All Forum Posts by: Michael Evans

Did the owner state why the lender hasn't foreclosed? Did you run title to see if there's a problem? What's the mortgage balance versus the value of the house as is? Details, details, details.

@Scott Smith Great advice. It provides the ability to get the lowest rates from the greatest number of lenders, while simultaneously providing liability protection.

Without being given the details, I would suggest you look at the equity in the house and see if your qualify for HELOC.

If you are investing to maximize your annual cash flow, then you want to focus on the Cap Rate for the market and the individual property, as well as your cash-on-cash Return on Investment (ROI). The Cap Rate is based on the Net Operating Income (NOI) divided by the property's purchase price. It is the same for a property regardless of how your finance the purchase of the property. The cash-on-cash ROI is based on how you purchase the property (all cash or financed) and the amount of leverage you use the purchase. The higher the level of leverage, the higher the ROI (and the higher the risk).

So what that being said, your level of risk should guide whether you focus on the Cap Rate or the ROI. A high level of risk will focus on the ROI of the deal/property, with the understanding that you can achieve a high ROI even with a modest or low Cap Rate. A low level of risk will focus on the Cap Rate as the driving factor given the ROI will be limited due to purchasing with all or mostly cash.

I also like to take into account the rent-to-price ratio (monthly rent x 100 / purchase price), where I like rent-to-price ratios of at least 1.3 (a property that costs $100,000 will generate at least $1,300/month in gross rent).

Here is a good article to get you started:

https://sparkrental.com/best-markets-cap-rate-rental-properties/

Anybody have an update on their experiences?

It's great to see other people using leverage to make money in real estate. Most people are afraid of leverage when it comes to real estate. I use leverage as much as possible when it comes to flipping. I just put 6 pre-construction houses under contract in Santa Clarita, CA with an average purchase price of $900,000, for a total purchase price of $5.4 million with only $30,000 down ($5,000 per house).

I love to hear people using leverage!

Stay Blessed!

This was 20 years ago (1997) and I found the deal in the newspaper. Guy owed $130k on it and was going to make a final payment of $20k to the bank to bring the balance down to $110k, so I could assume it and refinance it. I told him I could afford the monthly payment, so just give me $15k and he would keep $5k. We did the cash payment as a side Escrow to the FHA loan assumption. The process took less time than a normal purchase escrow. I just had to qualify financially to assume the loan, but I didn't pay anything. The seller paid all escrow costs.

I was paid $15,000 to assume someone's FHA loan. Doesn't get much more creative than that.

What's the catch?

You shouldn't have that hard of a time finding a hard money lender who will lend you between 60% - 70% of the purchase price. I would charge you 4% upfront for a 30-year fixed rate amortized  assumable loan at 10% with no pre-payment penalty.  If you can get better terms than that, go for it. If you can't, then contact me.

Stay Blessed!