**INCREDIBLE**

So you’re sick of the cash out refinancing?  So am I.  While it’s certainly worth it to utilize the bank’s money in these projects, it’s not always a fun process.  Our new construction financing program will blow you away.

Our new program is based on 80% of the END value and will be available up front.  I have 2 commercial banks that will allow you to finance my projects this way.  This program is limited to our projects.  Here are some details from one of the banks.  The loan functions like a construction loan and will provide your funds for rehab up front in the form of an escrow account.

It has taken me 10 years to establish the credibility to provide this program, but we have it in place, not only with one bank, but 2.  I couldn’t be more thrilled!!!

I met with 2 of their appraisers (that I’ve never worked with) provided them my comps and they hit the value exactly.  As an investor, you get to know value pretty quickly.  I have likely sold more homes in Aurora than 99% of agents and likely investigated more homes than the average appraiser has appraised.  This experience helps me understand value to the point where it’s nearly gut instinct.  Obviously, I need to have sold comps within 1 mile that are less than 6 months old, with similar square footage, beds and baths.  This is key for the appraiser, so I do my homework on every single unit.  One appraiser that I met with recently had a great comment, he said, "I’m not the price police".  This was great because some appraisers think they have to scrutinize everything that is successful as though it’s fraud of some sort.  Obviously, this program is based on acquiring properties that are undervalued and realizing that value via rehab.  The equity that is created here is largely due to 2 main facts. 1. - We buy foreclosed homes at incredible prices (Typically around $100K).  2. - We get these home rehabbed at incredible values.  The rehab that our crew does would retail around 2-3 times what we pay.  The crew has been assembled to do, what nobody else can do, at half the cost.  I’ve shopped rehabbers for years, and never found anyone even close.

We all know that the landscape of this business is changing and appraisers and banks are nervous.  Our track record is extremely solid and it’s really starting to pay off.   It’s a great sign that there are still banks that are eager for our business.  It’s important to continue to develop new banking relationships and foster current relationships.  I’m THRILLED to announce that we are in the process of developing a new loan program.  I have 2 commercial banks that will lend 80% of the "as completed" value, that’s right, the END VALUE.  Both First Choice Bank and Golden Eagle Bank have partnered with me in order to expand my business with this incredible offering.  This concept has been around for quite some time, however it was not always available to real estate investors.  Banks have been lending to builders for years utilizing this concept.  80% of the end value is available for the purchase and construction, often through escrow accounts.  This program is new and will require some tweaking, I’m sure, but it’s an amazing opportunity and will provide investors with a great second option.  When I started buying foreclosures, the banks required 20% down and the rehab was funded out of pocket.  With much negotiation and a lot of vision on the part of First Choice Bank, the bank agreed to go to 90% of the purchase price.  After all, if you put 10% down and rehab the home, the bank is typically around 60% - 65% LTV based on the completed value.  This is actually quite a conservative loan.  In order to recapture your capital, a cash out refinance was necessary.  I do still see value in this process and will continue to utilize cash out lenders as needed.  The benefit of the new program will be the elimination of the cash out refinance, and the benefit of having only 1 loan. This will provide us with 1 set of closing costs, the elimination of the Deeding process back and forth for the refinance as well as less cash out of pocket.

There are 2 huge components to getting this program approved.  1. I’ve worked diligently with my commercial bank to perform accurately for myself and my investors, which allowed the banks to better understand our business.  2. I’ve researched and provided appraisers with accurate numbers.  The most important step in this process is working with banks and appraisers to get accurate values and progressive programs.  This has been the focus of my professional career for the last 8 years and has materialized with the development of this latest product.  These factors have opened an incredible door for us.  This process will not be perfect, as nothing is, but it will allow investors an incredible opportunity to grow their portfolios. 

If you’d like to learn more about the new 80% "As Completed" program please contact me via email @ joshblank@gmail.com.

Investment or investing[1] is a term with several closely-related meanings in business management, finance and economics, related to saving or deferring consumption. An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a future return or interest from it. The word originates in the Latin “vestis”, meaning garment, and refers to the act of putting things (money or other claims to resources) into others’ pockets. See Invest.[citation needed]. The basic meaning of the term being an asset held to have some recurring or capital gains. It is an asset that is expected to give returns without any work on the asset per se.

