investing - FINANCIAL GOODNESS

How To Be A Millionaire By Retirement

Retire with a beautiful view. Photo credit: Unsplash. Thank you Alexandre Chambon @goodspleen

Updated April 13, 2024. Many of us dream of a beautiful house that is in a fantastic location, awesome vacations, and millions of dollars in the bank. Many people would like to become millionaires, but few know the steps it takes to reach this goal. Most self-made millionaires got there through hard work, disciplined saving habits, and investing wisely. If you want know how to be a millionaire by retirement, you are about to find out how to do it.

Most people would like to eventually retire and know that they have enough money to live comfortably in their retirement years. If you have already achieved the milestone of having accumulated $1 million dollars, congratulations! I invite you to continue reading this blog as a way to increase your wealth by focusing on developing multiple streams of income.

How Much Money For A Similar Lifestyle?

The big question that so many people have been asking is: how much money is needed to have the same lifestyle in retirement? If you try to research by looking online or talking to a retirement expert you will find that the answers vary widely.

Basically, this question of becoming a millionaire by retirement can be divided into two sub-categories. One: how much money is enough for retirement? Two: how to be a millionaire by retirement?

How Much Money Is Enough For Retirement

The 4% Rule

The widely accepted financial rule of 4% states that your savings should last for at least 30 years without exhausting their portfolio.

Many experts say that your retirement income should be around 80% of your pre-retirement salary. Suppose you make $100,000 a year at retirement. In this example, you would need at least $80,000 to have a comfortable lifestyle after you leave the workforce.

Of course, the $80,000 amount annually can be adjusted depending on your other sources of income, like Social Security, pensions, and other part-time employment. To have the $80,000 necessary, you would need a nest egg of about $2 million dollars. To calculate this using the 4% rule, simply take $80,000 and divide by 0.04. Also, keep in mind that this strategy assumes a 5% return on your investments.

If you are like many adults, you have probably thought of taking an early retirement at some time in your life. If you are thinking about an early retirement, is it possible to retire on $500,000? Let’s do the math. Using the widely accepted financial rule of 4%, the $500,000 will allow you to access $20,000 for 30 years.

If you have saved and invested your money wisely, the $500,000 would last you 30 years, assuming a 4% withdrawal strategy, for $20,000 a year. Say you live to be 85 years old if you are in good health. If you wait until age 55 this strategy could work.

Key Takeaways

If you retire on less than $1 million it could affect your quality of life.
Retiring abroad in a country outside the US in a country in South America may be more affordable in the long-term.
Retiring before you reach 55 years will hinder you from your prime earning years that could potentially increase your Social Security benefits.

Ways To Become A Millionaire By Retirement

Would you like to retire and have the lifestyle that you already have, but you don’t have enough money to make it happen? In my opinion, $20,000 or even $40,000 is really not enough money to live on comfortably even if you live in a South America country. For instance, our family has been living for more than eight years in Colombia, South America, and the value of $20k to $40k is more or less equivalent to $80 to $100k in where we used to live in Charlotte, NC. The $80k to $100k in Charlotte, NC will pay your bills, but many people won’t have the vacation lifestyle that many are dreaming of.

Who wants to have financial stress in retirement? As we all know, people are living longer in the last century than they ever did before and we need to plan for this to happen as well. If you want to have more sources of income, I have researched some of the best ways that you can increase your cash and have the kind of retirement that we all dream of.

Money Rules To Help You Reach $1 Million

If you are motivated, then follow these rules of how to be a millionaire by retirement:

Become financially savvy. Learn as much as you can about money. Read websites and books about saving money, investing, generating multiple streams of income. Every piece of information will help to guide on your quest to become a millionaire.
Live like you are poorer than you are. Be careful and frugal about things you buy on a daily basis. Be humble and don’t show off to your friends or on social media. Live in a modest house. Make your meals at home. That way when you do go out to a restaurant you can really enjoy it and also do so on a modest budget.
Build an emergency fund. Start by saving a month’s worth of expenses. Then build toward having three to six months. Just be conscious and do not use this money for vacations. This fund can only be used for emergencies.
Manage your debt. The less debt you have the quicker you’ll be able save and not have to pay off credit cards and other monthly debt bills. If you have credit cards, many of these have high interest rates. Pay off these credit cards as rapidly as possible. Certain kinds of debt like a home mortgage are necessary and can help you move ahead long-term. The key is to find a house that fits within through budget.
Save daily. Each week contribute to a savings account or a 401(k) account. Try to save at least 20% of your after tax income each year.

