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How and Where to Get Loans to Build Your Real Estate Wealth by Tyler G Hicks: Part III

Written by: Tyler Hicks

Article Overview: Contents of Part III: Use Credit Card Lines of Credit Credit Cards Lines Can Be Your Down Payment Credit Cards As A Way to Real Estate Wealth Flip Real Estate with Creative Financing Just Five Months to Positive Earnings Youthful Start Gets Good Results How to Start, and Be Successful In, Flipping Properties Take Lenders Out of Foreclosure Properties How to Be a Hero with Lenders Work with the FDIC and VA for Flip Properties

How and Where to Get Loans to Build Your Real Estate Wealth by Tyler G Hicks: Part III

How and Where to Get Loans to Build Your Real Estate Wealth by Tyler G Hicks: Part III

Use Credit Card Lines of Credit

I can just hear some readers saying to me—“Use credit-card lines of credit? I couldn’t get a credit card if my life depended on it!” My answer to you is: “That may be true. But what about the credit cards held by:

Friends
Relatives
Business associates

Plenty of my readers temporarily use credit cards from one,
or more, of the sources above. They repay their source quickly and go on to greater wealth.

Here are some reader letters showing you the power of using credit card lines of credit to buy income real estate. The credit-card line of credit could be yours, or that of one of the three sources above:

Credit Cards Lines Can Be Your Down Payment

“After reading one of your real estate books I went looking for my first deal. I located a recently rehabbed legal two-unit building whose income would service an 80% mortgage. Since I did not have the remaining 20%, I remembered your suggestions about using credit-card lines of credit. I used my credit cards for part of the down payment and convinced the seller to carry back at 11% a second mortgage for 3 years. I bought this property by financing the entire deal with other people’s money!” (RI).

Another reader who really uses creative financing to the maximum available to him writes:

Credit Cards As A Way to Real Estate Wealth

“About a year ago I bought one of your real estate books and took the steps you outlined to create a credit line of $70,000 with credit cards and personal loans. That alone was incredible to me. Then I recently bought my first property, a townhouse from HUD. I bid below the asking price and won the property. I used credit-card lines of credit to pay for the house and received a $600 bonus for a fast closing. I then mortgaged the property and got $3,500 cash more than I paid for it. I ran an ad and will now rent the property for $640 per month, slightly below the market, but I wanted a fast tenant. I have a positive cash flow.” (GA).

Based on the reports BWBs give me today, credit-card lines of credit are widely used for income real estate down payment money. This source of money is an excellent example of creative financing for BWBs everywhere. So give it some thought for your future wealth building in income real estate!

Flip Real Estate with Creative Financing

When you flip real estate you buy it at as low a price as you can, fix it up a bit, and then sell it at a profit. And flipping gives you many opportunities to use creative financing to the maximum.

Why? Because when you get real estate to flip you can use an option, a land contract, credit-card lines of credit, etc., to control the property for the time you need to flip it for a profit. For proof, see these reader letters:

Just Five Months to Positive Earnings

“In January I started full-time buying and selling residential real estate. It has been successful beyond my expectations. During my first 5 months, my financial statement shows I made $46,000. The average length of ownership of my flip properties has been 77 days. Most of the property I buy is distressed, and in need of repairs. It is often vacant and vandalized, with title problems, owners divorcing, and/or being foreclosed. Mostly, I buy at 50% to 70% of market value. I won’t pay more than 80% of market, including any repair costs. I have averaged $5,000 profit on every piece of property sold. I have closed 18 so far this year. I have one crew to do all my work which is guaranteed to pass FHA or VA inspection. With nearly a year of experience, it is getting easier to buy good deals and I am able to earn more profit per house. Next year I expect to handle 25 to 30 houses.” (TX).

Youthful Start Gets Good Results

“I started buying rental houses 1.5 years ago. I am 25 years old. In the 1.5 years I’ve been in business I bought 29 houses. I live and breathe rental houses—I love the business. I just flipped my first house and made $8,000 in two months! I will quit my job at a lumber company as soon as I have a large enough positive cash flow to support myself. I taught my sister how to flip houses and she bought two houses in her first two weeks.” (MO).

