Financing Tip of the Month – April 2009

I can’t believe that even with the things going on the economy the 30 year fixed rate loan is down below 5%!  I’ve actually seen rates as low as 4.6% for a fixed rate loan.  With the average right now as of this writing it’s down to 4.89%.  So needless to say mortgage applications are up.  People are going to start buying homes again and going to start re-financing again.  The tip today is this.  If you are going to re-finance or do anything, I would suggest that you get a fixed rate loan.  Do not do an ARM (adjustable rate mortgage) or anything like that.  Right now you can get a 30 year fixed rate mortgage for under 5%.  That is so strong.

Think about all the other bills you have right now.  If you are currently a homeowner, and you have any equity in your home, you can refinance your home to pay off other debts if you can still qualify for a loan.  You can look at your situation and refinance your home to pay off credit cards, car loans, etc.  Currently that mortgage interest is tax deductable.  I’m not a CPA, or a tax professional.  And I would advise you to talk to a tax professional.  However, as I understand it, car loan interest is not tax deductable unless it is a business owned car.  Credit card interest is not tax deductable unless it is a business credit card.  But mortgage interest IS tax deductable.

You could pay off your credit cards, you could pay off your vehicles, and you could refinance your house and get a low fixed rate loan below 5%.

Now, if you need to move some things around perhaps you need to talk to friends or family to get some assistance paying those higher interest items off first.  A temporary loan to lower your debt to income ratio could provide this.  Then the loan that refinances your house could pay back that temporary assistance and lower your interest rates.  Talk to friends, parents, aunts, etc. and get the loan you need to pay off the credit cards.  Be very careful when you do this.  You don’t want to take on additional debt that you cannot pay back.  Only get help from family if refinancing will enable you to pay them back quickly.  This is a way to reduce your debt and to perhaps even free up some cash to give yourself some breathing room.

In addition to that, if you are in a situation where you own a home free and clear or its almost paid off, you may want to consider getting a 60-70% loan to value loan and using that for your real estate investing.  A word of caution here.  Be very careful not to invest that money into anything risky that will keep you up worrying at night.  But if you use the money for something valuable or to create value, something that will make you money, you can make a very wise financial decision.

Over at TheCoachingClub.com I’ve just uploaded a new video that teaches what we are doing with our money.  You will find that in the video section at TheCoachingClub.com.  As you know by now as a newsletter subscriber you can sign up for the coaching club for just $29.95 per month which includes your newsletter at no extra cost.  Then you won’t be billed for the newsletter monthly.  No double $29.95 charges!

You will still receive the newsletter but you will get all the benefits of The Coaching Club as well.  Articles, archives, videos, courses, forms, everything that you need to further develop your real estate investment business.  You will find tutorials, webinars, trainings, Brain Pck a Pro archives, Palooza archives, and complete home study courses as well.  Everything you need is in one place!  But you have to join The Coaching Club to be a member AND receive your hard copy newsletter for just $29.95 per month.

That’s your financing tip of the month.  Be sure to head over to The Coaching Club to see where we are investing our money and how we are making 60-70% returns on our investments.  Right now you can borrow money at less than 5% interest and that is a smart financial move.

The real estate investing secret real estate investors do not want you to know about

 

As a real estate investor who has managed to attain the Holy Grail of total financial independence I am used to people asking me about the ‘secret’ to real estate investing. I have had people come up to me in after dinner speeches and ask me to tell them what the formula is and I have had colleagues in the industry come up and ask me for a secret tip and in each case I have been tempted to take out a ballpoint pen and write at the back of my business card “trust your instincts” but that would be being disingenuous as it is just the kind of advice that means everything and nothing.

 

Let me explain this first. Every investor in the world has to function in a way that is comfortable for them to operate in and that, invariably, requires them to use their instinct when they are going after deals and when they decide to pull out. So to say that you need to “use your instinct” is just the kind of non-advice that sounds good and means nothing.

 

So, to cut to the chase, what is the secret of real estate investing? To discus this here, now, I have to draw on extensive real estate experience that has taken me from my very first property to owning and running over 4,000 apartments in eight different states and growing. You realise that what I am about to say has been on my mind for some time and I have considered it in some detail and it is part of the advice I give out in my courses, seminars and workshops and it’s summed up by two words: “Risk management”.