Extra Rules To Really Increase Wealth

Invest in real estate. Make inflation your friend, not your enemy. Research areas that you are strongly interested in retiring to. My family moved to Colombia, South America. The big cities of Medellin and Bogota are beautiful and they are an outstanding places to retire. You will find that the prices are, by US standards, very reasonable and I could go far as to say cheap if you live in a major city in the US. For example, if the value of a property goes up 3% in a year due to inflation, that’s a 15% ROI. In addition, if you are from the US, take advantage of the ways you can avoid US taxes.
Consider utilizing a conservative approach to value investing. If you think of the value stock market investors today, most likely you will think of Warren Buffett. Warren Buffett, chairman of Berkshire Hathaway, and Charlie Munger, vice chairman, are value investors that only invest in a handful of the best value stocks. Take an in-depth look at what many consider to be the best passive income investment stock: Berkshire Hathaway B shares (BRK.B). Warren Buffett and his team and his successors have purchased and are continuously investing in the best value stocks so that you don’t have to. On top of that, Berkshire Hathaway has an incredible record for the last 55 years of 20.3% annual compound interest! (link)
Earn more money. First try to maximize the money that you make in your day job. For instance, ask for a pay increase, work overtime, or consider switching jobs and finding a more lucrative position. Look for side hustles that you can do. This could be anything from driving for Uber or Lyft to selling things online.

Increase Your Wealth

If you are the type of person who realizes that just because you reach a certain age you really don’t want to retire. Maybe you have seen other people retire and watched them lose all their energy. If you are one of these people, chances are you said to yourself, I don’t ever want that to happen to me.

If this is the case, then probably you have an entrepreneurial spirit. Rather than watch your retirement wealth decrease, you see the opposite. You want to increase your wealth in retirement. At Financial Goodness, we are the same way. We are entrepreneurs at heart.

Owning your own business means that you directly reap the benefits of all the hard work that you have put in. When you work for someone else, working harder does not necessarily mean more money in your pocket. As a business owner, you also build equity in your business. You are calling the shots. Basically, you can work on the things that are important and add more to the bottom line and ignore everything else.

Finally, I would like to share with you the millionaire behaviors that are directly from The Millionaire Fastlane by MJ DeMarco. The ideas for starting a business that are listed below are the thoughts and behaviors that you need to have to achieve the millionaire mindset.

Ideas For Starting Your Our Business

Appliance Repair
Blogger
Coach
Computer Training
Consultant
Desktop Publisher
E-commerce or online seller
Editorial Services
Electronics Repair
Financial Planner
Freelance Graphic Designer
Home Inspector
Import / Export Specialist
Interior Decorator
Marketing Copywriter
Personal Concierge
Personal Trainer
Photographer
Real Estate Investor
Solar Energy Consultant
Website Developer
YouTube video maker

Updated December 3, 2023:

The good news is this: after the COVID-19 coronavirus, the U.S. estimates that people working for themselves will increase to around 40%. What even better is that many of these ideas you can do from the comfort your computer in your home!

The Bottom Line For Success

Many of the steps to becoming a millionaire are not overly difficult. However, they do take hard work, discipline, time, and perseverance. But, it’s the emotional side that prevents many people from reaching the millionaire mark. Perhaps the most important two factors are time and perseverance. Without these two, new ideas and new businesses will struggle and possibly fail.

Make the decision to focus on your goal of how to be a millionaire by retirement and write down your plan of action. With your plan of action of the key steps you will have the confidence needed because you know exactly how to be a millionaire by retirement.

Then put in the work and you will be surprised at how your net worth grows over time from your multiple streams of income. Through the hard work, discipline, and through your preseverance you will be grateful at the end result you and your family have achieved.