I was shocked to find that the last phrase suggested that there are expected returns without any “work” involved.  That seems both comical and inaccurate to me.  I tend to find that successful “investors” are those who are realistic, as they expect to “work” on their investments.  By “work” I mean manage your investments, not painting the walls.  I did that type of “work” in the beginning of my real estate career, however I “work” by simply managing my investments now.  I don’t own a single stock, just cash and houses.

There will be “work” with Real Estate.  There will be “work” in any worthwhile investment.  There will be maintenance, there will be bad tenants, and there will be management.  If that is above your head, or beneath your standards, good luck with a mutual fund.  Anyone who believes that you can become wealthy (or even get ahead) without some element of “work” is insane.  Work is part of any good investment.  Even if you buy a mutual fund, you likely “work” on some sort of qualifying analysis of the fund.  You will track performance; you will likely even do some of your own homework on these funds.  This time spent analyzing your positions and investments is “work”.  Many brokers will encourage you to sit back and relax, and continue to dump your cash into their fund whether it is up or down.  Heard of dollar cost averaging?  Not my favorite investment strategy in the world.

The longer I am involved in my type of Real Estate (single family foreclosures), the more I believe there is no better investment available.  There are specific strategies that provide for the level of success my investors and I enjoy.  Listed at the bottom of the post you’ll see just a few simple guidelines that provide great insight to what works in today’s market.  If you’ve ever read my site before you’ll see a similar theme, own (don’t flip) Real Estate.  The reason I own Real Estate rather than “flipping” real estate is several fold.  First, it generally works better.  It’s typically hard to do poorly on a project if you buy it in foreclosure, rehab the property with our resources, rent it out for 3-5 years and ultimately sell for a nice gain (long term capital gain that is, of course = less tax).  Secondly, flipping is difficult to time.  Flipping is a nice thought in good markets, but prices are typically higher and competition forces us to bid up, or pay more on the front end.  Flipping in “bad” markets is typically hard because buyers are scared due to the media frenzy and inventories are high creating competition on the back end.   Don’t get me wrong, I do “flip” properties in a sense, but the flip is typically over a 3-5 year period.  The investments involve a longer hold period and a rental period.  This is what I advise all investors to do, and it is a practice that has worked for me time and time again.

Many investors think the point of this or any investment is to “make money”.  The problem of course is that investors all too often have a “right now” mentality.  The true nature of any investment is actually deferred gratification.  You sacrifice today for a potential future benefit.  Many bright eyed and bushy tailed Real Estate investors come in thinking they are going to “make money” in real estate.  Some do, many don’t.  If you want to “make money”, work more hours at your job, get a second job or better yet, get yourself a better job!  To really be a true investor, utilize your capital (or better yet, do what I do, and utilize the banks borrowed funds) to create a return and ultimately capital and equity.  If you want to create a phenomenal future income stream, buy single-family foreclosures around $100K.

The Truth About Cash -

So are you concerned with the economy? Good.  You should be.  How do I hedge against any economic crisis?  I buy houses.  Economic times are good = home values soar.  Investors win.  Economic times are bad = rental demand causes rents to soar.  Investors win.   We win either way.  These “first time home buyer” homes are the great equalizer within the economy.  This may sound odd, but homes do not really go up in value.  Dollars go down in value.  That’s right; homes appear to appreciate, when in actuality it is our currency that is plunging in value.  Inflation has been around forever, and will likely grow at a rapid pace in the near future.  Our economy is literally driven by oil.  (Nice pun eh?)  I see prices over $4/gallon.  That’s angering to me, but what am I going to do?  Buy a hybrid?  No.  I’m 6′4″ and I’m sticking with the SUV.  What is this $4/gallon going to do to us?  It’s going to create inflation.  It’s going to drive everything (including home prices) up.  Dollars are worth less; therefore it takes more of them to buy the same goods.  The “appreciation” effect of homes will return.  Historically homes have outperformed inflation at times and underperformed at others, but the bottom line is your homes tend to hold (often increasing) their value relative to other goods.  My rental homes help me hedge against inflation and are ultimately what I call, the GREAT EQUALIZER.

