You hear a lot about buying discounted notes. In theory, it sounds pretty sexy, but these deals are often hard to find and hard to put together.
I’m going to show you a simple, safe (and legal without a license) way to become the LENDER and get a excellent return on your investment.
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Read Transcript for “A SPECIFIC Technique To Buy Profitable Discounted Notes”
I’m going to show you a specific way to buy properties in bulk without doing any rehab to them and then sell them to end users for a profit.
Joe: I wanted to tell you about some other types of investment properties that I think make sense. When we’re talking about analyzing deals, you want to be able to go out and find deals that make sense, and there are so many people that are offering properties right now and so many of them don’t make sense. I’ve been trying to show you over this series of videos that I’ve been creating here what does make sense. This video today is another type of investment that I sell personally that I think makes a lot of sense.
Joe: It’s a type of investment that requires no manager. I work with another investor who is buying them in bulk. I’m not personally buying these properties. They’re from a bunch of different places in the country. We buy them in bulk and we don’t do any work to them, then we sell them to end users in as is condition. The end user (the person who’s going to live there) goes in and buys it from us on a land contract. A land contract is an agreement with us to pay us 10% interest over 15 years and they have to pay that off over time.
Joe: Essentially, what they’re going to do is pay us, the deed holder, their payments until that 15 years is up. So what we’re doing is selling you the deed so that you become the deed holder and you become the person who collects the money. We’re going to sell them to you at a discount from what we sold it for, so that means you’re getting it cheaper than what they’re going to pay for it and what their note is for. So essentially, it’s like buying a discounted note, except that you’re on the deed and then, if they default, it’s easier to get rid of them.
Joe: Again, I’ve talked about being the one who’s in control, being the one who’s most protected in the transaction? – This puts you in the most control because you have the deed on the property. It also makes it so that they’re buying it under market value.
Joe: Nearly always, with the way we set it up, if you look at the comps on the properties, we try to cut the price to the person who’s buying on a land contract – because we want them to stay in that property. We want them to have a good deal. We want them to stay there and make their payments. And if we have to take it back from them, we’ll be able to sell it again and hopefully, we’ll be able to sell it for even more next time.
Joe: But the hope is that they’re going to do well, they’re going to continue to make their payments and make payments to us. Now, were going to buy it, and when I say we, I’m talking about you – if you buy it from us, you’re going to buy it for less than we sold it on a land contract, which means there’s a spread there. They’re also paying 10% interest. So, with the difference between the spread and the 10% interest, your return on the investment is going to be between 15 and 18%. Let me show you one that I’m talking about so you can see the kind of deal that I’m describing here.
Joe: I’m taking you to my Push Button Method website. It’s one of the clone sites that we created from the Push Button Method site. And you could have your own site just like this by the way, if you either got the PushButtonMethod.com or if you were in my mentor program. We get these things set up there; they’re very cool. The nice thing about these is that any listings that I have on my site you will also be able to get on your site if you chose to. You don’t have to, but if you’d like to have my listings on your site, you can do that. And that way, if you found a buyer for them, you could send me the lead and I’d give you a cut on the deal.
Joe: It’s the same with my other students. We have about 500 investment properties for sale that you can do this with if you’re a part of that process, so if you’re interested in finding out more about that, go to PushButtonMethod.com and find out about that. But I digress. I have these listings on my site here so if you wanted to, you could go to StopPayingRentAmerica.com. I don’t know if these particular listings are going to be here when you come because we’re selling them pretty quickly and it’s likely that we’ll have them sold by the time you even see this video and if there aren’t any more on here at the time, it just means we haven’t gotten around to putting them up there yet. Just contact me and I’ll let you know what we have available at that time. These are some pretty interesting deals.
Joe: As you can see, we have one that’s in Kansas City, Missouri. The price to you would be $22,000. We’re showing 18% cash on cash return on this little house. Let’s go take a look at the full listing of it. We have some other pictures available just so you can see what it looks on the inside. Remember, we didn’t do any work at all to these properties and we sold them on land contract.
Joe: By the way, if you want to see what this property looks like on HomeGain or Trulia or Zillow, all you have to do is click and it’ll open up and show you the values that these particular areas think this property is worth, which is kind of a nice feature. And you can get a map to it and do a mortgage calculator; all sorts of cool stuff on our site.
Joe: Anyway, this explains how it’s going to work. What we’re doing is selling it for $22,000 which is about 66% of the land contract sale price (because we sold it to land contract buyers for $33,453 on a 15 year note with 10% interest). There’s no management on this; it’s all done by a loan servicing company. So you can look at these properties on, again, I gave you links to them so that you can go look at them. The contract buyer is paying $350 a month. They’re covering their own taxes and insurance, which we, by the way, are having the loan servicing company collect to make sure it’s being paid. So we want them to escrow it and we break it up into 12 months and have them pay the loan servicing company. The loan servicing company costs us $20, so that’s not too much.
Joe: Essentially, what you’re doing is buying the house for $22,000. You’re going to be able to collect on $33,000 at 10% over 15 years. Over 15 years, they’re going to be making payments to you, that are going to bring you, after you pay the property manager, in this case the loan servicing company, $330 a month – that’s $3,960 a month – that’s an 18% return on your money and so within just a little over 5 years, you’re going to have all of your money back and in the next 10 years, there’s going to be 100% profit. Where else can you put your money that you can get this kind of return?
Joe: If you go to this site, you can read this whole explanation. It’s pretty much what I’ve been telling you in this video. The house doesn’t have to be beautiful to make you money. These clearly are not beautiful properties. Let me just go back and show you that we have them in Chicago, we have them in Michigan, and we have them in Ohio. Here’s another one in Ohio. Here’s a New Jersey. Here’s Missouri. Here’s Detroit. Here’s Tennessee. We have them all over the place because the buyer’s buying them in bulk. And then they go out and get them into at least livable shape and then they sell them on land contract to these folks.
Joe: This is just sort of an example of the type of properties we get. We sell a bunch of these so we’re constantly going through them. This one that’s on the screen is probably not available right now but there are others. And if you’re interested, you can go to my website, StopPayingRentAmerica.com and take a look at some of the things that we have available. Not all of them are this type of property, but look for the ones that are well defined. Usually the ones at the beginning are the ones that we’re talking about. Then I have a bunch of other properties on there as well that you can buy on lease option and lots of other ways as well.
Joe: So, go look at the site and if you’re interested, give me a call if you have the money to invest. You’re going to need cash to invest in these properties. You can’t buy them on terms. These are cash investments. You can use your money from your home equity line. You can use your IRA. You can use the capital you have in the bank. Or you can convert some of the money you have in stocks and perhaps move them over to real estate investments where you’re going to get a much higher return on your money, and you don’t have to worry about management. There’s some really nice things about these types of investments. Thanks, now.