Last Updated on April 13, 2024 by Financial Goodness

Financial Goodness

George Alexander Roy III and our team are experts in helping you to seek wealth through investing and tips on how to succeed. Join us at FinancialGoodness.com to increase your knowledge through education in the areas of personal finance, real estate, and investments. George has been an owner of a real estate investment business that focuses on wholesaling, fix & flip, and long-term buy-and-hold property strategies with a consistent increase of annual revenues. Consequently, as an entrepreneur, researcher, writer, and speaker he has sought the truth in everything he does, no matter how difficult. Hopefully this value and service will help each person achieve their financial freedom sooner.

Unexpected COVID Impact On Homes

Unexpected COVID-19 Impacts On Single Family Homes. Photo credit: Unsplash. Thank you Avi Waxman.

Updated April 13, 2024. Many states are loosening their self-isolation orders and are allowing people to return to work. But the road ahead for the US economy coming out of this pandemic induced recession is a long one. I obviously have many concerns about this. Hopefully, the employers have implemented the necessary procedures so that people can work together and still be self-isolated while maintaining distance between the co-workers. Let’s learn more about the unexpected COVID impact on homes.

The Good and The Bad

First, the good news. According to Myles Udland, during the transition phase, the bounce in economic activity we are going to see is now expected to be stronger than previously forecast. We are currently in this phase of the unexpected COVID impact on homes.

But in Bank of America’s view, the impact from the lockdown phase that hit the economy hardest in March and April and the return of the economy to pre-COVID-19 levels of GDP will be larger drag on the economy than previously expected.

Bank of America expects that the second quarter GDP of 2020 to decline at an annualized rate of 40%. Not good. In addition, the 40% decline is a revised estimate from BofA’s previous number of 30% GDP decline. To put the 40% decline in perspective, during the financial crisis of 2007-2008, the GDP decline was 4%. This means that the COVID-19 pandemic is possibly ten times bigger than the previous recession in 2007-2008.

Looking at the next 18 months, BofA sees a soft labor market, disinflation, and a lack of investment conspiring to keep growth below pre-COVID levels into 2022. Disinflation is what happens when price slows down temporarily. Deflation, which is the opposite of inflation, is a decrease in general price levels throughout an economy.

The news media has been covering the effects on the real estate market as the coronavirus has swept the world in the last few months. But interestingly, three surprising and unexpected situations have occurred that effect single family homes. What is even more surprising is that the mainstream media hasn’t really been reporting on these three situations. Taking all these things into consideration, the unexpected COVID impact on homes could surprise you.

Surprise #1: Dramatic Inventory Reduction

The first major surprise that has occurred is that there has been a drastic inventory reduction. The inventory is the available properties on the market for buyers to purchase. This is known as supply. This inventory reduction means that the supply of houses has dropped dramatically.

In some areas, normal sellers on the MLS market have significantly dropped. According to the National Association of Realtors, the supply of homes fell 19.7% annually to 1.47 million units for sale at the end of April 2020. Why the huge drop in home supply from the unexpected COVID impact on homes? What is going on?

It seems that once the virus hit hard enough so that lock downs occurred, what a lot of normal sellers did was to take their property off the market. They did that for a number of reasons. Some sellers didn’t want to move in the middle of the coronavirus pandemic.

Other people thought that buyers were not going to be out and about looking for a new home to buy. Others didn’t want to sell their property when they thought about all the people who would be traipsing through their home. As we all know now, a person could be infected with the COVID and not know it for days.

What does this mean to the selling of homes? As it turns out, the selling of single family homes is a huge deal. When you have to sell your property you compete against all the other similar priced houses. Let’s say that you have done your homework and know the area and the comps in that area and decide to put your house on the market for $200,000 USD. But there is another house that is identical to your property that is in just as good a shape and they are listed at $175,000 USD. What does this mean to you?

That means that any of the available buyers in the marketplace looking for a property like yours are going to go to the $175,000 listing before they are going to go to yours. The offer is going to go to the $175,000 listing first. That’s just how it is.

With a reduction in supply it makes it so much easier. Now you can ask for and get full price or even more than full price for your house. A reduction in inventory is a very good thing to have. If you sell houses this is what you dream of.

Perhaps you are thinking that it is possible that when the coronavirus pandemic wears off and people get back to “normal” life the prices of houses will stabilize.

