I’m going to talk about “Deal Structuring”, how you get the money, where you will get if from and make a profit from your deal. There are a couple of ways to do it.
- Cash – This means that you have to pay the property in cash plus additional money for the rehab. So, what if you don’t have cash? You can either take a loan from a private lender and pay interest points and fees on the purchase amount plus the rehab amount.
But, why would you want to use cash if they are willing to sell it to you on terms?
- Owner Finance – This means that the seller is willing to give you their house and the title for absolutely nothing but your word and a note that you can create out of thin air to be able to take control of that property, so you can do your rehab. This scenario you only need to come up with the rehab amount and save the cost of the acquisition loan plus fees and interest. This means more profit in your pocket.
So now let me ask you a question: Is it better to get the deal with no money or have to go out and get all the money to structure that deal? Think about that.
Here is the most important thing: If you go buy a house in cash or on terms, you need to know your numbers, which is MAO/ARV. MAO is your Maximum Allowable Offer for the property. Your ARV is your After-Repair Value that you can sell the house for. So, whatever comes after ARV is your gain and profit. If you know how much you can buy the property at (MAO) and how much you can sell it for (ARV) what comes in the middle is your profit! It’s a numbers game.
Everybody wants that $100,000 profit on every deal, right? We’ll be teaching you all these techniques.