 

In a sense any kind of investment is about risk and every kind of investor who wants to be successful tries to manage it successfully in order to come out on top. Real estate is no exception and, if anything, tends to magnify the risks involved which is why risk management becomes so important and the only way to spread the risk in real estate is to have a large number of people contributing to the costs and giving you income as opposed to just a few. This is where multi-family dwellings and apartment blocks come in and this is exactly where an investor’s mettle is proved.

 

Do your homework carefully, pick up the right multi-family dwelling to buy into, arrange to outsource everything so you do not have to deal with tenants yourself (that would definitely not be a good use of your time), use the bulk-buying power of running multiple properties to negotiate tough but fair deals and then get ready to reap the rewards which, as you might have guessed, are considerable.

 

So now you know the ‘secret’ top real estate investors do not want you to know. What’s holding you back?

 

David Lindahl, also known as the “Apartment King” has been successfully investing in single-family homes and apartments for the last eight years. He is the author of four popular, money making home study courses “Apartment House Riches”, “How To Estimate And Renovate House For Huge Profits” “Managing For Maximum Profits” and “The Real Estate Investors Marketing Tool Kit”. He can be reached at http://www.thecoachingclub.com/event-archives/brain-pick-a-pro/apartment-houses/dave-lindahl/.

Unable to Get Mortgage Debt Relief – Be Ready for a Lawsuit

By Don Burnham

The United States is home to 94% of all the lawsuits in the world and 75% of the world’s attorneys. Very few of them are willing to help you get mortgage debt relief, or give you free financial advice, but many are willing to come after you for the default judgment..

Once you are served with a lawsuit, the clock starts ticking. You may be served by mail or in person and you have a very limited amount of time to answer the lawsuit. In most instances, the lawsuit will typically overstate the claim. For example, if you were involved in an automobile accident that caused $5,000 of damage to the other car and $5,000 of medical damages and you get sued, it will be for an amount much greater than $10,000.

They’re going to say things like, “I have headaches now and I get cranky with my kids.” You’re going to file a claim for much more than the actual damages. If they can also say they suffer from emotional distress, which means more money for them.

In most jurisdictions, you have 20 to 30 days to file your answer has to be before the court. And, it must be in the right format and have substance to it.

The discovery phase begins next and is the most expensive phase of a lawsuit. The discovery phase is where:

• Depositions are taken under oath
• Answers to interrogatories or questions are provided
• Copies of documents are provided
• Testimony is taken under oath on both sides
• Expert witnesses are brought into the process

Then, the plaintiff prepares their case against you. You will spend a lot of money defending yourself if your liability insurance policy includes ‘except’ or ‘but’ provisions. If you’re in that category, you are on your own, except for some partial coverage.

You’ll be faced with expenses and a lot of stress, because the real cost of the lawsuit isn’t just the money. It’s also the stress you experience during a process, which could last for two or three years.

Alternative Dispute Resolution

A method used to resolve legal complaints is called Alternative Dispute Resolution or ADR. All contracts should include an Alternative Dispute Resolution clause waiving rights to litigate and engaging in an Alternative Dispute Resolution.

Step 1, Conciliation

The first step is called conciliation, where you talk informally and see if you can work out the problem. If that doesn’t work out, you agree to enter into mediation where you hire a third party mediator.

The mediator will help both sides sit down and negotiate an arrangement in which both agree. The process is formalized with a written agreement. When the dispute is resolved, both parties are required to perform according to that agreement.

Step 2, Arbitration

If mediation doesn’t work, then arbitration is the next step. Arbitration is similar to court system process, except that it is much cheaper and much faster. The American Arbitration Association is a national organization that has arbitrators in every major city in the country.

Arbitration allows you to hire a third party. The third party can be one individual or a panel of third party participants to hear the complaint. Both sides give verbal testimony and present any evidence to the third party.

The rules of evidence in an arbitration setting are more relaxed and less formal than in the courtroom. Arbitration is usually completed within one to two days devoted to a hearing. The results are then usually determined within a few weeks instead of years.