However, we also have to consider the fact that some of the people who were going to sell decided not to. Why? They have been living in their house for two more months while self-isolating and they have decided to fix the cosmetic problems. Now they have made the decision that they are going to stay in that property and enjoy living there. Why? Because the house is all fixed up and they realize that the house isn’t so bad after all.

Maybe you have been reading the news and have heard that there is going to be a tsunami of foreclosures because of the people who have lost their jobs and are not going to be able to pay the mortgage. This may or may not happen. The foreclosure process is a lengthy process in most US states. So it takes a long time.

Many people are still in their forbearance period and they could stay in the forbearance period for quite a while. So if there is an influx of foreclosures it wouldn’t happen until the end of 2020 at the earliest. As well, many of the lenders could tack the forbearance onto the back of the loan. So it is possible that there might not be this flood of foreclosures.

Surprise #2: Increase In House Demand

Surprise two is the drastic increase in house demand. These are people looking to buy a single family home. When you think about it, it makes a lot of sense. If everyone is self-isolating at home, then people are going to want to have a real home with a lot of amenities.

People are not going to want to be in an apartment building or in a condo complex where they are right next to all their neighbors. Seems pretty logical and this is exactly what is happening. There is now a huge demand for people to have their own home.

But this increase in demand goes a step further. We are talking about people living in urban areas. Now that our society has had to shift to Zoom conference meetings as opposed to in-person meetings. Now more and more people are not commuting to work on a daily basis.

You might be one of these people as you start to get used and like working from home. As companies get used to managing their teams from home it is possible that there’s going to be less of a requirement for someone to drive into the center of a city to go to work in a big office building. It might be possible to commute from a home that’s further away from the inner city core.

What that means is that it is possible to increase demand for homes that are more suburban and even rural houses out in the country. These are homes where people have more room to do more things on their own property. As you can see already, the unexcepted COVID impact on homes is going to have a huge effect on where people decide to live.

Are you worried about unemployment as you read the newspapers? Before the COVID-19 pandemic hit, the US had hit record employment numbers. But now in the US the unemployment rate was at 14.7% in 43 US states in April, 2020. However, that means that more than 85% of the people in the US still have their jobs. Many of these 85% of people are moving towards the idea of buying a home.

As we know, we are having an affordable housing crisis in the US. There is even more of a demand on affordability and portability as you move further away from the downtown areas as you find your price point houses in the suburbs or further out. Can you see what is happening? To that affordability crisis we add a much lower supply of houses for sale combined with an increase in house demand. Wow.

Surprise #3: Rising Value Of SFH

Hopefully you came to realize the significance of what this means when you suddenly have dramatically lower levels of supply and dramatic demand. Those of you that have been following real estate probably guessed it: you will see rising real estate values.

Rising property valuations are actually happening right now. Unbelievable right?! Now it is a fact. As you know, the basic fundamentals of real estate values in your area is all about supply and demand.

Right now we have both working in our favor. Even though less people can get a mortgage loan, there’s still so much demand with the people who can get a loan versus the supply. Many experts are looking at what is happening and are scratching their heads saying they didn’t see it coming. But remember in real estate 101, it is all about supply and demand. Check out this article from The Wall Street Journal on single family homes. Here is another article from Forbes saying that the coronavirus effect of lower interest rates and commodities have traditionally been beneficial for real estate.

People are saying that the prices of houses in the future are going to have the same value as they do now or they could rise a little bit more slowly. Either way, make the most of this situation. As a seller, you cannot ask for anything better!

If you are a real estate investor or just like to dabble with properties, I invite you to read my blog on the Three Real Estate Investing Strategies That Work Every Time. I promise that the strategies discussed in this article will definitely help you increase your wealth over time.

Hopefully you gained some insight from this blog on the unexpected COVID impact on homes. Until my next blog, stay healthy and best wishes!

Last Updated on April 13, 2024 by Financial Goodness

Financial Goodness

Everyone Can Buy And Own Property In Colombia

Buy Colombia Property. Photo of Medellin. Photo credit: Unsplash.
Thank you to Daniel Vargas.

Updated April 13, 2024. Everyone can buy and own property in Colombia, South America. If you are looking to invest in property in Latin America, especially if you are from another country, Colombia, South America, should be high on your list of destination choices. The Colombian people are friendly and they welcome foreigner people to Colombia. The climate is also very welcoming, with a variety of landscapes that will meet the needs of many buyers. As well, Colombia has one of the strongest performing economies. In addition, the price points for the real estate properties are particularly affordable in this Latin American region.

