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I’ve been talking about closing your transaction and how you can make some additional profits when you’re closing the transaction. Insist that the closing company, closing attorney or title company, provide the closing statement to you at least 24 hours before the closing. This allows you to look for mistakes and negotiate fees. All right, so here’s what typically happens at a closing. You get to the closing, they kind of look out the door and they see that the sellers have arrived and the buyers have arrived and then they go back in there and they actually do the paperwork.
This is going to be focused on areas that affect your bottom line with a thing called a closing statement. Sometimes you go to a closing and all of a sudden you’re surprised by some of the costs that are on there. Well, it’s because you didn’t manage those costs. My suggestion for you on this tip is to ask if you can get a reissue fee on the title insurance. This is when your closing agent writes for the same firm that issued the prior title insurance. In other words, that seller, when they purchased the property, likely also purchased a what’s called an owner’s title policy.
Only offer collateral if the lender insists. Slow that car down and don’t get too excited. In this series I’ve been sharing with you about borrowing money, borrowing money without going to banks and without qualifying for loans. That’s my favorite way to borrow money. I’ve got a whole system on this called Borrowing Volume Six. It’s in my system of training you how to become an amazing real estate investor and build a terrific real estate business. You can find that by going to streetsmartinvestor.com click on tools and click on Volume Six Borrowing.
Make no payments. Wow. How good is that? Well, why would that be good for the lender? Let’s say they have a retirement account and they’ve loaned to you at say 6% interest and imagined that that interest is accruing. That means that every month that you don’t make a payment that you owe interest on the original amount borrowed, plus you own an interest on the payment that wasn’t paid so they can earn interest accruing. Well, what does that mean by the end of the year?
Read all the paperwork. Know what you’re agreeing to, this is so important. I’ve seen many of my licensees around the country borrow money from third parties. They didn’t even know what they were getting themselves into. I’ve seen them borrow from banks. For example, banks love to take all of your assets, pull them together into one. What’s called a blanket loan and then makes you subject to them is if they decide that your property’s not worth what they think it ought to be worth, they can call that entire loan. Do I imagine that that was in that paperwork all along?
I’m teaching you about how to borrow money. But not the traditional way. That I’ve done since I got started in this business. I know you can avoid all of the expenses, the headaches, the pain, the suffering that it takes to qualify for a traditional loan. Once you contact, and in other words, plan in advance, put this on your calendar, know that you’re going to have a deal come and in some cases, you’re going to need all cash or you’re going to need rehab money or you’re going to need down payment money, you’re going to need some cash.
Help someone who has some money that they would like to loan, put that money to work. If they’ve got a self-directed IRA, fantastic, they can move that money. They can actually loan that money to you. But what if they’ve got money in a retirement account and it’s not a self-directed account? Self-directed means that they can actually direct that the money comes from the IRA Custodian to you and what you give back is a note to the IRA Custodian and they hang onto that and watch the payments come in based upon those notes.
Before you say what you’ll pay, ask them what they are earning on their money. Then offer to increase that. What do I mean by that? Well, so many folks have their money sitting in bank accounts right now, lots of it, and it’s just sitting there earning 0.0 something percent, which is zero. In fact, because of inflation, inflation has averaged 3% over the last 20 years according to the Bureau of Labor Statistics, 2.94% to be accurate. Anyone who’s earning less than that is really going backward.
Borrow private money from folks who are not in the business. Let me tell you what that is. Basically a lot of folks that are close to real estate, also understand money and they understand interest rates and they understand the power of that and they understand just how much profit you can make by allowing them allowing you to borrow their money. Typically when you’re close to real estate, you’re actually paying more for the money if you’re borrowing it from another real estate investor or if you’re borrowing from a private money lender that’s affiliated or associated with real estate.
Show the seller what it will cost them to sell their home the traditional way or the typical way. All right, when I’m making a presentation to the seller, one of the things we do is a thing called a cost to sell worksheet. We actually share with the seller what those costs are. We talk about the real estate commission. If they were to list their home, we talk about closing costs, we talk about repairs to the property, all the different aspects of what it will cost them to sell their home, and if they were to move. Let’s say they’re being transferred to another state, then that’s another cost that has to be considered as well.
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