If you have entered into a contract with this method of dispute resolution, you might spend a couple thousand dollars, instead of losing $100,000 in a lawsuit

About The Author Don Burnham is an entrepreneur, author, real estate investor, teacher and speaker. He is CEO of the International Association of Seminar Professionals (IASP) and CEO and co-founder of the Wealth Restoration Institute, LLC, at http://www.weknowthewayback.com

What if I have a bankruptcy on my credit report?

 

Your chances are 60 percent that you can get it removed before 10 years–the same statistic as with foreclosures. It once took me eight frustrating years.

 

You can’t remove foreclosures, bankruptcies and tax liens yourself. Please get an attorney.  One client who had claimed bankruptcy thought all her loans were in there as well. I had to tell here the three things that aren’t included: Student Loans, Child Support and IRS tax liens.  Her attorney never told this to the woman.

 

Don’t rely on others to take care of your past mistakes–be proactive. Find a good attorney right away.

 

Lates are pretty easy to remove.  When you apply for personal credit always read the agreement’s fine print.  You’ll find that you have signed your rights away.  Banks have the right, if you are one or two days late that you were late 30, 60, or 90 days.  If possible, go to your creditors and tell them you want a copy of the original application.  See if you did in fact sign your rights way.

 

One way to use the copy of your agreement against the credit companies is to remove lates. People can leverage their knowledge to clear up credit.

 

Can you ever get credit without a personal guarantee?  No, because with The Patriot Act you must now sign your personal signature regardless because of this law.

 

In addition, if you talk to any banker they will want to know what they can hold as collateral to limit the risk of you defaulting on the loan.  You will either have to have personal credit, assets or something that will guarantee the credit.

 

I’ve never seen a lending corporation that did not ask for a guarantee.  Even Enron, when they were going down, were still using their pension plan as a guarantee to continue to get money. You have to have something; obviously, if you don’t have property, then you will rely on your personal credit until you do. 

 

This alone can get you several thousand dollars if you work a system correctly.

 

 

 

 

Dustin Mathews- best-selling author of How to Get Rich Working For FREE, and co-author of Secrets of The Real Estate Millionaires, is the nations most celebrated small business and entrepreneurial financing expert.  Claim your very own copy of the video e-Course, “How to Get The Money You Need to Launch or Expand Your Business without Going to The Bank!” at http://www.BusinessCreditVideos.com

Are You an Undercover Real Estate Investor?
by William Tingle
Is there anyone in your town that doesn’t know that you buy houses? If so, you aren’t doing as well at marketing as you should be. I hear investors saying all the time that they aren’t getting seller calls and subsequently aren’t getting the leads they need to find deals. I say step up the marketing and the sellers will call. Not only that but if you are shouting to the world that you buy problem properties, eventually you will be known for what you do and sellers will call you strictly on your reputation. THAT is cost effective marketing.

I was in Home Depot a few weeks ago and passed a couple of guys in an aisle. As I walked by, I overheard one say, “That is the house man”. Now I had never seen either of those guys and have no idea who they are but that experience lets me know that I must be doing my job at letting the world know my business is buying houses. There are many ways to let the world know what you do. Some ways are cheap and some are more expensive. You are going to have to try many things and get a feel for what produces for you best in your area. I have tried many kinds of marketing techniques and have come back to a few that constantly produce enough results for me to buy the 2 or 3 houses I want to buy every single month. They are as follows:

Classified Ads

The classified ad in the largest paper in the area is by far the largest producer of leads I have found. I know it is expensive and I know there are times it doesn’t generate calls but if you are going to stay in the biz just put it in there and leave it. Get used to it being part of the cost of doing business. I pay about $300.00 a month for my 4 line ad and that is the commercial rate. I run it 24/7, 365 days a year.

Over the past 3 years I have seen many “investor” ads come and go. Most folks put them in for a couple of weeks and then pull them or try just putting them in on the weekends. IT AIN’T GONNA WORK! Put it in the paper and leave it. It will more than pay for itself, believe me. If you are worried because there are several in there, don’t be. They are there because they are getting calls. Just be sure and actually answer your phone.

