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I totally agree. The only investors that I have seen go broke are the ones that ignore negative cash flow and rely on capital appreciation. Um...hello...there is NO appreciation right now. Cash flow is king.
Real Estate People
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T-Matt
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bran987 said:
Of course the assets are going to still be there and a low DTI ratio for a person to acquire more property and essentially build more debt.. The monthly income will always rise higher than the monthly debt if you're a smart investor. You will obviously utilize the Option Arms and make the minimum payment. The key is, of course, to make good use of the money you opted not to pay towards your principle or the negative amoritization..
Residential real estate credit is king.. Commercial is a whole new ball game brotha, they don't give a shit about your credit really..
T-Matt
bran987
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No I know I'm in commercial dude... except my company does $300 million deals so we have to have huge institutions partnering with us to guarantee those loans...T-Matt said:
Walk me through say 3 purchases of 2-4 unit properties, what loans you would use, and how you'd structure the transactions. let's actually learn something instead of just saying "oh it's great you should do it"!
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T-Matt
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bran987 said:
With prime at 8 1/4 I'd definitely take advantage of Option Arms currently. The 12 Month treasure average at full index right now (full margin too, i'm doing my own loans so I'm getting the immediate commission so I can dump the money in a 7-pay VUL and create immediate tax free income
) is in the mid 7s. Obviously depending upon program guidelines, generally the MTA start rate is 1%. The great thing about the Option Arms is that your payment can only go up or down 7.5%/year. Not the interest rate now, the minimum payment, I want to clarify that.For example. If your payment is $1000/month and the MTA index goes up forcing the lender to increase your minimum payment to the maximum of 7.5% that means that your payment for the next year will be $1075. Yes, it is a fact that you have some negative amoritization going on, however, if you are a savvy investor you will know that you can write off your interest on your taxes and you will of course, be making a substantial ROR with the money you opted to not pay towards your principle.
See, just look at everything like a business. It's really a mindset more than it is anything. Think of it like a restaurant. You take a loss on wings on Saturdays so you can attract more people to buy your highest profit margin goods like beer and liquor. Obviously, there is a risk that people may only show up and buy wings and drink water so you should put in a disclaimer that the price is only valid with the purchase of a drink. You might also consider putting overly attractive women in there to boost alcohol sales. AFter all, how hard is it to say "No" to a 5'1" 115lb brunette with a round ass, big fake boobs, and pigtails asking you if you want another round. I find it extremely difficult to this day.
I really think that if you can truly understand that you will become successful. Rich Dad Poor Dad by Kyosaki was an awesome book. It really shows you the different mindsets of an average-poor person to a successful businessman. Knowledge is power, yes, however applied knowledge is success.
Back to the loan.. Well, I would state as much information as the lender would let me. Southstar Funding will do an 80/20 combo 100% financing 12MAT/HELOC. If you'll loan me 100% LTV I'll take it all day b/c that just frees up cash. The key is to pay off the HELOC before you purchase another property b/c it drastically reduces your DTI.
Realistically the key is to do everything stated with letters from a CPA. Basically if you have good credit lenders look at you like "hmm, ok, these numbers look a little exaggerated but he has great credit so he is honest. Let's do it"
As long as you know how to set up a stated deal and give yourself plenty of leeway with DTI and not exaggerate numbers too much you can close a deal. Take advantage of the Option Arms and get together with an ESTATE PLANNER not a Financial Consultant from a bank whose primary income comes from deposits or a Financial Planner from T Rowe Price who is going to charge you a grand to sit down and talk then give you a 4 inch thick folder with hundreds of pie charts and technical terms and then move your money 4 times a month so he gets paid. Screw that.. That's why I'm so passionate about what I do, that's not how our company does business.. That's why we don't need a series 7 license.
I'm telling you guys if you don't know what you want to do I would consider doing estate planning. Within the next 5-10years $45trillion is going to exchange hands from the baby boomer's parents to the babyboomers. Everytime money moves someone has to get paid, why not let it be you? Besides money under management pays a RESIDUAL income. Not only that, our economy is going to go through a real shift with all this money (power)change hands. How we educate consumers to spend their money is crucial in the health of our economy. The economy is drive by how money is spent, not how it is saved. If no one trust the economy and we all just stash our money underneath our mattresses or be stupid and give it to a bank so the bank can get rich off our hard earned money then our middle class is in big trouble. Money works. Why let money work for the bank? Why not let it work for you?
