Chasing Infinite Returns Using Real Estate Investor Financing

www.HasslefreeCashflowInvesting.com

Chasing Infinite Returns Using Real Estate Investor Financing

http://www.HasslefreeCashflowInvesting.com



Today’s agenda1) How to prepare your balance sheet, credit score, mindset, and acquisition strategy to borrow money from banks at unbelievably low interest rates.

2) Creative real estate investor strategies to buy income property using low interest rate loans when you have cash, but no credit and no income!

3) Creative real estate investor strategies to buy income property using low interest rate loans when you have a good job and good credit, but limited amounts of cash for the down payment!

4) How to create double digit, triple digit, or even infinite returns using arbitrage - e.g. borrow money at a fixed rate of 4% and invest it for virtually guaranteed profits of 6% or better.

5) How a real estate investor can leverage even small amounts of equity in their existing real estate to buy more income property.

6) How to refinance your primary residence and rental properties at today's low interest rates, even if you have NO EQUITY



David Campbell - FounderHassle-Free Cashflow Investing

Former high school band director Self-made multi-millionaire

Real Estate investor / developer / broker+$800 million in transactional experience

Financial educator / author / speakerHouses, condo-conversion, multi-family, winery, resort, office,

retail, medical office, production home buildingFaculty Member: Investor Summit at Sea with Robert Kiyosaki

Regular Contributor to the Real Estate Guys Radio Show




• Mortgage specialist for over 15 years.

• Over 22 years in sales, marketing, and customer service.

• One of the top mortgage producers in Dallas-Fort Worth, TX.

• Focus on residential lending and residential investor financing.

• Active real estate investor.

RELATIONSHIPSIDEAS

OPPORTUNITIESNOT a sales pitch

NOT investment, legal, or tax advice

• We currently have over 200 offices in 41 state with this national representation, we are well equipped to provide loans in ALL 50 states.

PrimeLending Locations

I Can Provide You Loans in

All 50 States

Arbitrage is the investment strategy of borrowing money to invest for a profit.

MINDSET

RULE #1 of Hassle-Free Cashflow Investing

CAP Rate > Interest Rate

positive leverageinfinite ROI

CAP > interest rate

• $100k price x 6 CAP = $6k NOI

• $100k debt x 5% interest rate = $5k expense

• $6k income - $5k expense = $1k profit


infinite ROI



Case Study

No financing = No Arbitrage

6 CAP > 7% Interest Rate = Negative Arbitrage

6 CAP > 5% Interest Rate = Positive Arbitrage

No Arbitrage

NO MORTGAGE

Price: $100,000

6 CAP

$6,000 NOI

n/a

n/a mortgage

$0 Interest Cost

$6,000 profit

$100,000 invested

6% ROI

No Arbitrage Negative Arbitrage

NO MORTGAGE Interest > CAP (Bad)

Price: $100,000 Price: $100,000

6 CAP 6 CAP

$6,000 NOI $6,000 NOI

n/a 7% Interest Rate

n/a mortgage $80,000 mortgage

$0 Interest Cost $5,600 Interest Cost

$6,000 profit $400 Profit

$100,000 invested $20,000 invested

6% ROI 2% ROI

No Arbitrage Negative Arbitrage Positive Arbitrage

NO MORTGAGE Interest > CAP (Bad) CAP > Interest (Good)

Price: $100,000 Price: $100,000 Price: $100,000

6 CAP 6 CAP 6 CAP

$6,000 NOI $6,000 NOI $6,000 NOI

n/a 7% Interest Rate 5% Interest Rate

n/a mortgage $80,000 mortgage $80,000 mortgage

$0 Interest Cost $5,600 Interest Cost $4,000 Interest Cost

$6,000 profit $400 Profit $2,000 profit

$100,000 invested $20,000 invested $20,000 invested

6% ROI 2% ROI 10% ROI

Essential Resources• cash

• cashflow

• credit

• equity

• time

• talent

• strategic relationships

• control of an opportunity

LIMITED

INFINITE

LIMITED and INFINITE

Credit

Income

CollateralMortgage

DTIcash reserves

FICOexclusion events

property typeconditionlocation

LTV

Historically low interest rates

Why NOW is the time to buy real estate!

Home prices have returned to the long term trend line


Home prices

below CPI


median home prices

CPI

interest rates and prices

are low

at the same time


interest rates

median home price

Investor Loan Programs 1 – 4 Loans20% Down Payment available for Single Family

30, 20, 15, & 10 Rate Programs

Adjustable Rate Loan Programs

Minimum Credit Score of 620

Cash Reserves – 6 Months on Subject and 2 current

H.E.L.O.C. Fund allowed

No Gift Funds allowed

Investor Loan Programs 5 - 10 Loans

25% Down Payment available for Single Family

30 & 15 Rate Programs

5 Year Adjustable Rate Loan Program

Minimum Credit Score of 720

Cash Reserves – 6 Months on all properties owned

H.E.L.O.C. Fund allowed

No Gift Funds allowed

Loan ProgramsFannie Mae Home Path Programs

H.A.R.P. 2.0 Refinance Programs

Fannie Mae Home Style Programs

Cash Out Refinance (Seasoned & Non-Seasoned)

We honor 1031 Exchanges (No Entity Vesting)