When a new ad pops up in my paper, I will always call. 9 times out of 10 I get a message. This is a big turn off to someone who needs a solution now. They want to talk to someone who can qualm their anxiety and tell them everything is going to be alright. Your answering machine won’t do that. As for what to put in the ad, you will have to work on this one. I have tried several and the one I have now hasn’t changed for over 2 years. I haven’t changed it because I get calls. My ad is:

CASH FOR HOUSES
In 48 Hours!
Any area, price or condition
Call xxx-xxx-xxxx

Now I have had other investors jockey for position and change their ad copy to be ahead of mine in the column but it hasn’t made any difference. Don’t worry about those things, just get the ad out there and leave it. It may take a few weeks to get going but sellers will call! Once you have your classified ad running than start working on your other ideas. If you only implement one idea a week, within a couple of months you will have a tremendously powerful real estate buying machine.

Ads in the “Freebie” Papers

I also run ads in the freebie papers here. These are the “Thrifty Nickel”, or the “Green Sheet” or whatever they are called in your area. I run both a column ad and a display in this paper and spend about $150.00 a month for these. They pull in seller leads fairly well and have always justified the costs. Remember that these guys are usually open to negotiating on your rates and you can probably get a better rate if you commit to a longer contract.

Bandit Signs

Bandit signs are great. They are some of the best lead generating tools around. I have yet to put out a bunch and not be bombarded with calls right after. I just don’t put them out that often. I might put out 5 or so a month and the ones that stay continue to pull in calls. At an average cost of less than $2.00 apiece, they are one of the best values around. Check the internet for sign companies for cheaper prices. I use 18 x 24 signs and place them at high traffic intersections around town. I also place one in the front yard immediately upon buying any house.

I have bought several homes in the same neighborhoods as a result of this. You can either use contractor stakes or the wire stakes with your signs. I like the contractor stakes because they don’t bend like the wire ones, in addition, they are cheaper. Just nail the sign to it with the roofing nails with the orange or green plastic tops or you can use screws. There are many variations on what your wording on the sign can say. Keep in mind that traffic will be moving so you want to keep your message short and sweet so it can be read. My signs say:

I BUY HOUSES
Cash in 48 Hours!
Any area, price, condition
xxx-xxx-xxx

Notice that it is the same as my newspaper ad? I like to brand my advertising because I think that helps with recognition. My signs are white with dark blue letters. Some folks swear by black on yellow or black on orange. Again, I say it’s not what or how you say it but the fact that you DO say it that counts. When dealing with bandit signs, be sure that your local code enforcement laws are tolerant of them. In my area, the City of Macon is very lax on them but a few miles down the road in Warner Robins they are super strict and will fine you in a minute.

Flyers

Flyers are another inexpensive way to get the word out that you buy houses. Just create a flyer telling people what you do and how to get in contact with you. Make copies for $.05 cents apiece and you have some really inexpensive advertising. It really is that simple. Then place these flyers on every bulletin board in your town. I also place some of them in those plastic sheet protectors so the rain won’t destroy them and put them up on telephone poles around neighborhoods I like to buy in. While not as large as the bandit signs, on poles actually IN the neighborhood they still attract calls. I carry a file with me in my truck and place them up whenever I stop at a grocery store or Wal-Mart. Some other places to put them are:

• Laundromats

 

• Taped to the inside of Pay phones

 

• On the counter of any business that will allow you

 

• Bulletin boards at Wal-Mart or K-Mart

 

• Grocery store bulletin boards

 

• Fax to Mortgage Brokers

 

• Fax to Real Estate Agents

 

• Take them Door to Door in target neighborhoods

 

• Employment Center Bulletin board

 

• County Courthouse Bulletin board

These are just a few examples. Any place that will allow you to put one is a good place. You can never let too many people know that you buy houses!

Promotional Items

These are some of my favorites and most fun. While they are not the top producers of leads or the least expensive, they will sure set you apart from the average investor.

Pen Knives – These tiny Swiss army knives are the coolest. They are actually key chains engraved with your message, mine being: WE BUY HOUSES- All cash or take over payments within 48 hours! Xxx-xxx-xxx I guarantee if you give one of these to someone they will keep it and if they think of selling, they will think of you. They are about $1.50 apiece.