I remember asking my dad when I was young, “Why do homes go up in value and cars go down?”  He explained that cars eventually lose their utility.  They are worth less as they get used up.  I bring this up because it is important to note that the useful life of a home is EXTREMELY long.  Older outdated homes tend to become rentals and rental real estate is a huge part of our economy.  Tight credit markets lead us to a bulging rental market that has driven prices up.  I estimate that rents are up 20% based on numbers I see come through our office and based on my portfolio.

Saving is another alternative often touted as a wise option.  Some will suggest you live like a pauper and save 10% or even 25% of your income.  Pack your lunch, skip the “expensive” coffees and save your way to a million.  Great idea right?  Wrong.  Horrible idea.  Enjoy your life.  I’m not talking about spending like a fool.  I’m talking about investing aggressively in a low risk, high reward medium that can change your lifestyle so the $3 coffee won’t put you in the poor house.  Without getting into the difficulties of actually saving money, it’s important to note that many Americans have quite a hard time actually saving anything.  Saving is one of the worst ideas I have ever heard of as a means to retire.  You just can’t save enough.  Saving is difficult and spending is so easy.  The amount of discipline required to save enough to retire capital to retire on is likely unattainable.  If you were to have saved $1,500,000 over the last (or next) 30 years, (which would have been difficult or impossible for many folks) and you had those funds in a savings account, you’d generate around a 3% return.  That would yield you $45,000/yr.  Not good.  $45,000 will not get you very far in an economy that is in a hyper-inflationary mode.  $1,500,000 invested in my program would likely buy you 14 - 20 homes.  While it’s nearly impossible to calculate, the raw numbers would look something like this.  Obviously this is an estimate, but I believe it to be an accurate estimate.
16 homes at $1,150 in rent = $18,400/mo.

Less Vacancy of 10% = $16,560

Less Management Costs ($1,120/mo.) = $15,440

Less Maintenance (est. $1,000/mo.) =  $14,440

Less Taxes & Insurance (est. $4,000/mo.) = $10,440

$10,440/mo. *12 mo. = $125,280

This is a hand free method of investing that will triple the return of a savings account.  One more thing, each of my projects is around 30 - 40% undervalued.

When considering your equity position, you’ll generate $30,000 to $50,000 per project in equity.  We’ll be conservative and suggest that $30K in equity is created in every purchase.

16 homes at $30K equity = $480,000 in equity.

$125,280 in cash and $480,000 in equity = $605,280 in net worth increase.

This is a 40% return on $1,500,000.

PS - it will involve some “work”

Rules that work for me.

1. I buy homes well under valued - Typically 60 - 70 cents on the dollar (in this market we are getting some at 50 - 60 cents on the dollar).

2. When the market is “bad”, I buy.  I’ve bought 3 homes in the last 2 months, 1 in Aurora, 1 in Joliet and 1 in Carpentersville.

3. I buy cheap homes - I tend to buy first time homebuyer homes.

4. I rent my properties out - “Flipping” is generally, good fun for TV shows, but “Owning” real estate allows you to create real wealth. - Donald Trump doesn’t flip homes, he owns buildings.  Doesn’t that make him a landlord?

“Bad Real Estate Markets” are largely caused by Interest Rates Increasing = Prices go down, Rents go up
“Good Real Estate Markets” are largely caused by Interest Rates Decreasing = Prices go up, Rents go down

In good markets, I can sell projects that I’ve purchased previously and generate profits.  In bad markets, rents typically increase in collaboration with interest rates dropping, which results in better cash flow.  Either way, as an investor, money can be made in either “good” or “bad” markets.

There are some qualifiers that allow this process to work for me, and should help guide anyone buying investment real estate.

1. I buy low end real estate - I have 2 nice homes…both are for personal use.  I have 18 other homes ( I have had as many as 31 at one time) that are all valued under $250,000, most of which were purchased around $100,000.  These homes are generally in Aurora, Elgin, Joliet and Dekalb.

2. I rent the properties out - With rentals I’m able to cash out (refinance all of my invested capital, often creating even more capital  at my disposal) and cash flow, which allows me to utilize the banks money rather than my own.  Another key to my success is that I take advantage of the taxation surrounding long term capital gains.  Much of my income comes from the sale of homes I have purchased previously.  This income is taxed at 15% rather than my ordinary income tax bracket.

