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Domino Effect

Here is a brief summary of the system I’ve put together for real estate investing. I got tired of having to having great deals “go south” because the appraiser didn’t agree with the buyer, seller, real estate agent, etc… so the buyer couldn’t get financing. So, I just developed a system that by-passes them.  It is self-sustaining and repeatable hence the reason I call it the Domino Effect.  Once you start it, it takes on a life of it’s own.

What I’ve put together is a large system based on several smaller systems and programs, all that have been successful for a long time in their own right. By putting them together, I’ve solved the “problems” with each individual system and made each of them stronger.

Some of the individual systems I have combined are: I don’t use the exact system…I just took the basic concept and applied it.

  1. Commercial Absolute NNN leases. The part where the corporation (say Walgreens) uses the same funds to build each building before it packages the building and the lease to an investor.
  2. Development financing. The part where the developer not only finances the cost of construction/development, but also at least 1 years worth of debt service…a cash reserve that “buys” the developer time to develop.
  3. Selling LLC’s with the property as an asset, instead of selling the property. This can be accomplished because we are buying in cash.
  4. Selling to other investors looking for cash flow (like at least $1000/month for cash buys) and more importantly, investors using their Self Directed IRA’s to buy and hold…with cash.
  5. My Architectural firm does 3D presentations of what the rehab will look like to sign up tenants before the rehab is complete. This accelerates the time from flip to sale and reduces down time for the flipper waiting for the house to sell.
  6. …there are others, but these are some of the high-lites.

It all starts with the financing alternative I use. It’s a form of Equipment Lease Financing with a cash rebate. It works just like a car lease with a couple of very important differences:

  1. Unlike a car lease where the objective is the car (the equipment), and the rebate a bonus, this program has the rebate is the objective and the equipment (computer servers) is just a means to an end.
  2. The rebate with a car is usually low…like $1000, and it goes into the lease. The rebate here is 75% of the total lease amount and is paid in cash to the client. The max. lease is $200k per application, so the client could get as high as $150k in cash to do with as they will…like invest in real estate. If you have more than one company, or access to more than one company, you can do multiple applications.

This means you are investing with cash. This program, when used as the first step to my system, ends up being the only loan you need since my system turns this into a repeatable use of this cash with every sale of property.

One of the best programs is as follows:
  • It is called a Business Equipment Lease program. This way it is asset based so the terms are much better.
  • You must have a business at least 2 years old in good condition and a credit score of 650 or more. This is to qualify the individual that is responsible for payoff, but it is a business loan…not a personal loan.  You can also do it with a new company, 6 months old with at least 3 months of cash flowing income and a credit partner with at least a 720 score.
  • Loan yes/no answer  is usually received within 24-48 hours and funding beginning within 10-14 days.
  • Funding amounts are between $30 – 200k.
  • Equipment leased is computer servers (brand new high end ones). This is because the markup is huge. Option to buy equipment at end of lease for $1.
  • 25% of loan amount stays with the source, 75% of loan amount is delivered to client in the form of a check to use as the client wishes.
  • Payback is based on 3-5 year term with 6-8% interest (simple). No early payback penalty.
  • Client may have to make first lease payment before funding is delivered, but since funds are received quickly this payment is out for a very short period of time…and does not have to be made until after client is approved for funds…so you know the money is coming.

Now, the payments are high per month, but by using my system (initially the use of a cash reserve for the first year of payments) allows the “system” to develop and thus become self-sustaing. One of the more important parts that also makes it self sustaining is how the system takes advantage of at least a year of cash reserve payments on the lease to exponentially grow a “tree” of repeatable streams of houses (every house you sell gets the cash principle back plus profit). Each sale spawns two houses…one with the principle recovery and the other with the profits, and so on. Quickly, one of the repeating lines of houses uses the profit from each sale to pay off the lease program with lump sums. The net of this is the system pays off all debt, and with the system being a cash base system, the only loan required is the initial Equipment Lease Program. Every house after that is an all cash deal…so no more appraisers, LTV’s or turned down deals.

I realize this is a lot to take in in one bite. Please give me a call and I can answer any questions you may have, and fill in the blanks. This is a great system.

One comment on “Domino Effect

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