Key Chains – I give these to all my buyers with the keys to their new house on them and leave them all over the place. They come in the shape of a house or #1 or whatever style you like and have your message on them. You can guess what mine says. Cost – about $. 25 cents apiece.

Pens – I use these all the time. Whenever I sign a sales receipt or anything I leave my pen. I can’t tell you how many calls I have gotten off of these things and since I always need one, I always have one to give away. My attorney even has a supply on his closing table. Mine are the “click” type and have my message repeating around the barrel. I have two types printed. One for sellers says “We Buy Houses!” and one for buyers says “Everyone Qualifies”. Cost – about $.21 cents apiece.

Coin Holders – These you hardly find anymore so everyone is surprised when I have them. I leave these things everywhere. Mine are bright yellow with blue letters and my message. Cost – about $.30 cents apiece.

I leave all of these promotional items everywhere, on the top of gas pumps, on end-cap displays in grocery stores and in department stores. I look at it this way, if I give away 100 pens, 50 knives and 50 coin holders a month, that is only a little over $100 bucks a month. That is still cheap advertising. You can get any of these promotional advertising products at National Pen. Their website address is www.pens.com or you can call my rep “Madison” directly at 1-888-672-9810. Always ask for her specials and tell her William sent you.

Business Cards

I order business cards by the 1000’s and you should as well. They are cheap, mine are about $50.00 for 2000, and I pass them out everywhere. I leave my cards everywhere, in pay phones, on restaurant tables, my kids even have their own supply to pass out. Try to get a box a week out. The card doesn’t have to be fancy, in fact the simpler the better. My card is bright yellow with blue letters and says:

WE BUY HOUSES
Foreclosure? Need Repairs? Bad Tenants? Divorce?
CASH IN 48 HOURS!
OFFERS MADE ON ALL CALLS!
XXX-XXX-XXXX

Car Magnetics

Magnetics are one of those things where you spend once and get use for a long time. Mine cost about $75.00 and are yellow with blue letters. They say:

WE BUY HOUSES!
FA$T CA$H
XXX-XXX-XXXX

I have gotten several deals from these signs. Remember to order a smaller set for the back of your car/truck. People have more of a chance to read the message when they are riding behind you.

Clothing

I like golf shirts and oxford dress shirts with my logo on them. There’s plenty of advertsing houses that will help you design a logo if you don’t have one or use the one you already have. There is no charge for set up and all items ordered include your embroidered logo free. They also have cool baseball caps and other stuff there as well. They have specials for new customers at great prices.
I pass my hats out to everyone I know who wears one and have given away many shirts as well. They really look nice and present a nice image for your business.

Other Advertising Tools

There are many other forms of advertising, some I have tried in the past such as billboards, door hangers, yellow pages, television and radio advertising. I even have a traveling billboard, an old SUV painted bright yellow with blue WE BUY HOUSES! and my phone number that I drive around and park overnight at different places. It gets the calls! Get the marketing going and let the world know who to call when they have a house to sell. If that phone isn’t ringing, you aren’t making money!

William Tingle currently wholesales and rehabs several deals every year but his real niche is what he calls “Sub2”, buying subject to existing financing. To date, he has taken the deed on almost 100 properties and continues to buy 20 to 25 properties a year in this manner.

Mr. Tingle is the founder and head of the Macon Real Estate Investment Association in Macon, Georgia. He also owns and operates his own web site at www.Sub2Deals.com.

Credit Reports and How to Raise Your Credit Score

By Alan Turco

In this article on credit reports, we will talk about credit scores. Specifically, how to raise them. After reading my first article, “About Credit Reports”, you should have ordered your credit reports, looked them over and picked out all the bad stuff. Now you want to know what to do to raise your credit score.

Ok. First things first.

Your credit score is deemed by the following:

• Payment History – 35%
• Balances owed in relation to your high credit limits (utilization rate) – 30%
• Years of credit built up – 15%
• Number of credit inquiries – 10%
• Type of credit – 10%

Knowing that your repayment history is the most influential part of your credit score, you need to pay your bills on time. I know it sounds fundamental, but paying on time is instrumental in getting a good credit score. If you are behind, catch up. If you can’t catch up, get help. And then pay on time! If you started paying all your creditors on time for 12 straight months, you could raise your credit score 50 points or more for just that one creditor.