Consider Buying A Property Overseas

There are benefits that you might want to consider for buying real estate overseas. Andrew Henderson, from the YouTube blog Nomad Capitalist, emphasizes that people from the United States, Canada or Australia might want to sell their property in these countries and invest in overseas properties. Check out Andrew’s YouTube video called the Benefits of International Real Estate Ownership.

Andrew points out that the problem with investing in the U.S., Canada and Australia are that the property returns are low and the taxes are high. For example, in Australia the returns on rental properties are like 1 to 2% only! If you consider buying a property in another country many times the returns are much higher and you can have a friend run the property management for your off shore properties. But, not in Colombia, South America. The attractive reality is that everyone can buy and own property in Colombia!

Colombia Has Very Nice Rental Returns

Let’s take a look at the Colombian property rental revenues. If you buy a residential apartment to rent in Colombia, I would say you are looking at a minimum of a 12% average return. Then add in the increasing value of the real estate of 10% on average for the last three years. Not too bad, right! I first came to Colombia in 2005. I have watched every year as the economy and housing prices haven’t gone down, they just continue to increase. For this reason, the housing market in Colombia, South America is one of the best kept secrets in the world!

Looking For Global Asset Protection?

Another reason that people look at global real estate is the idea of asset protection. This is kind of like a form of government insurance. You can protect yourself not only on an asset basis, but you can protect yourself from some of the madness that’s going on around the world today because everyone can buy and own property in Colombia. To me, that is a win.

In addition, if you are a U.S. citizen or some other countries citizen that has foreign tax rules, this is one of the few ways that you can legally have a non reportable asset. For example, if you are a U.S. citizen and want to buy a house or some land overseas in another country you can do it. You can wire the money overseas and pay in cash.

There is not an IRS form on which you need to report. There is an FBAR, or an FATCA to report a lot of assets. But not for foreign real estate or in the precious metal of gold. This is fantastic, because in the U.S. you have to pay taxes on the income from any property. But if you want to park money in foreign real estate and enjoy the appreciation you can do it with relative safety and it is non-reportable.

Be Well Diversified In Your Investments

The last reason why you might want to consider buying foreign real estate is because doing so is part of being well diversified in your investments. Perhaps you have always dreamed of having a second home or vacation home in another country that you could go to spend part of your time. In Colombia, it is possible that you could get a residence permit by owning property here.

It is also possible that if you spend some time here in Colombia it can lead to a residency permit. Depending on the size of your Colombian investment, you can apply for a one-year or five-year visa. There is also the possibility that you can become a citizen as well. This citizenship gives you other opportunities as well. To give you an example, your Colombian real estate is also a safe and secluded place to go if you are worried about chaos in the world.

The Legal Process Of Buying Property In Colombia

If you are a foreigner, you can in fact buy property in Colombia. The Colombian government recognizes the importance of foreign investment. The good news is that the procedure is the exact same process for foreign individuals as it is for locals! The only requirements are you need to have a valid passport and sufficient funds for the purchase of the real estate.

No National Licensing Systems

The real estate market operates very differently than your home country if you are from North America or many Eurpean countries. Here in Colombia, there is no national licensing system in place. This is a turn around if you are from a country like the United States or Canada where the agents are always trying to ask for and demand the exclusive rights on your property.

As a result, not having a national licensing system in Colombia has led to a proliferation of real estate agencies called inmobilarias. Many investors will be surprised to find out that it is very uncommon for sellers to have exclusive agreements with what are called inmobiliarias. This is good news if you are used to paying much higher fees for buying or selling properties. If you have been paying high fees to brokers, you are going to really like the commission rates in Colombia.

Nice Commission Rates

The standard commission for real estate agents in Colombia is just 3%. The great news: quite often the 3% fee is split 1.5% and 1.5% between the buyers and sellers agents. In short, here in Colombia, the low commissions are very nice for buyers and sellers!

Highly Negotiable Property Prices

Overall, is important to point out that here in Colombia, in Bogota and Medellin for instance, it is not uncommon for a property to be for sale for many months before a buyer is found. So, the huge advantage is: most property prices are highly negotiable.

