whats better? cash flow or anominity - Posted by Lane

Real Estate Investing Triple Net Leases
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Posted by LeasePurchase on April 03, 2005 at 21:04:54:

  1. Asset Protection, property can’t be attached by judgement or liens, including the IRS.
  2. Anonimity
  3. No Due-On-Sale Violations
  4. Resident has no claim of equity in the property
  5. Simple Eviction -vs.- Judicial Foreclosure
  6. Protects Property from each others legal toubles including divorce, bankruptcy and creditor judgements.
  7. Higher sales price
  8. Higher positive cash flow
  9. The ability to transfer active tax benefits to the resident
  10. No Maintenance, Upkeep or Repairs
  11. No Tenant and Toilet problems
  12. No calls in the middle of the night
  13. Trustee’s agent handles all payment dispursments, PITI and cash flow.
  14. Better quaility of Resident.
    (The national average for Lease Options and Purchases is only 1 in 11 ever exersize their option to purchase -vs.- 9 in 10 with a Equity Holding Trust).
  15. No Property Managment Required, just set it and forget it.
  16. Can be used to mimic any form of Seller Assisted Financing without jeopordizing the title.
  17. Since Full Escrow is used the Resident may purchase the property from the trust as a Refinance -vs.- a new purchase loan at Full Market Value.
  18. No chance of the transaction being classified in the courts as a Delayed or Disguised Sale. *(See Arizona Law for example).
  19. Freedom from the need for subterfuge, deceit or “quiet documentation.”
  20. Allows investor to legally assume any non-assumable loan.
  21. Ability to acquire Over-Encumbered properties and make money.
  22. Can be used to “Legally Flip” properties without further financing or having to take title.
  23. Legally avoids the potential for re-assessment.
  24. Did I mention… It is a legal shield against liens, judgment creditors, bankruptcy, divorce actions (even IRS tax liens)?
  25. Circumvents income tax on capital gain
  26. Stops the expense of negative cash flow, maintenance and vacancies
  27. Avoids any income tax on Debt Relief while averting credit record damage
  28. Profit while someone else makes the payments and handles the maintenance and repairs
  29. UNLIMITED OWNERSHIP OF INCOME PROPERTY WITHOUT DOWN PAYMENT, BANK QUALIFYING, OR UNDUE CREDIT RISK
  30. I can sleep at night because it’s the Right Thing To Do.

I started with Lease Options and Purchases over 15 years ago, thus the name LeasePurchase. But I quickly discovered LOs may be the most dangerious form of Buying, Selling or Investing. Just one mans opinion.

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whats better? cash flow or anominity - Posted by Lane

Posted by Lane on March 28, 2005 at 22:23:03:

Bought house subject 2 15yr mortgage at 8.75%, payment $967 rent is $900, -$67 a month cash flow. Loan is not in my name

OR

Refinance in my name 30 yr at 7.75% +200 a month positive cash flow, but have risk of new loan in my name, have 10 houses starting to get harder to finance with banks??

any suggestions

see you in St Louis

thanks

lane

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Re: whats better? cash flow or anominity - Posted by dealmaker

Posted by dealmaker on March 29, 2005 at 07:04:48:

Back to Lane’s question. I guess it depends on WHY you’re holding the property. LT rental, L/O, etc. Why you’re holding ties into what are your long term goals in REI.

I never have any hassle getting loans, I don’t get them. Years ago I decided that loan fees and interest were expenses that I didn’t need or want to pay. Since I almost always evaluated my deals on a “cash on cash” basis, I figured it made it easier to analyze and explain to my wife.

I looked at all my mortgages, 13 at the time including my home and set up a plan to slam every nickel onto the lowest balance one, then when it was paid off to move the program to the next lowest in sequence. IIRC it took less than 4 years to clear them all, of course I continued to buy during this time.

It’s made buying easier and more profitable. If 3 of us are offering on the same house, whether it’s MLS, pre-foreclosure, REO, heirs to an estate, it doesn’t matter. If you’re offering subject to, someone else is offering L/O and I’m offering all cash, 3 day closing, who do you think has the most attractive offer to the seller.

On selling it’s way more profitable. (I started getting out of rentals 10 years ago and was completely out 5 years ago. When I run an advert that says “3/2, owner will finance with $2000 down”, my phone rings off the hook. No one has ever asked me to accept a nickel less than full price, heck most of them don’t even know the selling price until they look at the HUD-1, that’ I’ve prepared, along with the other legal documents.