Along that same line, all the bad payment history you have in your report needs to come off your credit report. I know what you heard. The same thing touted by “run of the mill” consumer advocates (usually ones born with a silver soon in their mouths with never a credit problem), banks and credit bureaus: “Only time can erase bad credit from your credit report”, or “You have to wait 7 years (or 10 for bankruptcy) for your bad credit to come off.”

Simply not true! That will be a whole other article, but for now let me say, by federal law, ANYTHING on your credit report that is misleading, erroneous, obsolete or unverifiable HAS to be deleted. There is no way around that. It’s the law!

Anyway, a series of disputes and other methods of credit repair and restoration are proven to get negative information off of your credit report BEFORE their 7 or 10 year statute of limitations is up. The more negatives you get deleted, the more your score will raise.

Another way to raise your score is concerning the balances owed on your credit cards and loans. In general, using any more than 40% (30% is better) of your available credit, will hurt your credit score. 30%-40% or less will help it. If you are in position to, pay down your balances on each of your open credit accounts to at least 40% of your available credit. So, if you have a $1,000 limit on your credit card, you should show a balance of no more than $400.00.

If you do not have the money, maybe you can do some credit card shuffling if that makes sense in your particular situation. If not, just pay down as quickly as you can.

The one factor with your credit score that you have no control over is your years of credit built up. Basically, the more time you have been in the system, the more, theoretically, you’ve proven yourself and you are seen as a better credit risk. If you’re young (right out of school) or have not had much credit in your life, you will just have to wait it out.

Inquiries. Inquiries show up on your credit report as a result of you applying for credit and the creditor pulling your credit report (making an inquiry) into your credit report. Although counting for only a relatively small percentage of your credit score, it is still seen as a negative if you have too many inquiries. Especially if those inquiries are not followed up by the creditor with an actual extension of credit.

More than a few inquiries in a year make you look desperate to the credit scoring software. With that said however, only these types of inquiries count against you. There are other types of inquires which are conducted for promotional purposes to solicit you for credit offers, jobs or insurance products or even when you pull your own reports, that do not count against you.

One more little known tidbit as stated in my list above: The type of credit you have can influence your credit score. Mainstream credit granted by banks for instance, if paid on time, will do wonders for your credit score. However, if you get credit from a finance company (HSBC, American General) or some other “2nd or 3rd tier” credit grantor, you could hurt your score.

With that said though, I need to say this as well. Sometimes, especially when you are building or rebuilding your credit, it’s the only credit you can get. In that case, just pay the bill on time each month, and all things being equal, you will be okay.

So to sum up. You can help raise your score in the following ways:

• Pay your bills on time
• Never go more than 30-40% over your available credit
• If you have limited credit, get some and build it over time
• Don’t apply for too much credit in a short period of time.
• Choose wisely who you are getting credit from. Banks and other conventional lenders are best.

I will continue to bring you articles on credit reports as we move forward. So stay tuned and I hope you got something out of this.

About The Author Alan Turco is a passionate consumer advocate with over 20 years experience in the credit and debt industry. Alan believes that “Everyone Deserves a Second Chance”,and has built his company’s mission statement around that. You can visit the company website at http://www.TurcoFinancialGroup.com.

Remember, whenever you buy a property, in my market, you need to be in it at no more than 70% ARV including purchase, rehab and closing costs. That is one of the most important things for you to learn and to remember.

You can then fix it up, re-finance it at 75% to 85% loan to value, and pull out the cash, which by the way is Tax Free cash, as you don‘t pay tax on borrowed money. Then you can rent the property out at a positive cash flow and have Tax Free cash in your pocket.

But don’t get all crazy with that Tax Free money or the positive cash flow from your rental properties. If you have outstanding credit cards, a car payment, student loans, even a home mortgage; you need to look at that money in terms of what bill can I pay off with this house? You are looking at the house, running the numbers, hopefully buying it a 70% ARV or less, fixing it up, re-financing the property and pulling out $5,000, $10,000, $15,000 tax free cash; then you are going to pay off a bill. Here is an example. If you bought a property and after you purchase it, you were able to put $5,000 tax-free cash in your pocket and the property has a $200.00 a month cash flow. What if you take that cash and you pay off a credit card that also has a $200.00 payment? You have now just increased your cash flow from $200.00 a month to $400.00 a month and increased your assets by $5,000 by paying off that credit card. It is also probably going to raise your credit score, right?