Hide The Fact That You Are A Foreigner

Have a real estate professional do the research on the properties that interest you, how long they have been on the market, and how motivated the sellers might be. I recommend always using a local agent to negotiate the price. Hide the fact that you are a foreigner because this may cause some type of discrimination. Here is the secret: only reveal that you are actually a foreigner after the Promesa de Compraventa has been signed.

Three Necessary Tips

Everyone can buy and own property in Colombia. Here are three more tips that you need to do.

Firstly, is to open a Colombian bank account. Again I highly recommend working with real estate team because this step can be a daunting one. So get the right help from the beginning. Your real estate team will be able to help you determine certain details such as whether to buy in your name or in your company’s name.

Secondly, make sure to leave a paper trail. Buying real estate is easy to mess up, but a smooth operation when done by professionals.

Finally, hire an attorney. Having a good attorney will help with the stresses of an international real estate venture.

Legal Process To Buy Colombian Real Estate

I have found an excellent article called How To Buy Property In Colombia: The Legal Process, written by the legal team Colombia at bizlatinhub.com. Below the the steps needed so that everyone can buy and own property in Colombia.

First, find the property that you are interested in investing in. Then acquire a Certificate of Tradition and Liberty or ‘Certificado de Tradición y Libertad’. The Certificate of Tradition and Liberty contains all the information about the property and the properties history.

The properties history includes ownership records, mortgage history, legal claims on the property as well as any works carried out on the property. This property work includes when significant work to the property has taken place.

You can request the Certificate of Tradition and Liberty at the Registry Office. Requesting the Certificate of Tradition and Liberty will cost $15,700 pesos. Or if you convert Colombian pesos to dollars,about $4.60 USD. Nice price right? Welcome to the prices of Colombia!

Taxes and Fees Of Buying Property In Colombia

You want to ensure that the previous owner has paid all of the outstanding taxes on the property. You need to obtain these two certificates directly from the owner:

Tax free property certificate (Paz y Salvo Predial). This certificate guarantees that all the municipal taxes on the property have been paid.
Tax free on value gained property certificate (Paz y Salvo Valorización). This certificate guarantees that all taxes have been paid on the increase in value of the property.

Buyers Fees

At the time of purchasing the property, the buyer must pay different taxes and fees which total 1.65% of the value of the property. The 1.65% value of the property consists of:

1% tax on the property’s value for the registration of the property.
0.5 % fee of the property’s value for the registration of the property.
0.15% fee of the property’s value for the notary.

Sellers Fees

The seller of the property must pay between 3.63% and 4.79% of the total value of the property in taxes and fees:

0.15% fee of the property’s value for the notary.
3-4 % (including 19%VAT – value added tax) fee of the property’s value for the real estate agents.

Final Step For Buying Property In Colombia

The final step to buying property in Colombia is the signing of the Public Deed or ‘Escritura pública’ and this will confirm you as the new legal owner of the property. The Public Deed is a written legal instrument and you must hire a notary to produce it. The following taxes and fees apply:

Public Deed Fees

0.25% fee of the property’s value for the notary.
1% of the value of the transaction as an advance payment to be applied to the Income Tax.

Once the Public Deed is paid for and signed, it gets registered at the Registry Office and then consequently at the Cadastre or ‘Subdirección de Catastro’ where you will be officially registered as the new owner of the property.

Buy And Own Property In Colombia

There you have it. In conclusion, everyone can buy and own property in Colombia! To prepare, I would definitely recommend doing more due diligence on specific property regions and areas that you may be interested in. I would also recommend looking at property in Bogota or property in Medellin. Both of these locations have the potential for excellent returns. If you have a question or need more help, please send me a message.

Did you know that there is actually an equation for wealth? I invite you to check out my blog on how to Build Unlimited Wealth With Money’s Untold Truth and achieve your dreams and living an amazing lifetyle.

Until my next blog, best wishes!

Deuteronomy 8:18. But thou shalt remember the LORD thy God: for it is he that giveth thee power to get wealth, that he may establish his covenant which he sware unto thy fathers, as it is this day.

