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What Houses to Target for your Portfolio and How to Structure Them – Part 2: Multi Mortgage
Joe: What houses to target for your portfolio and how to structure them, part two. Last time I talked about subject to. This time I’m going to talk about multi-mortgage. Multi-mortgage I like even better than subject to, unless I get a great deal on subject to. Some of them make a lot of sense.
Joe: But multi-mortgage is interesting because it usually means that they’ve paid down the not for a while. You can do it with higher end properties. Let’s say we have a $300,000 property and the owner still owes $200,000 on their property. They have a mortgage of $200,000. So you can take over the first mortgage. Have them deed you the property, take over the payments on the first mortgage and then have a second mortgage created for $100,000 that you make payments on to that seller. That way you’re paying off a $300,00 property.
Joe: But on the second mortgage you’re not going to have any interest on that mortgage. You’re just going to make payments on it. So you’re going to make payments probably over seven to ten to fifteen years to pay off that mortgage. So that mortgage is probably going to pay off faster than the first mortgage. The first mortgage may have twenty, twenty-five years left on it. The second mortgage is going to be amortized in a much faster way because it has no interest on that second mortgage. Or maybe you make the payments lower so you have more cash flow on the deal if that seller will accept lower payments on that second mortgage.
Joe: So multi-mortgage can be wonderful and you can buy properties that are $200,000, $300,000, $400,000, $500,000, $600,000 properties and still be able to have positive cash flow and be able to buy down those properties. And you can give that seller full price or nearly full price for their property and still make it work. And you can build your portfolio very quickly by buying a few of these properties. You buy five properties that are worth $250,000 each you’ve got $1M worth of properties. That’s easier to manage than ten $100,000 properties.
Joe: Now I think it still makes sense to buy cheap properties. I buy a lot of cheap properties because I can get such great deals on those properties. But if you’re buying subject tos and you’re working in the higher end market it makes sense to buy higher end properties. You know, if you’re in a market that doesn’t have cheap properties or even in a market that has a luxury market within it, maybe you’re in St. Louis or maybe you’re in Columbus where you can find $350,000 properties that you can buy subject to or buy on a multi-mortgage which is exactly what I’m talking about here. So that’s multi-mortgage.
Joe: If you like this channel, hit the subscribe button. Hit the thumbs up. Go to ZeroDownInvesting.com and check out my mentor program. It’s a six-month mentor program where I walk you through the entire process of building your business, learning how to make offers, how to make income and then how to start buying properties for your portfolio. And then how to systematize and automate and outsource the work that you need to do in order to build your business into a going concern that you can extract yourself from and do only 1% of the work.
Joe: All right. Good luck to you.