So I would like to suggest that every time you buy property think about what bill you are going to pay off. Now after you get all your consumer debt, your car payments, student loans and all that, then you start paying off your house. Once your personal residence is paid off, then you can go in and re-finance with a Home Equity Line of Credit at prime. You cannot get cheaper money than that. Then when you are making an offer to somebody and you ask them, “What is the least amount you can take if I can write you a check by Friday”, you can back it up because you can literally write a check on that Home Equity Line of Credit.

That is a great feeling, having access to the cash, having the ability to write the check and knowing that you are debt free except for the properties that the tenants are paying for. Now that‘s an idea that really is money in the bank!

There are numerous ways that you can eliminate your debt. They all start out and end up the same way – increase your income and apply it to your principles. One vehicle that you can use to bust debt fast is rental properties.

Let’s assume that you invest in a property at about 70% After Repair Value including your purchase, rehab, and closing costs. Once you have fixed the property up, you should be in a position to re-finance at 75-95% of the loan to value and pull out the cash, your cash, that you original invested in the property. This is Tax Free cash as you don’t pay any taxes on borrowed money. Once you rent the property out, at a positive cash flow, your tenant pays your mortgage AND puts money in your pocket.

So what do you do with this money? Look at your bills. Credit cards, car payments, student loans, your own home mortgage, debt consolidation loans, medical bills, etc. Let’s assume that you have $15,000 in credit card debt. Its probably not at a great interest rate. As a student of my Ultimate Buying and Selling Machine course, you know you can make $5000 to $10000 on each and every real estate deal.

Take the credit card with the LOWEST balance, and pay it off when you refinance your first rental property. If there is any money left, apply it to your next lowest credit card, and so on. In doing this with your Tax Free money you are lowering your debt balance AND increasing your monthly income from the rents due on the property every month. Imagine if you eliminate $250 in monthly debt or loan payments every month AND you increase your monthly income by $250. That’s like getting a $500 per month raise from your real estate business, rather than putting $5000 in your pocket. So at the end of ten months you have increased your income, lessened your debt, and added to your real estate net worth portfolio.

By doing this you are also raising your credit score. Making it easier to finance your real estate deals.

Start by paying off your credit cards. Then automobile loans and student loans. Follow up with medical bills or other old debt. Then pay off your personal mortgage on your residence. Once your own home is paid off, you can re-finance with a Home Equity Line of Credit at prime. That is the cheapest money you can put your hands on.

Once you reach this milestone, and you talk to someone about a property you can actually ask, “What is the least amount you can accept for this property if I write you a check by Friday?” You know you can do this deal because you can literally write a check against your Home Equity Line of Credit. At this point, you are living debt free with the single exception of the properties that your tenants are paying for with their rent checks.

This is one of the very powerful ways that my Ultimate Buying and Selling Machine course can truly improve your quality of life and allow you to spend more time with your family and less time chasing the almighty dollar.

Larry Goins

For many more articles and a 10 part e-course on how to create your own Ultimate Buying and Selling Machine! as well as over 50 training audio recordings you can listen to online, download and collect, simply go to www.TheCoachingClub.com where you will gain instant access to all of this and 51 Exclusive Editable real estate investing Forms and Documents all FREE! You will also get two FREE real estate investing eBooks, A free Personal Coaching Profile to help you jump start your real estate Investing, FREE Nationwide Wholesale Property Listing Notification, FREE Weekly Training Teleconferences with Different Topic Each Week, FREE subscription to Larry Goins “Almost” Weekly Investing Newsletter, FREE Admission for Two to Investor Palooza 3 Day Training Event, FREE Admission for Two to Larry Goins 3 Day Boot Camp, Plus over 31 Exclusive Articles on real estate Investing and Much More! Just go to www.TheCoachingClub.com. Thanks and I look forward to working with you, Larry Goins