Homework for whoever reads this. Search up the Rule of 72. It explains how compound interest works. Go to the bank and put in $10,000 go get your 4% return on a cd. The bank is AT LEAST going to get 12% ror from that money. So, it's going to take you 18 years to double your money and it's going to take the bank 6 years. So in 36 years times the bank gladly hands you your $40,000 and walks away with $600,000....
How can you expect a ship to come in with gold for you if you never even send one out??
T-Matt
bran987
New member
T-Matt, are you an estate planner/attorney or a mortgage broker? by the way you're a little off on your spread that banks earn on savings deposits (it's not that big) but that's ok... everyone has to make a profit to be in business...
I'm just saying... say you earn $100K/year and have perfect credit... that's only enough to take on what... $700K in debt MAX? so if you're buying duplexes/quads at $200K/pop and cash flowing $500/month from each... wouldn't you hit a ceiling pretty quick? i.e. once you've bought 3 properties and you're cash flowing $1,500/month where do you go from there?
I assume you have to put together an investment package and go out to get investors at that point. That's what I would do at least. Let me know. I'm about to finish my MBA in May but I seriously considered going to law school and becoming an estate planner... investing and retirement planning is like my passion, it's like sex but .. wait I'll just leave it at that.
I'm just saying... say you earn $100K/year and have perfect credit... that's only enough to take on what... $700K in debt MAX? so if you're buying duplexes/quads at $200K/pop and cash flowing $500/month from each... wouldn't you hit a ceiling pretty quick? i.e. once you've bought 3 properties and you're cash flowing $1,500/month where do you go from there?
I assume you have to put together an investment package and go out to get investors at that point. That's what I would do at least. Let me know. I'm about to finish my MBA in May but I seriously considered going to law school and becoming an estate planner... investing and retirement planning is like my passion, it's like sex but .. wait I'll just leave it at that.
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T-Matt
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bran987 said:
Am I really off with the bank spread? The day after you put that $10,000 into the cd they send you letters saying you are "preapproved" for a car loan, mortgage, credit card, student loan, home equity line of credit, you name it.. And it's VERY save to say that you're going to bit on a couple of those.. Now do you see how the bank is making 12%.. And wouldn't you think that 12% is even modest? I think so too.
Again, you're complicating things buddy. Keep it simple. Look at the monthly debt, not the yearly debt. Once you can change your mindset there you will understand everything so much more clearly.
Hit me up on AIM or Yahoo msnger if you like.I am an estate planner. I work very close with attorneys to set up trusts, and investors to put together a individualized financial blueprint. The great thing about our company is that we service you in the 3 major powerhouses in the financial industry, mortgages, insurance, and investments. We build a financial blueprint, much like is done for housing. Would you live in a house without a blue print? I know i wouldn't. Why live in a financial foundation without a blueprint? You do, hell everyone does. That's where I company comes in. I think our company would be a great opportunity for you. We are franchising much like Starbucks and McDonalds. See, most of America looks at Starbucks and thinks coffee, I think domination, franchising. Howard Schultz is amazing man. He has balls.. He has Starbucks in China. he brough coffee to a tea drinking nation. He's been there for about 2 years and already has over a thousand franchises. That is some domination for you. Most look at McDonald's as burgers, I see the franchising. Franchising is the product.
Our company sees the same vision. We're not financial services, we are domination. Our company aspires to have 1,000,000 franchises by the year 2010. The question is how many do you want to own? The real question is do you have it in you to be a leader? The world is full of people who are scared of leading who only want to follow. Our company is in dire need of true leaders. You have what it takes. hit me up..
T-Matt
T-Matt
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T-Matt
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bran987 said:
You also have to keep in mind that Real Estate is only part of your income. You must also be making savvy investments in various other operations either from your career or mutual funds or life insurance. T-Matty likes life insurance the best.
Of course, if you're a financial consultant/estate planner, you have residual income from your all the policies you've written and money under management. That right there gives you a nice buffer for your DTI.. HOpefully that clears things up a bit for ya too bro.T-MAtt
