The Experiment results reported
“Within 2 weeks of leaving the seminar I
created $200,000.00+ in usable cash”
I hit the ground running even before I left seminar. One of my goals was to improve cash flows and I’m well on my way.
1) I had a small commercial property that was not moving, sale after sale fell through. It was financed by a bank and had to be paid off by Feb 3rd. By the second day of your training it came to me. I made a call and secured an investor, sold him 50% of the property which was enough to pay the bank off. We closed on 1/22/10, the last day of the seminar.
Then I called a Church that wanted to buy the place on owner financing. I increased the price and owner financed the Church with a 2 year balloon. We closed the Church one week later on 1/29/10. Then I created a Note for a portion of my 50% interest on the property that provided $50,000.00. The Church pays the mortgage each month, I pay 50% of that to my partner. The other half of the mortgage goes to me and pays the Note holder 8% interest only payments (for the $50,000.00 Note). And I have a spread of $315.00 left each month.
Considering I was thinking I may have to give the property back to the back a week before the seminar, I LOVE YOU GUYS.
2) Next, I secured owner financing for a property one year ago. No payments, no interest for 60 months. I lost my tenant buyer and put a sign up.
A Realtor brought me a cash buyer for $165,000.00 but I owed the seller $188,500.00. Again, during the seminar it came to me! Since the seller was receiving no payments for another 4 years I Next Day Aired them a proposal. If they lowered the $188,500.00 to $150,000.00 I promised to create a Promissory Note (non-secured) and pay them 8% interest only on the lower $150,000.00 amount or $1,200.00 each and every month for 48 months. They agreed and I had them sign a Reduction Of Note Balance form with instructions that instead of a payoff, they would receive payments for 4 years. They were happy to get reliable income.
Now I get cash at closing and $150,000.00 to work with. Within 2 weeks of leaving the seminar I created $200,000.00 plus, in usable cash. Now I am hiring an assistant to help me kick off the direct mail campaign to buy more properties.
Thank you, thank you, thank you, thank you, to Richard and all of you for helping me put pieces together.
Richard Paradis
(Actively participating in The Experiment)
For details on being part of
The Experiment II click here
There is just a slight bit of risk here, you have created a ballon note for $150,000 due in four years, plus payments on that note of $57,600 to in fact borrow the money.
Yes, it is an unsecured note, but if you were to default the seller/lender would have recourse against all of your assets.
Not being critical, I love creative financing, but weird things happen in this life which can take it’s toll on deals like this.
I borrow private money to buy no money down, with all cash to repair, and hold until the property can be rented. The tenants pay the note, and I get infinite returns on my investment which if you think about it includes none of my money. I pay 7.75% on a fixed 15 year note, so far I have had no problem getting money.
I will admit I do not do 10 deals a year, only 2-3, and only triplexes. The best thing I ever did was get away from bankers.
Richard do you think you could speed things up for me, I know I am little potato’s compared to some of your students.
“could speed things up for me”
Yes. Participate in The Experiment! There’s no better suggestion I got. If you can’t attend then at least get the Free & Clear Cash Machine system. Best deal today is getting it free with Million Dollar Postcards.
Hi Richard,
1200. a mo. X 48 mo. = 57,600. + 150,000. = 207,600. Why would just pay the 1200. a mo. On the 188,500. Principal and only owe 130,900. in stead of 150,000? You can still use the 165,000 cash – closing costs couldn’t you?
I’m not criticizing just trying to do a similar thing.
Also how did you create and structure the note on the other property. I need to do that to get out of trouble on a property I had to borrow and pay cash for.
Alexander: Good question-
First of all, I purchased a home last year from a seller on owner financing. I offered full price (actually more than full price because of terms) but no payments, no interest for 5 years. I put a Lease/Option tenant in the home but they moved out after a year. I then put a for sale sign out and a Realtor brought me a cash buyer for about $165,000.00. But I owed $188,500.00. Instead of saying ‘no’, I got the idea in seminar that if I had private funding I could more deals. So I contacted the Note holder of the property and said I have a buyer but to do the deal they have to agree to lower the $188,500.00 balance to $150,000.00, and instead of recieving the $150,000.00 they would agree allow me to create a non-secured Promissory Note at 8%. In other words I can use the funds for 4 years, the Note holder receives $1,200.00 interest only payments. You are correct that the $150,000.00 does not paydown, but I can do at least four deals with the use of these funds that will create more profit. This profit can be used to do periodic pricipal paydowns should I choose to do so.
Feel free to email me directly with questions richard@sunnylakes.com
Question. In the fact pattern above, you say the note was reduced to 150,000, and that payment were made at 1200 a month for 48 months interest only.- Then you say they agreed to accept payments only instead of a payoff.- Did you mean the payments were “principal only”, rather than interest only? Otherwise I am lost on how they are getting paid off?