I’ve done these deals where I’ve done “simultaneous” closings for as much as 29% profit, without ever touching the house. And I get a nice comfortable cash flow on each one.

Not to brag on me though. Just to show you one other way to analyze and structure deals.

dealmaker

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Why can’t you have both? - Posted by WAREIA

Posted by WAREIA on March 28, 2005 at 23:20:37:

I have over 200 properties and have no limit to amount of properties I can have, why should you?

If you know how to properly structure your transactions you can buy as many as you want with NO Limit and total anominity & protection.

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Re: whats better? cash flow or anominity - Posted by Rich

Posted by Rich on April 01, 2005 at 22:01:44:

If you are paying all cash for these deals, doesn’t that limit the number you can do at a time. And what kind of terms are you selling them on (30 yr or 5 yr baloon)?

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200!!! - Posted by Billy

Posted by Billy on March 28, 2005 at 23:47:00:

Wow, 200 properties!! How many years did it take you to get 200 properties?? I have 3 and am trying to figure how to keep everything straight. I am impressed. Tell us more.

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Re: 200!!! - Posted by LeasePurchase

Posted by LeasePurchase on March 29, 2005 at 24:21:42:

About 4 years. I did Lease Purchases for about 6 or 7 and thus the name. I started buying houses on Short Sale but didn’t like rehabbing so I just started remarketing them as Seller Financing / Fixer Uppers using a Land Trust and Net Lease. (i.e. no maintenance, tenants and toilets etc.)

The Tenant/Residents do all the fixup and repairs if needed. I personally don’t care if they every do. All I care about is that they finance it into their name in 36 months and cash me out.

To this day I still have not had one eviction. I have started a few but all were settled. I have had a few that didn’t want or couldn’t complete our agreement. I let them live in the property for the next month for free if they will show the property to prospective Tenant/Buyers etc. and then I sell their interest in the Trust to the next buyer, thus no costly evictions.

When I was doing straight Lease Options and Purchases I had only 1 in about 10 ever excersize their option to purchase and had to evict almost half of them. Needless to say I don’t do that anymore.

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Re: 200!!! - Posted by Rich

Posted by Rich on March 29, 2005 at 06:38:41:

Are you saying you basically do Lonnie deals with normal houses? Do you have to put 20% down on each of these? Trying to figure out how it is possible to do many of these without running out of money. Excuse my ignorance on the matter.

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Re: 200!!! - Posted by LeasePurchase

Posted by LeasePurchase on March 29, 2005 at 12:42:41:

I’ll have to admit, I don’t know what a Lonnie Deal is.

I don’t have to put any money down. In fact if it going to cost me anything upfront I don’t do it. Sometimes I pay cash and sometimes I finance. If you use conventional financing to buy a Short Sale then you are having to finance only 80% of the purchase price. However, if you use Hard Money, of which I have access to, then you can get 100% of the purchase price. Once I have the property, I sell it to a partner. He/She gets a 90% Interest Only based on the Full Value of the property. This gives cash out for marketing and holding costs. It usually takes a 3 to 6 weeks to get a Resident on the terms we are looking for, which is a Net Lease from our Land Trust. In a few years the Resident will refinance, payoff our loan and split any of the Equitable Growth with us over that period of time.

When my partner purchases the property from me, at Full Price, my Hard Money Loan is paid off. This usually takes only a few days to a few weeks from the time I get the Hard Money. In other words, my Partner is already pre-approved and qualified to purchase the property on our terms before I even request the money from the Hard Money Lender who is a friend of mine. He charges me 1 to 2 points for using his money for 10 to 20 days and then we do it all over again.

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Re: 200!!! - Posted by Rich

Posted by Rich on April 01, 2005 at 22:03:52:

What kind of terms do you sell these on?

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Re: 200!!! - Posted by LeasePurchase

Posted by LeasePurchase on April 03, 2005 at 15:59:59:

I can either sell them outright, take the difference and split it with my partner/investor.

Or, what I prefer to do is use an Equity Holding Trust and Triple Net Lease Agreement, with my Resident as a co-beneficiary having the First Right to purchase the property from the Equity Holding Trust, at Full Price, on or before the end of the term minus their initial contribution and share of equitable growth.

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Re: 200!!! - Posted by Rich

Posted by Rich on April 03, 2005 at 17:18:51:

What is the advantage of doing this over a L/O?