3. I don’t get emotionally attached to homes - When I want to sell a home, I simply price it right and sell it.  I don’t argue with the market.  I don’t demand a price.  I simply take what I can get.  With that being said, I also don’t “need” to sell anything.  If I “need” capital, I often borrow from my portfolio rather than selling my portfolio.

4. I have multiple income streams - Many folks wonder why I broker these homes, rather then buying them myself.  I broker 100 - 200 homes per year.  There is no bank around that will lend me $10M - $20M.  They will however lend me several million.  When I reach their lending limits or comfort level I focus on brokerage.   My brokerage business is a lot like many of my investor’s full time jobs.  Real Estate is likely a 2nd or 3rd profit center for most investors.  For me I need both Brokerage (Income for the Banks) and my projects.  My typical project yields me 5 to 10 times what brokering a project yields me, so it is advantageous for me to actually own the project rather than brokering it, however there are limitations to my purchasing power.  This is one of the principles that has kept me successful.  I never stopped “working” simply to invest.   A key here however, is that I’ve also never stopped investing either.

5.  I have stayed with what works - In 2005 many of my peers started building homes and focusing on high end real estate.  I’ve never built a home, although originally I wanted to become a custom home builder.  I did not however do this because the risk was not justified.  I could buy a lot for $175K next store to my home, general the project, build the home for roughly  $100 - $125/sq. ft.   4500 sq. ft. later I’d owe $625,000 - $740,000 on a home that is not rentable.  That same $625,000 could be used to buy 6 or 7 rentals, that would almost certainly yield $7,000/mo. in rental income.  This safety net of rental income provides me incredible security.  At the high end of the spectrum, you are limited to selling the home.  Having a plan B is priceless.

I’m nearly ready for my next house, once Beth and I come together and get a tenant in there. I have really enjoyed the process. There was a bump here and there but a fun experience overall.

Cheers,

The following contacts can be very helpful with refinancing investment property!

Most importantly, he didn’t have to refinance his mortgage, his monthly payment didn’t change, and his household budget didn’t change at all. Sound too good to be true? He thought so too until he put the software to work for him last year and the results have been amazing!

We’ve attached a recent article published in Personal Real Estate Investor Magazine that praises this software and outlines how the concept works. You can also click the link provided to the UFirst home page that offers additional information.

If you’re interested in learning more about how to effectively leverage your existing income to kill the front loaded interest associated with home loans on your primary and investment properties, you should contact Marty Loughlin at 815-690-3810. His email is mloughlin530@yahoo.com.

www.unitedfirstfinancial.com

If you are interested in participating in a Joint Venture, Mass Consumption, LLC can partner with you.  You can use our line of credit to fund projects that we send out.  There are a wide variety of structures available.  Utilizing this partnership can be a tremendous opportunity.  You may be able to purchase real estate with very little cash out of pocket.

Our typical structure works as follows, on a case by case basis:

Procurring Partner (Mass Consumption LLC) provides funding for the project.

Managing Partner (Investor) will ultimately refinance the project and take advantage of the benefits of owning real estate.  Appreciation, Cash Flow, Cash Out and Tax Benefits.

• 90% of the Purchas Price will be funded by First Choice Bank, utilizing our Line of Credit.

• A Procurring Partner (Mass Consumption LLC for example) will provide you with funds for down payments (and in certain circumstances, rehab funds).

• As a Managing Partner, it will be your responsibility to manage the project and refinance the home in your own name (or legal entity) within 90 days.

• As a Managing Partner, you will have full ownership rights of the property upon refinance of the orginal partnership.

• Initial costs are limited to the Series LLC (typically $5,900 - $8,900).  You can put the Series LLC costs on a credit card if you’d like.

• Your 10% down payment will be provided for you at close.

• You can either put the rehab costs on a credit card or pay cash (in special circumstances the Procurring Partner will fund the rehab).

• Partnerships are limited to our projects.

• You will need a good credit score (680+) and solid income to qualify.  You will need to be approved with one of our lenders to refinance.

• If you have not refinanced the project within 90 days, you will make 1 interest payment and be allowed another 90 days.

• If you have not refinanced the project within 180 days, your interest in the property will be disolved.

The purpose of these Joint Ventures is to allow investors to buy real estate with as little cash out of pocket as possible.  The costs for this venture vary by project, but typically range from $5,000 - $10,000.