(H.A.R.P.) Home Affordable Refinance Program Highlights

• More Appraisal Waivers offered • More flexibility in tranference of current private mortgage

insurance • Unlimited Loan to values available with certain servicers and loans

without Private Mortgage Insurance! • Loan-to-value up to 125% with or without private mortgage

insurance • Owner occupied, 2nd home and investment properties 1-4 units • Additional DU Refi-Plus programs • Unlimited # of properties owned

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(H.A.R.P.) Home Affordable Refinance Program Requirements

• Current mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae

• Current mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009

• Current mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009

• Current loan-to-value ratio must be greater than 80% • The borrower must be current on the mortgage at the time

of the refinance, with a good payment history in the past 12 months

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Can you qualify for a mortgage?Determine your debt-to-income ratio. If a loan program uses

a 28/36 qualifying ratio, it means you are allowed to spend no more than 28% of your gross income on monthly mortgage payments, and no more than 36% on total debt.

This includes debts such as car and school loans, credit cards, child support and alimony. If a person earns $60,000 per year, their monthly gross income is $5,000. Under the 28/36 guidelines, their maximum monthly mortgage payment should not exceed $1,400, while their totally monthly debt should not exceed $1,800.

Down payments are generally paid in cash, due at closing, and are based on a percentage of the selling price of the sales price. You can make a down payment of 20% or 25% to get a better interest rate and reduce your DTI ration.

How many properties can I afford?On rental properties, we will give you 75% of the gross

rent toward your qualifying ratios

We will also give your credit on any addition rentals properties that you may be purchasing at the same time.

If property in tenant occupied at the time of purchase, we will give you 75% of the TRUE gross lease amount.

If the property is not lease out at the time of closing, we will still give you credit of the true comparable market rents determine by the appraiser.


How does this work?

Scenario 1

Sales Price $100,000Loan Amount 75% $75,000PITI Payment $682.00

75% of Lease $750.00PITI payment $682.00Qualifying income $0

Scenario 2

Sales Price $100,000Loan Amount 75% $75,000PITI Payment $682.00

75% of Lease $750.00PITI payment $682.00Qualifying income $68.00

Non-Seasoned Landlord

Under 2 Years

Seasoned LandlordOver 2 Years



Applying for the Loan Make Loan Application

Apply OnlinePhone Application

Discuss your loan application in great detail with your loan officer.

Choose a product that make since for your financial needs and commit to a rate lock.

Review your loan disclosures, sign, date, and return with any requested documentation.


Applying for the LoanSending loan documentation

Email – Preferably in PDF formToll free fax (All faxes go directly to me)

Third party vendors will be ordered, i.e. Appraisal, Title, Survey, and Insurance. Once all needed documentation is in our office, the processor will organize and submit the loan to our in-house underwriters for loan approval.

Express Mail, FedEx, or UPS (No Snail mail)




Underwriting And ClosingOnce the loan is reviewed, validated, and conditionally approved by the underwriter, we will notify you on any loan conditions that needed to be cleared for closing.

After all conditions are satisfy, the loan is sent to our closing department.

Loan documents are drawn and sent to the title company with closing instructions.




Closing and FundingThe title closer will prepared the HUD settlement statement for our approval and will be set to the borrower in advance for their review.

The title company will coordinate with the borrower on where to send the closing documents.

The title company can also send the documents to a mobile notary for your convenience or you may choose to use your own notary.




Closing and Funding

Once the closing papers are signed, notarized and returned to the title company, the closer will forward to PrimeLending for funding.

Our closing department will validate the necessary signed documents and if complete will fund the loan.

Primelending funds and your fund will be sent to the title company in order to complete the closing.




DO’s and DON’T




What to DO during your loan process!

Be responsive and don’t delay the process

Inform us if your address changes from what appears on your original loan application.

Full Disclosure is recommended

Obtain homeowner’s insurance with minimum coverage equal to the amount of your total loan or the replacement value of the house.

Call my office with your agent’s name and phone number at least 10 days before closing.




What to DO during your loan process!Let us know of any “Family Trust” requirements at the time of loan application. All revocable trusts have to be approved by our attorneys. We will need ALL pages of the trust document.

Keep all documentation (or a “paper trail”) on any large deposits into your account. A “paper trail” is composed of the copies of all paperwork necessary to prove a financial transaction: copies of all checks, deposit slips, loan paperwork, forms to liquidate assets, etc.




What NOT to DO!Acquire any additional credit lines or make any large purchases on existing credit without first consulting us. For example: Purchasing a car or buying appliances for your new home will change your debt-to-income ratios.

Change jobs without consulting us. A change in compensation may affect your ability to qualify. Borrowers must have a two-year history of bonuses and/or commissions to be counted as income. Lenders may verify employment on the day of closing as a quality control check.




What NOT to DO!

Co-sign with anyone to obtain a line of credit or make a purchase. The payment will show up on your credit report as an additional debt.

Negotiate your contract with an allowance and expect to get money back at closing. An allowance can be used to pay closing costs and/or prepaids.

DON’T ASSUME ANYTHING!!!




Questions

FREE Consultation: [email protected]



mailto:[email protected]


www.HasslefreeCashflowInvesting.comDavid@HasslefreeCashflowInvesting.comwww.HasslefreeCashflowInvesting.com

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Chasing Infinite Returns Using Real Estate Investor Financing

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Transcript of Chasing Infinite Returns Using Real Estate Investor Financing