So, here you are. You’ve looked for potential properties. You bought your ideal first $30,000 property for $5,000. You’ve marketed the property. Now it’s time to complete the sale… and watch your income start to build.
With the amount of homes in foreclosure, this is an amazing deal for a lot of people. They could either be losing their home or live in a rental that is being foreclosed upon. Imagine paying $500, $600, $700 or more in rent only to find out that you are going to have to move because the bank is foreclosing on your landlord. So, you start driving around your neighborhood to see what else is available and you find a piece of property with an affordable down payment and lower monthly payments than you were paying for rent. And, in ten years, you own the house free and clear! Who wouldn’t jump at a chance like that?
In comes my Filthy Riches program. This is a piece of property that is valued at $30,000 that you have purchased for $5,000 cash. When you find a buyer who will commit to a $1,000, you only have to recoup another $4,000 to cover all your costs. With an 11% interest rate, you can charge $399.48 a month. In a year’s time, you will have recovered your entire investment. The rest is pure income!
So, how do you turn this property around to sell quickly? First of all, it’s important to note that you never even have to leave the comfort of your own office in order to complete the sale. Everything can be done via phone and with the help of a mortgage broker and title company.
A mortgage broker is a person or company that works as the middleman between you and your buyer. Traditionally, banks sold their own loans, as did other financial institutions. However, as the market has become more competitive, they hire brokers to compete to find buyers. What’s important for you to know is that these mortgage brokers are versed in how to structure mortgages and are licensed to ensure that they are in full compliance with any and all banking and finance laws.
This alone takes a lot of time and pressure off of you, the seller. You don’t have to worry about the intricacies of finance. Simply seek out a mortgage broker who will help complete the transaction and making your investment work for you.
With some of the new laws in place, using a mortgage company fulfills the requirements necessary to sell your property with seller financing. Otherwise, you would have to either limit your sales to corporations or LLCs, or you would have to get your own mortgage license. This can take a lot of time and really isn’t practical for the Filthy Riches approach.
A title company is also a handy shortcut to take advantage of in order to speed up transactions. A title company is responsible for doing an “abstract of title” which searches real estate records in order to confirm the property’s owner and reveal any outstanding mortgages, loans or liens against the property. Additionally, a title company will identify any easements or restrictions that may affect the property you are selling. They are responsible for finding any document or record that relates to the past or present ownership of the property. Records searched will include public and court records, property tax records, deeds, mortgages, wills, etc.
Also important for you is the fact that title companies are aware of any legislative acts that might affect the transaction, such as the SAFE Act and the Dodd-Frank act. When you use a title company, ask them if you are in compliance with these legislative acts. This is another level of protection for you.
Another thing I suggest is hiring an answering service to accept all incoming calls. An answering service provides friendly, knowledgeable people who are trained to gather information and ask pertinent questions to get the first steps started in qualifying a buyer.
As your business really takes off, you can consider hiring other professionals to move these transactions along quickly. A closing coordinator can help order title searches and surveys, inspections… pretty much anything to close the deal quickly.
Virtual assistants are becoming more popular in growing businesses. A virtual assistant is someone who helps the “small tasks” that eat up your time: answering emails, designing ads, making calls to realtors, etc. There are some great freelancing sites that can help match you up with a virtual assistant.
Working with a relator can also speed up the process of selling your property. Soliciting the help of a realtor means that you never have to leave your own home in order to put up for sale signs or show the property. This means you can focus on other aspects of your business while someone is hitting the pavement for you to sell your home.
I always suggest that people use docmagic.com as a fast and easy way to prepare all of your loan documents. I personally use this website and strongly suggest that everybody in this business use the tools you will find here. DocMagic, the flagship product of Document Systems, Inc., has become a great tool for the mortgage industry. Made up of mortgage industry professionals and computer experts, DocMagic helps provide a fast and efficient way of creating customized closing loan documents.
Great information with an easy to read understandable message of practical experience along with much knowledge and wisdom.
QUESTIONS:
If we are using a mortgage broker, why would we create a loan document through DocMagic? Is there a savings for doing this? Approximately how much should we budget for the completion of the DocMagic and mortgage broker?
This was great information. I was just noticing on multiple forums that there are no answers to the questions being asked. Has anyone reached out to you on this question? It’s a very good question and I would like to know the answer as well.
Hello Allena! We try to reach out to every question if possible! However, if you have any, you get the quickest response in the, “Ask Ron,” forum. That way Ron will directly respond to you via videos.
How are you able to charge 11% interest, I thought you were limited as to the interest rate you can charge.
In Michigan we can charge 11% interest on a Land Contract aka Contract for Deed.
What’s the best place to find houses for $5k? median priced houses in houston is over $150k
Tax Deed Sale but make sure you know what you are doing before bidding and buying.
There are areas of low priced houses in many states, but especially the South and Southeast U.S. I believe the idea is to do hard negotiations with the banks for their REO’s (through your Realtor)to try to get the prices down to $5,000 (or as close as possible). You are going to be offering on properties in lower income areas, not medium price point neighborhoods, but not “war zones” either.
This is a great, well thought out plan but I suspect that houses you can buy for $5,000 would often need many thousands in repairs. Assuming that is true, the numbers used here for illustration don’t work.
not sure
Selling your houses the “How to Sell Your Filthy Riches House QUICK!” way is a very good plan. It will require you to make lots of offers and be prepared to be called crazy by Realtors. But don’t be discouraged. Just keep making those offers.