Larry Goins Course Strategy

General Real Estate Investing
9yFollow

Larry Goins Course Strategy

Charles Stewart II
Investor · Baton Rouge, LA · Member since 2017 · 29 posts · 3 votes

Hello,

I am asking for opinions on the strategy used in one of Larry Goins courses.  This is a brief of how it was explained on Ron LaGrand's website: 

"If you buy the property for $5,000 and sell it for $30,000, you can ask for a $1,000 down payment and finance the remaining $29,000. If you finance that amount for ten years, at 11% interest, the payment will be $399.48 per month. Most people will be able to afford a $400 mortgage and they should be able to find a $1,000 down payment as well."

The idea is that you are getting the house a such a low cost because it may be a distressed property with minor repair needs.  You would pay off what you have "in the house", which is $5,000, within 12.5 months.   At that point, the $400 paid to you would be all profit.  You wouldn't have rent repairs because the person is buying the home, not renting.

Does this appear to be a good investment strategy? I feel it is, but I would like to hear from community members here on Bigger Pockets.

Thanks in advance!

0Reply
58 views

Most Popular Reply

Larry Goins
Specialist · Lake Wylie, SC · Member since 2015 · 20 posts · 17 votes
9y

@Charles Stewart II Hey, this is Larry. Our students and I are still doing lots of seller financing. We typically use a lease option if the property is "fit and safe" as would be required of a landlord. If not we use a land contract and follow Dodd Frank rules. It hasn't slowed us down. 

Also, the article you spoke of quoting 11% is an older article. We now use 9% to make sure we are compliant. 

Remember, $5000 is just an example. I recently purchased a single wide in a park for $1,500 and have done these deals as high as $50,000. We do a lot in the $20,000 - $25,000 range and we stay out of war zones and make sure the house is livable or close to livable. It is true that the lower priced ones will be more likely to default but once you learn how to minimize it you can get great returns and cash flow starting with little money. 

Do more research before deciding and let me know if I can help. 

5Reply
See this reply in the discussion

11 Replies

Jump to latestLatest
  • Ralph R.
    Investor · Bethel, AK · Member since 2013 · 1k+ posts · 852 votes
    9y

    @Charles Stewart II  NO not good.  a $30,000 property purchased for $5,000 is probably 2 things. 

    1) in the hood, warzone, class D neighborhood or whatever you choose to call it that's why the owner sold it so cheap and its only worth $30,000 when its fixed up.

    2) needs way way more than a minor rehab (second reason he sold it so cheap)

    The third problem is its pretty difficult to do any type of owner finance to a home owner.  The Dodd Frank rules have pretty much stopped that.  The buyer unless he is an investor will have to get his loan else where, and that means you have too pay your loan off the day you sell it in order to clear the tittle.

    Another thing is in order to get 11% interest your looking at somebody with no recourse other than to pay hard money rates to buy a house.  In other words they cant get a loan anyplace else.  No credit or whatever.  Likely you will need to take the house back and they will tear it up before you get them out.  Then you will be selling it for $5000 same as the guy you bought it from!

    RR     

    1Reply
  • Dane Ohlen
    Investor · Richardson, TX · Member since 2016 · 46 posts · 12 votes
    9y

    dodd Frank didn't stop owner financing.  I just owner financed a house from someone a few months ago and had an attorney draft up everything.  I think you are confusing owner finance and lease options/contract for deed. 

    2Reply
  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    9y

    @Charles Stewart II

    Many people do not understand Dodd Frank, everything is legal:  Selling on cfd's, lc's, lease option's with rent credits, you just have to follow the regs.

    BUYING on terms you can do as many as you want.

    Look at lease with a rofr as an alternative to lease w option.

    Here is a Dodd Frank summary.

    Beware of Predatory Lending.

    Predatory lending is any lending practice that imposes unfair or abusive loan terms on a borrower. It is also any practice that convinces a borrower to accept unfair terms through deceptive, coercive, exploitative or unscrupulous actions for a loan that a borrower doesn’t need, doesn’t want or can’t afford.

    See the Penalties for Predatory Lending.

    3Reply
  • Larry Goins
    Specialist · Lake Wylie, SC · Member since 2015 · 20 posts · 17 votes
    9y

    @Charles Stewart II Hey, this is Larry. Our students and I are still doing lots of seller financing. We typically use a lease option if the property is "fit and safe" as would be required of a landlord. If not we use a land contract and follow Dodd Frank rules. It hasn't slowed us down. 

    Also, the article you spoke of quoting 11% is an older article. We now use 9% to make sure we are compliant. 

