The only reason most people get into real estate in the first place is to make money. So the first question on most people’s mind is…
“Joe, How Much Money Can I Make Using Your System For Real Estate Investing?”
Here is a hypothetical scenario:
You find a property that you can purchase “Subject To” that has an original mortgage of $100k, a payment of $950 and a real market value of $120,000.
What if you told one of the millions of buyers with either, 1. bad credit or, 2. income that they can’t verify, that they can move in, start making payments to BUY the house, NOT TO RENT and they can do it right now, no credit check, no income verification, no nothing, they just need to pay you $5,000.
For $5,000, they avoid all the headaches that require good credit. You are going to give them the benefit of the doubt and ignore their past history because it makes sense financially for you.
You are going to charge them $5,000 down, $1,200 a month and you will show them how to get a new loan on that property in one year. They agree to buy the property for more than it is worth because of the WAY they are buying. So they agree to a purchase price of $130,000.
Is it ripping them off by charging more for the property than current market value? Absolutely not… a conventional B, C lender (that is a type of lender who loans money to people with bad credit) would charge them much, much more than what you are charging by dramatically raising their interest rate on their loan and requiring a 15-20% down payment. So for them, you are still giving them a great deal.
So now you make $5,000 immediately. Every month you make $250 (the difference between what you owe – $950 and what they pay you – $1200). And in one year you will make $25,000, because they will pay you $130,000 (that’s $130,000 purchase price minus their $5,000 down) and you have to pay the original mortgage off for $100,000, the difference of $25,000 is yours to keep.
When you give the property to your buyers, you tell them that they should treat this home like it was theirs. You are going to act like the lender and they are going to act like the owner and you expect them to take care of the problems.
Make Them A Homeowner, NOT A Tenant
I actually have a lease option contract in my ADVANCED CD course that lays this responsibility squarely on their shoulders. This contract makes sure, right from the beginning that if the toilet stops up, they will fix it… if the furnace goes out, they buy a new one, if the roof leaks, they repair it. I tell them… “You wouldn’t go to your mortgage company and ask them to unclog your toilets… so don’t expect me to do that for you.”
You are giving them a second, and sometime third or fourth chance to prove themselves responsible enough to own a home. Treat them as if the home is already theirs. This way you never have to deal with any problems. You’re a lender, not a landlord. Of course, the IRS still sees you as a Landlord, which gives you WONDERFUL benefits… ever heard of depreciation? This topic is outside the scope of this article, but I have other programs that teach it in detail.
So lets take a look at how much money you made off of this one deal.
You made $5,000 up front on the down payment from the buyer, $250 every month (which is $3,000 over one year), and then you get $25,000 at the end of the 12 months when they refinance and pay off their debt. So add that up, $5,000 from the down payment, plus a total of $3,000 in monthly income over the year, plus the $25,000 at the end. You add it up and you made $33,000 on ONE DEAL in ONE YEAR.
Actually, you would make twice that much if you took advantage of several other income sources that a deal like this provides. I wish I had time to explain them all to you here.
But all you did was put the deal together. You’re just shuffling a little paperwork and making over $30 GRAND!
Sure, that’s great, you say, but what if they don’t make their payments and you have to evict them?
You Make Even More Money!
Now don’t get me wrong, it’s not good for the buyer if they default and you want to see them succeed. But quite frankly, it’s great for you if they stop paying monthly because you get to keep ALL of the money they paid up to that point. It is non-refundable.
So in this example, if they stopped paying after, lets say, six months, you would get to keep the $5,000 they put down, the $1,500 in monthly cash flow they paid, and now you can go charge somebody else another $5,000 down and make even more money!
Plus the property appreciates and that is yours to keep, so if the value increases 5% and you own a $100,000 property,,, you make an EXTRA $5,000 on the next sale. Just raise the price the next time you sell it.
Do you see why I call it the “Safety Net Method” ™
NO RISK DEALS that make you more money if they go “bad.”
Remember that the demand for buying homes like this his huge and by showing people a way they can get into their own home… they are going to love you. I also want to point out that all of these figures are projections and that you may make more or less, not everybody has the same success and I think it’s my obligation to tell you so.
The big factor to your success is going to be the effort you put in.
Anyway… you just made $33,000 from one real estate deal that took you minutes to put together.
So, you can see how easily you found the seller… all the people begging you to take their properties. And I showed you all the buyers that are willing to throw money at you to get these deals.
What if you only did one of these deals a month?
That means that in your first month, you would make $5,250 from the down payment and the first month lease income added together.
The second month you would make $5,500 because you do a new deal just like the first one and collect an extra $250 per month.
Then in the third month, you make $5,750. The fourth month you get $6,000… the fifth month you get $6,250.
Do you see how I am getting these numbers… just like our first deal, the buyer is giving you $5,000 down, then you are charging the buyer $250 over the cost of the mortgage payment in rent. And since you are not doing management or upkeep of the property that $250 is pure profit.
So every month you are getting an additional $250 on top of your $5,000 and on top of your cash flow income from the other deals in the previous months.
Do You See The Exponential Profit Potential Here?
Now don’t forget the equity you are building every month… remember that $25,000 I talked about earlier? I’ll discuss it more in a minute.
So then, in the sixth month of the deal I talked about above, you make $6,500, in the seventh you get $6,750 the eighth month you make $7,000, the ninth month you make $7,250, the tenth month you make $7,500 the eleventh month you get $7,750.
But then things change…. Now the cash is really going to start pouring in like the bursting of a dam.
But before I get into that, let’s first look at what you made in just 11 months.
The least you made in any month is $5,250, and after 11 months you made over $63,000 dollars total. But this doesn’t count the equity you built… remember the $25,000 per month you were making in equity. That adds up to $300,000!
You made that in 12 months working less than 10 hours a week!
Let me show you how the equity starts to pay off.
Remember the way you sold the first property and each and every property after that? The buyer has to pay them off in one year and when they do pay it off, you make an EXTRA $25,000 on every deal as it closes… and since the first year is up, you now have a deal closing every month!
Are you starting to see the power here, even if you did NOTHING your second year, if you didn’t close another deal, every month for the next 12 months you would have one of your previous deals close and you would make $25,000 every month.
And remember that you are almost hoping that they don’t pay or don’t close so you can get somebody else in there and charge more money.
If you optimize this process using my “Millionaire Matrix System ™” you will make over a million dollars in 2 short years and all you have to do is one deal per month.
By the way, just so you know it’s possible, I took one of my students and had him put together 14 deals in 10 hours. He did more than a YEAR’s worth of deals in TWO DAYS! And we did it in front of a television crew!
How hard can it be to do 12 deals in one year if a student of mine can do 14 in 2 days?
It’s not that hard, but you do have to take ACTION. Just do exactly what I tell you to do… step one do this, step two do that, step three do this other thing. And on and on.
It’s predictable, repeatable, consistent, straightforward and VERY, VERY PROFITABLE!