CHAPTER 13
BORROW CLOSING COSTS
In almost
every real estate transaction
there are going to be "closing
costs" of some type.
Whether in the form of escrow
fees, points (an up front
percentage of the loan charged
by the lender, usually 2% or so,
of the loan), or insurance, they
are going to be there. As they
vary from state to state and
even county to county I am not
going to go into any detail
other than to say that there
will be costs.
Another
reason for not going into detail
is that when structuring no down
transactions, they take on less
importance, because they do not
have to be paid out of your
pocket. In any transaction that
is being structured to bring
cash into the deal, whether
through saleable notes or new
loans,
you can usually stipulate that
the seller pay all closing
costs. If the seller
does not like that solution as
well as you do, then just
raise the price of the property
by the amount of the costs.
That way it still does not cost
the seller anything and it does
not have to come out of your
pocket. Then where does
it come from?
Closing costs will always have
to come from the money that you
raise to go into the
transaction. If you know that
you can get a loan of $70,000
from the finance company, and
the closing costs are going to
total $3,000 dollars, don't sell
the seller on the idea that you
can get him $70,000 dollars.
Tell him $67,000 dollars and
use the other $3,000 to pay the
closing costs. That's right.
You can even borrow the
closing costs. You can then
increase the amount of the
second he carries and the sales
price by $3,000 dollars. In
other words, if this were
another $100,000 sales price,
you increase the price to
$103,000, borrow the $70,000,
have the seller carry back
$33,000 and have the seller pay
all closing costs out of the
$70,000 dollar loan.
HOW TO FIND PROPERTIES?
Having all
this real estate knowledge is
great! But, if you can't find
anything to buy, it doesn't do
you any good. So, how do you
find properties?
1)
Newspapers. Check your
local paper for properties for
sale, then simply call the
sellers. Ask questions to find
out what they need in the way of
cash, why they are selling, loan
balance and any other
information that is pertinent.
You then analyze the facts you
have acquired to determine which
principles are needed to
structure the transaction in a
way that will achieve both the
seller's and your objectives.
2) Real estate agents.
Agents usually have the easiest
access to properties, but if you
tell them that you are looking
for something that you can buy
with nothing down, you are
probably not going to get much
information.
The real
estate principles we have
discussed are not taught in real
estate school; at least, not as
they pertain to buying
properties with nothing down.
Consequently, the vast majority
of agents do not realize that
what you want to do is even
possible. What you must do is
find one agent that you feel
comfortable with and explain
exactly what you are doing and
what you need in the way of
properties. Assure him that
anything he finds that will fit
your criteria, you will buy from
him. That way he knows that he
will get paid his commission, by
the seller, and you know that
you will have someone out there
searching for your "no down"
properties.
In today's
day and age, the internet is one
of the best sources of potential
homes that you can buy
creatively. see...
www.owners.com
www.forsalebyowner.com
www.homesbyowner.com
www.betterlifestyles.com
See
Chapter 14.
Create the
Appearance of Wealth.
APPLY WHAT YOU KNOW!
I want to repeat that what we
have been discussing are not
"pie in the sky", theories.
They work.
Everything
you've seen has been used either
by client, a colleague, or
myself.
This is actual,
workable, valuable knowledge.
We all have heard the saying
that "knowledge is power". And
it is
But only to the
extent
that it is used.
Just as the person who won't
read is no better off than the
person who can't read, if one
learns principles but doesn't
use them, he is no better off
than the person who does not
even know they exist.
Learn these principles, but
more importantly, use them!
Create the
Appearance of Wealth.
