate a positive cash each month.
When paying all cash we need a bigger discount. To protect our private investors we will not borrow more than 75% of the property’s value. Those funds will be used to buy, fix and occupy the property, with any cash left being available for the seller. Even in this case, the underlying payment for taxes, insurance and interest must be supported by the income from the property, leaving enough left over to create a positive income. Without a positive or breakeven cash flow, there’s no compelling reason to own these houses.
We will invest these properties, using none of our own cash or credit. The profits from these real estate transactions will be used to fund the buying and selling operations, generate cash to payoff our unsecured debts and provide reliable influxes of cash to survive and thrive.
Buying discounted real estate and holding for 6 years or more using a purchase price based on today’s value (or based on a projected lower value in some housing markets) will keep us well- protected. Every deal will improve our balance sheet but must also provide either cash now or cash flow. Otherwise we can’t justify investing in the property… and the seller will need to pursue more conventional avenues for finding a buyer.
Even though we are in a position to hold these houses for many years, we will immediately offer to sell them with flexible owner financing.
Some buyers will fix up our properties in exchange for equity. Some will get new bank loans and cash us out. But most will be attracted by our offer to finance them whenever they can’t (or prefer not to) rely on a new bank loan.
We will create wraparound financing for buyers with 10% to 20% for a down payment, or rent the home to them until they close with a 3 to 5% down as non-refundable purchase deposit. Being a creative and flexible seller allows us to sell for top dollar quickly.
Anyone who’s not looking to own will have to rent. Each property we buy can simply be rented since we’re not under time pressure or a cash crunch to sell. We’ll be in the business of providing wonderful housing opportunities to everyone.
Banks? We don’t need no stinking banks!
Ok. Ok. Have I lost my mind? Can I really accomplish these goals? Do I really want to be president? Well of course most of this is all fantasy… but not all of it!
I would only become president it became a non-political position. I hate politics, whether corporate or government. But…
What I described above about buying and selling houses is not science fiction!
In fact, it’s exactly how YOU can prosper and profit during an uncertain or depressed economy. YOU can buy houses using this “ultimate game plan.” YOU can help buyers finance or rent a home. And YOU can help investors get secured returns on their idle cash or retirement funds.
As a result, over the next few years, taking advantage of these historic market conditions… you can make a fortune as a real estate entrepreneur… and retire with me in 2012.
How can you implement all these real estate investing ideas?
Check out the Free & Clear Cash Machine. It holds all the answers. You certainly need it for investing safely and profitably after the recent housing bubble burst and credit crisis.
I guess I need a running mate… “Hey, get The Donald on the phone!”
Richard~
No more IRS or Fed Reserve? I am with you 100% on that! Both are so very UN-American. I researched the Federal Reserve several months ago and was quite angry with the results. You have an excellent perspective in that we the people should be the ones in positions of power over our own lives, not the banks and bloated bureacracy. I appreciate that you truly do want to effect positive change and forward growth in others’ lives.
Maybe Tony Robbins is available for VP?
~Diane
President Richard Roop has a nice ring. Go for it. You got my vote!
Nora
RON PAUL WITH RICHARD ROOP FOR PREZ 2012 SCREW THE BANKS THEYVE TAKEN OVER
Who gets the Prez slot, me or Ron?
Dear Richard R:
I love your stuff (all of it) and note that you’re the only RE guru (out of the several I’ve spent money on over the last 2-3/4 years) who has referred to the upcoming “resets” that you and I seem to agree will drive RE prices even lower than they are – through 2012 at least. (Ref: Credit Suisse charts).
SO – how mamy more percent can we expect to see home prices falling in SoCal relative to current prices before they bottom out? It seriously worries me that I might build up a sizable inventory of houses whose rental income (or resale value) puts me in a mighty hole – sometimes called bankruptcy!
Thx – Geoffrey
Who knows?? Buy now with 7+ years of 0% owner financing. Judge value based on income the property can produce. Take action with fear. Buy better. Get picky. Choose a better farm area.
Richard
Richard,
The challenge is finding sellers that will finance you at 0% interest – it’s like looking for a needle in a hay stack. I will continue to target “out of area” owners with a sale date of 15 years or longer and perhaps widen my farm “area”. The last campaign I did was 10 zip codes with a sale date of 10 years or more in Southern New Jersey. I only got 650 names, 20 calls, but no deal.
Actually 20 calls from spending about $300 is a good response. My questions is how many appointments did you get? 5? 7? 10? Run this campaign again and you should make at least $30,000 on one deal. Run it twice and you are most assured to have a deal, assuming you are handling the calls right, not negotiating on the phone and meeting with any seller with equity (on the phone if out of the area or in the home) to do a presentation. On average our members are getting 0% deals 1 out of 10 appointments, some getting a deal on their 1st, 2nd or 3rd appointment. Hang in there. Your marketing is working.