How to Start, and Be Successful In, Flipping Properties

To start buying houses to flip, take these easy steps in the area in which you believe there is a good potential for your business:

1.Look around the area. Check to see if you have a supply of houses to buy, and sell.

2.See if there is a demand for housing in the area. Young families need low-priced homes.

3.Get estimates from HUD, FHA, the VA on typical housing prices in the area.

4.Check local papers on Sunday for bargain properties. Read every classified For Sale ad. You’ll almost certainly find bargains.

5.Visit potential bargains; see how much work they need.

6.Find a competent contractor who can help you with needed repairs.

7.Bid on your first flip house, after you know how much profit you can make on it.

8.Do your first flip job. Go on to more, using creative financing.

You can make money using creative financing in flipping. For best results you should have some experience with home repairs. And you should not be afraid to pick up a hammer and start working!

But if you’re “all thumbs”—as some people are—don’t give up. Get an experienced house mechanic and arrange to have that person do the work. Offer an incentive—such as a share in the profit on the sale of the property. Then your repair work will be done while you do the financial planning!

Take Lenders Out of Foreclosure Properties

Closely related to flipping is the Foreclosure Specialist who takes lenders out of properties they don’t want to own. These properties are often called REO—Real Estate Owned. No lender wants REO properties on its books!

Why? Because a lender’s business is to accumulate money and then lend it out on safe loans to earn interest. The interest earnings are shared with the suppliers of money. Such suppliers are people who put their excess funds into savings accounts, bonds and similar holdings.
No lender wants to own property!. Every lender wants nothing more than to receive a check on the first of every month for the repayment of a mortgage loan the lender made. That’s “lender heaven.”

How to Be a Hero with Lenders

You can be a hero to any lender by:

1.Agreeing to take repossessed homes off the lender’s hands.

2.Often at zero cash because you’re relieving the lender of an intense problem.

3.Having all closing costs paid by the lender because they have an in-house legal staff and the work doesn’t cost them much.

4.Flipping the property for a profit for yourself and making the lender happy because it no longer has REOs on its hands.

With zero-cash down for REO properties you have the ultimate in creative financing. And—happily—many lenders will not even check your credit when you take over an REO property.

Why? The lender is so happy to get rid of the REO that a credit check is overlooked. So if you’re into fixing up houses and selling them, check out REOs. You’ll often find them listed in your Sunday paper real estate section.

You can, of course, work with a house mechanic and have that person do the fix-up. Then you share a small portion of the profit with your mechanic. This allows you to do the financial planning for your future purchases.

Work with the FDIC and VA for Flip Properties

Both the Federal Deposit Insurance Corporation (FDIC) and the Veterans Administration (VA) may have properties for sale at excellent prices for flip BWBs. Thus:

The FDIC has a searchable database of property currently for sale by type, state, city, value range and other criteria. This list is updated weekly. FDIC properties can vary from single-family homes to some of the largest buildings available anywhere.

Properties listed in the database are sold on an “as-is, where-is” basis, and with all faults they may have. So you may be able to get bargains galore!

Each listed property has a contact name and telephone number. The contact name will either be an individual from an FDIC office or an individual associated with the sale of the property. If a property information package (PIP) has been prepared on a property it can be obtained from the listed individual.

Property listings are updated by the close of business each Monday. So you have an ongoing and steady supply of properties to study and consider.

Seller financing may be available on some residential properties with a minimum purchase price of $500,000 or those residential properties sold as affordable housing, and on all commercial and land properties, regardless of price.

Visit the FDIC Web site at http://www.fdic.gov/buying/owned/index.html to find FDIC properties that might be excellent flip candidates for you.

Related Articles
  How and Where to Get Loans to Build Your Real Estate Wealth by Tyler G. Hicks: Part I
  Real Estate Commercial Loans?
  Purchasing Real Estate using the SBA 504 Loan
  The Real Road to Wealth in Real Estate
  Banks Continue To Hold Back on Lending

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