    Remember, $5000 is just an example. I recently purchased a single wide in a park for $1,500 and have done these deals as high as $50,000. We do a lot in the $20,000 - $25,000 range and we stay out of war zones and make sure the house is livable or close to livable. It is true that the lower priced ones will be more likely to default but once you learn how to minimize it you can get great returns and cash flow starting with little money. 

    Do more research before deciding and let me know if I can help. 

    5Reply
  • Charles Stewart II
    OP
    Investor · Baton Rouge, LA · Member since 2017 · 29 posts · 3 votes
    9y

    Hello Larry,

    I'm really happy you spoke on the discussion. I am a real estate agent in Baton Rouge, Louisiana. I have looked at your courses and at courses by a man named Mark Ferguson. Both of your courses work with REO's, which is where my interest is.

    While I have the opportunity, I would like to ask two questions:

    1. Honestly, what is the least amount of cash, and the most amount of cash I would need to get started and be able to complete the average deal in the $20,000-$25,000 range?

    2. You mentioned that the course provided could be a ministry; How has the work you do allowed you to minister to others?

    I ask the first question because I have a good credit score (761), but little cash.

    I ask the second question, to learn how what I will be doing will allow me to serve others as well.

    Thank you.

    Charles

    0Reply
  • Larry Goins
    Specialist · Lake Wylie, SC · Member since 2015 · 20 posts · 17 votes
    9y

    @Charles Stewart II Hi Charles and thanks a lot for writing. I would be glad to answer your questions. 

    1: It is always easier when you have your own cash however I do teach how to get the money without using your own cash or credit. There are many ways to fund these deals... cash partners, credit partners, credit card partners, SDIRA partners or lenders. 

    You can even do a no money down deal by table funding the deal with your note buyers. This allows you to sell one and keep one, sell one, keep one, etc. But remember, your goal is to keep the note because of the great returns you will be getting. 

    2: I have had many students tell me this is a ministry because they have been looking for a way to do real estate where they knew they were actually helping people become homeowners and not taking advantage of people like so many people think investors do. 

    Also, if you know anything about me you will know I host a weekly live radio show called BRAG Radio. It is all about investing in real estate to Be Rich And Generous.... BRAG. Each week we teach real estate strategies and then bring on students that are using their blessings in real estate to bless others. We encourage everyone to be generous with their blessings by helping those less fortunate. 

    I hope this helps,

    Larry. 

    1Reply
  • Charles Stewart II
    OP
    Investor · Baton Rouge, LA · Member since 2017 · 29 posts · 3 votes
    9y

    Hello Larry,

    It helped a great deal and it means a lot that you took the time to answer my questions.  I did hear about BRAG but I have never listened to show and didn't know much about the program.

    It is simply up to me now to do my part and make a final decision.  

    Thank you for your help!

    Charles.

    0Reply
  • Jon Lanclos
    Real Estate Broker · Houston, TX · Member since 2017 · 64 posts · 27 votes
    7y

    @Brian Gibbons this is why you run your owner finance note thru a RMLO and let them do the Dodd frank compliance

    0Reply
  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    7y

    @Jon Lanclos

    I agree using a RMLO selling on terms to an Owner Occupant.  Mitch Steven https://1000houses.com/ in San Antonio has down over 1000 wrap deals using private lender money to buy before selling on a wrap, with no due on sale clause.

    0Reply
  • Collin Corrington
    Investor · San Antonio, TX · Member since 2016 · 242 posts · 126 votes
    7y

    Sort of....

    I've done that sort of deal to another investor (kind of a wholesale type deal) to help them get into and allow them to rehab it and pay off the loan when it's sold again.  

    However, to an end user, you're going to run into all sorts of problems.  They'd just assume walk away from a house for $1,000 then try and keep up payments, etc.  

    We do a lot of owner finance deals and they are very lucrative but make sure you do it right.  Make the house livable and make your money on the spread.  That way you can sell the note at one point should you need to. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Collin Corrington:

    Sort of....

    I've done that sort of deal to another investor (kind of a wholesale type deal) to help them get into and allow them to rehab it and pay off the loan when it's sold again.  

    However, to an end user, you're going to run into all sorts of problems.  They'd just assume walk away from a house for $1,000 then try and keep up payments, etc.  

    We do a lot of owner finance deals and they are very lucrative but make sure you do it right.  Make the house livable and make your money on the spread.  That way you can sell the note at one point should you need to. 

    YUP  this model is fraught with defaults..   

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free