The easiest way to sell properties is to have a lot of people who want to buy them.
Well, there are 44,000,000 people who would like to own a home but they cannot qualify for financing.
I am going to show you how to leverage the failed mortage industry into an extremely profitable business.
First ask yourself, if you saw the ad below and were an investor with money, would YOU be interested:
8%, 5 year notes secured by real estate, for sale, 94% of face amount.
But let's move on to the actual mechanics of how The Phoenix Strategy will work for you.
You acquire a property below market value from a bank for roughly $.65 on a dollar.
And you don't have to have ANY skill at all to do this, just go in and ask them and you can get it.
Matter of fact, they will be glad for you to take it off their hands because this is a bank-owned property and THEY are the ones paying the debt service and property taxes.
Banks DO NOT want to own real esate because they have to carry that on the debit side of their ledger. These debits show a less than healthy balance sheet that affects profits and the value of the stock that all the big wigs in the bank own.
Let's say you get a $250,000 property from your local bank for .65 cents on the dollar. Now, we use that example just to show you the profit potential because, in actuality, you can get properties much lower than that, more like $.45-.$55 cents on the dollar.
And, if you follow the strategy at the end of this page, you can get properties for $.30 on the dollar.
You get a $250,000 property for $.65 on a dollar.($250,000 x $.65=$162,500) and maybe you have to do $5,000 of cosmetic repairs to make the property sellable.
Total money in the property:: $162,500+$5,000=$167,500
Next you put a sign on the house: For sale by owner..WILL FINANCE: 4% down (and your phone number)
When someone calls (and they will because 44,000,000 people want houses, they just cannot get a mortgage), you tell them: " I do my own financing, so I only require 4% down and will hold the mortgage balance of 96%. "
Now, fair market value was $250,000. so, you set the price on this property, at $225,000 to move this property very quickly.
That means the buyer's 4% down payment will be $9,000 ($225,000 x4%) and they immediately have $25,000 of equity in their house.
($250,000-$225,000=$25,000 of equity)
Now, after they give you a $9,000 downpayment that leaves a balance of $216,000 that you will hold as a mortgage. And since you are giving them a financing deal that no one else will give them, you have the right to make the interest rate on the mortgage 2% higher than current mortgage interest rates.
Also, you charge them 2 points up front for holding the mortgage. (The term point only means 1% of the mortgage amount).
($216,000 x 2%=$4,320).
Let's say that mortgage rates are 6%, so you draw up a mortgage for $216,000 at 8% with a 30 year pay out figure but the mortgage is a 5 year balloon mortgage. This simply means that in 5 years, the entire mortgage balance is due.
This is very common and people reason out that they want the house now and in 5 years, they will be doing much better.
Also, once this mortgage becomes "seasoned" which means they have paid it on time for 13 months, they qualify for traditional financing and can simply get a 30 year mortgage to pay off the 5 year mortgage.
Okay, so all is good so far but you don't want to be holding mortgages, do you?
So, remember the ad about the 5 year notes? Run it. As a matter of fact, you shold run this as soon as you decide The Phoenix Strategy is for you and have a whole pool of people interested in buying these notes.
When you have a note to sell, call tell them you have a note.
Tell them that it is an 8%, 5 year balloon note, secured by a property with a fair market value of $250,000 and you are selling the note at 94% of the face value. The face value of the note is for $216,000, thus, the actual cost to them is $203,040.
Here is the math: ($216,000 x 94%=$203,040).
When they buy your note, they immediately make a profit of $12,960.
$216,000-$203,040=$12,960)
Their actual note cost of $203,040 is secured by a property with a fair market value of $250,000 which is $46,960 greater than the cost of the note.
($250,000-$203,040=$46,960)
The will be getting an 8% return on their money every year until the note is paid off.
So much about the note buyer...let's see how you did.
You paid $162,500 for the property and put another $5,000 to dress it up for sale.
You had the home buyer give you $9,000 down and $4,320 for holding the mortgage, for a total of $13,320.
The Note Buyer gave you $203,040 and immediately removed you from holding any mortgage.
You received in total $216.360.
($9,000 down + $4,320 in points + $203,040)
So, you received $216,360 and had an iniial outlay of $167,500
($216,360-$167,500=$48,860 profit)
And you were in and out of the property in 30-45 days.
That is The Phoenix Strategy. So, easy a caveman can do it
You discounted the selling price of the house and discounted the price of the note to the buyer, yet still made $48,860.
The reason is simple, you had the capital to buy bank-owned real estate for pennies on the dollar.
The drawback in flipping properties, the traditional way is your capital is most likely limited, so you can only involve yourself in one property at a time. You have to sell the first house and then move on to the next.
How about, if you could do a lot of these property deals simultaneously?
How about, if you had $5,000,000 to buy properties?
How about, if you could form your own real acquisition firm, in the next 15 days and that allowed you to get that $5,000,000 of capital?
And when you have $5,000,000 of money at your disposal, you can go to that bank that has all those properties that they DON'T want to own and have them create a bundle of properties.
You have them bundle up a package of 10-12 properties, all in the same area, and give you a price to take the entire package.
Then you negotiate. This is when you will get real estate for $.30 on the dollar.
Now, $.30 on the dollar will change your profit greatly. So, break out your calculator and go back to the example used above and just change $.65 to $.30 and see just how your profit margin changes.
You will make an additional $87,500 on this transaction. Yes, your profit sky-rocketed from $48,860 to $136,360.
Every factor remained the same, except your pool of capital allowed you to buy properties at a greatly reduced price.
So, at this point, they only factor you are missing is the $5,000,000 capital pool to launch your own real estate investment company.
Well, on the next page I am going to tell you exactly how to do this.
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