Matthew 7:8 NLT. For everyone who asks, receives. Everyone who seeks, finds. And everyone who knocks, the door will be opened.

Last Updated on April 13, 2024 by Financial Goodness

Financial Goodness

Buy Houses Without Cash Or Credit

Updated April 13, 2024. Say that you want to buy houses, but you don’t have cash or credit. In addition to not having cash or credit, you don’t think you would qualify for a home mortgage. What is the answer? You have read books and videos about investing in real estate. Again, are there any options available to buy houses without cash or credit? The answer is yes! You can be buying houses right now using creative financing without any cash or credit.

Three Ways To Buy Houses

Here are three ways that you can buy houses without cash or credit. All you definitely need is a really motivated seller. If the seller isn’t really motivated, the answer is simple. Wait for the next deal to come up.

The three options to buying houses that we will go over in more depth are: owner financing, subject to, and lease options.

Owner Financing

Owner financing is a transaction in which the property owner finances the purchase directly with the person or entity buying the property, either in whole or in part. This type of arrangement can be advantageous for both the buy and the seller. Basically, it eliminates the costs of a mortgage from a bank. As the real estate investor, ask for $0 down payment, and an interest only payment.

If you have ever purchased a house before, you know that when the house ownership changes hands it seems everyone wants a piece of the pie, so to speak. The mortgage is part of this equation because a part of the mortgage each month always goes to pay down the principal. If you can negotiate an interest only payment with the seller, you will pay down the price of the property more quickly.

Subject To

Subject to means that the investor will offer to take over the original owners payments because the owner was falling behind. Why would anyone agree to leave their name on the loan and let you become the new owner? There is a rule in business that says “you are not your customer.” So you can’t really put yourself in the owner’s shoes. For whatever the reason, the original owner is highly motivated to get rid of their property. The good news is that luckily you are there to creatively solve the issues and problems so the owners can get on with their lives.

You agree to take over the original owners payments. Why would you do this? There are two reasons. One: time is of the essence. You don’t have time to see if you qualify for a mortgage. The owner’s want out now. The second reason: the original owners payments are less than the bank would give to an investor by a few percent points. So use the mortgage that is already in place. Basically, the bank doesn’t care where the money is coming from each month to pay the mortgage. The bank just wants the money each and every month. After you take ownership of the property, then you can start to consider if having your own mortgage makes sense for this property.

Lease Options

Lease options. The buyer investor pays the seller option money for the right to purchase the property at a later date. The buyer and the seller can agree to a purchase price at the inception of the agreement. Perhaps the buyer might agree to pay market value at the time the option is exercised. As a result, owner financing and subject to do not work.

If owner financing doesn’t work because there is already a mortgage on the property, and in addition, subject to doesn’t work because probably they owe too much based on the value of the house. If that is the situation, then a lease option could make the deal work.

Lease Option Agreement Example

The value of the house or apartment is $150,000. The loan on the property is $140,000. The investor would agree to lease the property for a period of say five years for $1000 a month with the option to purchase the property for $145,000. Then you, the investor, can rent out the property. Keep the original owner’s mortgage in place and just make payments. Check the numbers and make sure you are positive with your cash flow.

Depending on the location of the house, if the area is appreciating, in five years you could exercise your option and purchase the property. However, if the area is depreciating you may be better off deciding to not purchase the property. In this instance you can always try to renegotiate the price of the property to an agreeable value.

No Excuses For Owning Multiple Properties

So there you have it. These are three awesome ways to buy houses without cash or credit! Many real estate investor professionals use these three ways exclusively in their careers. If you are looking to invest in real estate or looking to take real estate investment to the next level, seriously consider the techniques we have just talked about.

I know real estate investors that stick to these three buying techniques and have the profits each month from hundreds of property rental houses that they control. Therefore, if are interested in finding out how they do it, please read my blog on the best three ways to Boost Your Rental Property Cash Flows.

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Finally, if you are interested in Becoming A High-Net Worth Individual, please read my blog and watch the YouTube video by a fancinating guy named Andrew Hendersen, founder of Nomad Capitalist. He believes that the world has changed forever and says it’s time for you to “go where you’re treated best.”

Best wishes to you in achieving your financial freedom sooner!

Last Updated on April 13, 2024 by Financial Goodness

Financial Goodness