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Is your real estate bringing you enough monthly
cash flow? Is land lording draining you of energy? Is property
maintenance depleting your bank accounts? Are you open to new and safe
methods of bringing huge annual returns on your cash? If you answered
"Yes" to any of these questions, please read on . . .
The Dirty Little "Secret" of How Bankers Make
Money
Actually, it's not really a secret at all. In
fact, bankers have been doing this for over a hundred years. Bankers
make money by borrowing at low interest rates, then lending at higher
interest rates. You deposit money in a saving account and they pay you
3% interest. They lend the same money back to you for home loans at 7%
or more. The "spread" between the interest rate they pay and the
interest rate they collect amounts to incredible profit!
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Consider this simple example: You are shopping for
rates to refinance your home loan. A lender quotes you 7% interest. On a
$100,000 loan, the monthly payment (amortized over 30 years) is about
$665 per month. However, at the last minute someone at the bank decides
that the color of you underwear isn't right, so your interest rate
changes to 7.25%. Your monthly payment will now be $682. You aren't
terribly upset, since, after all, what's $17 per month? What you don't
realize is that the extra ¼ percent amounts to over $6,000 in additional
interest! An Incredible Opportunity in Today's Market We are in a unique
time in history in that real estate prices are rising, yet interest
rates are dropping. This means that those who can borrow at low interest
rates and loan at higher interest rates are making a bundle! Combine the
interest rate "spread" and the "buy low, sell high" principle and your
profit grows exponentially.
Enter Wraparound Mortgages
Consider this example: Susie Seller buys a $90,000
house for a 10% discount ($81,000). She borrows $81,000 from First
Federal Financial on a favorable 8% thirty-year loan. Her principal and
interest payments are roughly $594 per month. She sells the property to
Barney Buyer on an installment land contract for $100,000 (about 10%
above market), taking $10,000 down and carrying the balance of $90,000
at 11% for thirty years. She does not pay off the underlying loan, but
rather collects payments ($952/month) from Barney on a monthly basis and
continues to make payments on the underlying loan. She collects
$358/month cash flow on the "spread" for 30 years!
This is a basic example of a "wraparound". The existing loan remains in
place, and a new loan is created which wraps around the existing loan.
Susie makes a profit on both an interest rate spread and a markup on the
purchase price. People with poor credit rarely question the price of the
property (especially since they do not have to qualify for the loan).
When the new buyer pays off the remaining balance, Susie pays off the
underlying loan. In the meantime, she makes monthly cash flow on the
spread between the interest she pays and the interest she collects. This
cash flow is not offset by property management, maintenance and the
aggravation of tenants. There are no vacancies, calls from tenants, city
code violations or other headaches to deal with. You can collect your
monthly checks for thirty years, or you can sell your "wrap" note for
cash!
You Don't Need Good Credit or Huge Sums of Cash
If you don't have the ability to qualify for low
interest rate loans, not to worry! You can use partners who have good
credit and income. You can take over existing loans with low interest
rates, then re-sell the properties on a "wrap." There are multiple ways
to make a profit on "wraps," and you don't need credit, provable income
or bundles of cash! If you are looking for an alternative to land
lording or a new way to create more cash flow, this is the ticket!
