Investment strategy for higher return

Hello and Welcome to Todd Miller TV. I wanted to show you an investment opportunity that was around, it was really big in the 70’s and 80’s when interest rates are really high, and it’s something that’s not seen, hasn’t been seen lately but there’s a great opportunity out there for people with cash, want to get a better investment. So here’s the example: So let’s say that you go out to buy a property for $50,000, you’re thinking about buying it cash and renting it, you’re probably gonna get maybe $700-$800 a month in renting it. Okay? So that’s one option. You get a pretty good return when you do that. There’s another option for you. You can take that property, $50,000, buy it cash, immediately turn around and sell it for $80,000 on an owner carry note. That means you as the investor, you as the previous owner, carry the note on the property. Transfer titles to them, they own it, you become the mortgagor. You know, your pricing will wait. Why would I wanna go through that with people foreclosing and all these other stuff? Well this is why: Okay, so first of all, you can charge ’em a higher interest rate then you could get on your money elsewhere. You could go ahead charge 8%, just throw out a number in there, 10, it can be whatever you negotiate with it, okay? So what that’s gonna do is that’s gonna give you a monthly payment. So, one of things you wanna do is you want to have a short time frame on the, like a balloon payment. So in this example, you take a 30-year note, some advertise over 30 years, that’s all due in 5 years. So within the 5 years, they’ve got to re-finance the remaining balance. Well here’s the magic thing, a 30-year note of 8%, they’ve only paid off $4,000 of principle, so at the end of 5 years they have to re-finance $76,000, give $76,000 to you. You’ve been collecting $600 a month plus at the end of the note you get a $76,000 lump sum, it’s like seeling it. If they can’t do it that’s fine, you just take the property back from them or, you just re-negotiate better terms for you. You raise up their interest rates, you change the payment a little bit, you do something like that to make it good for you. So these are some advantages why you would wanna do this. The scenario I just mentioned, if you do this, and at the end of 5 years they re-finance and pay you back off, you made a 27% return on your money. This is why this is better potentially than renting a property, being a landlord, this $600a month payment is less than you would get in rent. You would probably get maybe $700-$8000 depending on the type of property it is. The great thing about this is, you’re not paying taxes, you’re not paying insurance, you’re not paying property management fees. We get a couple hundred bucks of those in here, you have to rent this for $800 a month plus you have vacancies. You have maybe 2 months out of a year you don’t have a tenant, you have tendencies of leaving going back and forth, you’re constantly making repairs on the property which can eat into your investment. So this is a great opportunity. The other place this is really good is in a really low-end condos. Reason why it’s good in low-end condos is remember, when you transfer ownership under a note you carry, they pay the HOA fee. The HOA fee is what kills most investors in condos, which is why condo prices are like 30-40,000, you go out and buy a condo. So this is a huge opportunity. Si there some risk involve? Yeah sure because you’re now a note holder. And in theory, if property values are down, they would just say, “well I’m not gonna pay you, I’m just gonna walk on the note, you can have the house back.” One thing you can do that may get rid of your risk, is charge ’em some upfront fees on this. So $50,000, make ’em put a couple more thousand as a down payment; or just charge ’em point and say “I’m gonna loan you the whole $50,000 and we’re gonna make it based on that, but I want $2,000 upfront” and then make them pay all the closing cost. So they have to come out of pocket maybe $3,000 or $4,000 to close the deal out. You get that right upfront which mitigates some of your cost in you. You carry a note and you just collect the payments. Instead of being a landlord, you collect them as a mortgagee. So that’s just one opportunity. I just thought I’d point that out you. There’s gonna be a lot of opportunity for this. I think this is gonna give you some huge that we see, until the loan industry comes back. If you want to keep up to date with all my update, you can follow me at twitter @ lasvegastodd. That’s the update for today. Thank you very much.