FINANCIAL FREEDOM

Your complete guide to achieve financial freedom. Proven tips, tools and tactics for you to achieve financial freedom. Make money, save money and effectively manage your money.

How You Can Use Rehab, Refinance and Cash Out as Long-Term Wealth Building Real Estate Investing

Written by Dian Herdiana on 5:47 AM

Author: David Neese

Fixing up a property to rent out can have some hidden profit centers that can help you become financially independent in a hurry.


Today we are discussing a somewhat advanced strategy for you to use after you have been in the creative real estate investing business for a while. I call this “Rehab, Refinance, and Cash Out”. This strategy can lead to true long term wealth and financial independence. This works very well in a buyers market like Memphis where prices have been quite flat for some time. You need to use this to augment your wholesaling for immediate income and retailing for bigger short term profits. Rehab, Refinance and Cash Out is a long term wealth building strategy and will be something you will be glad you did as it is a long term buy and hold strategy, and those are the strategies that lead to true wealth accumulation and financial independence.

Let me explain how this works. You find a good middle to low end 3 bedroom home that you are able to buy from an out of state owner or other motivated seller that needs a little work and you buy at 60% of after repaired value. You buy the house using a hard money lender like http://www.pleaseclose.com/memphistrading and do your fix up and have a property management firm manage the property and put a renter in the house. The hard money lender will typically loan you up to 65% of the after repaired value to purchase the house which you use to buy the house and then repair it. Now that the home is repaired you obtain an investor friendly mortgage and cash out by refinancing at 80-90% of after repaired retail value and you should be doing this with properties where this strategy gives you back at least $10,000 at the refinance that you can use in your business any way you need. Do not use this money to live on, use it solely to grow your real estate business. Once you have done this strategy on 10 homes you should be able to keep finding better and better deals because you can close quickly as you have cash in hand to make things happen. More cash equals better deals and more opportunities.

By the time you repeat this strategy 20 times you should have at least $200,000 cash plus about $200,000 equity and 20 homes giving you at least $2000 per month positive cash flow whether you decide to work this month or not since you have a property management company handling things for you. With average annual rent increases, within five years that $2,000 a month should grow to $4,000 a month. In 30 years you should have $2 to 3 million plus in paid off real estate. It’s a good solid long term strategy to add to your immediate selling from wholesaling, retailing and lease options that the extra $200,000 in cash will help grow tremendously.

The rent minus the management fees and all loan and other costs must leave you with positive cash flow or this strategy should be avoided. If you cannot cash out on the property I don’t recommend holding it long term as you want to be able to use your best mortgages to cash out.

You can purchase using http://www.pleaseclose.com/memphistrading if your Equifax credit score is above 550(which is bad credit) or you have a co-borrower who has an Equifax score over 550. A good investor friendly mortgage company will give you good rates if you are at 660 middle score or above and the very best rates if your middle score is 720 or above. Your first 10 investor mortgages in your name and 10 in your spouses name are the easiest to qualify and get the best deals. After those you really need a good investor mortgage company to work with. Take the time to find the real investor friendly mortgage companies that can help you get loans for 100 properties and not just the first ten and let them have the easy ones and the tougher ones. I do recommend having more than one good lender available though, but stick to the ones that specialize in investor loans. Find out from other investors who the most investor friendly mortgage companies are to use to refinance the repaired home.

I do not advocate becoming a landlord as I do not believe this is a valuable usage of your time and energy. I highly recommend asking around and finding a good property management company that will charge you 10% or less to start out with and gradually lower that % as you add more and more properties.

I feel this is an advanced strategy as you won’t see any cash in your pocket from this strategy for 4-6 months after you find the deal which is a long time to work and not see any pay. If you are wholesaling and making consistent money each month then it shouldn’t matter. This strategy will magnify the profits you make in your investing business in ways you might not have imagined. This strategy is a natural progression from wholesaling as you are already helping others find these kinds of deals, now you will be able to get the cash out typical of probably 2 wholesale deals, just paid slower, and at the same time building a nice future nest egg.
About Author
David Neese is a real estate investing author who offers a free course for real estate investors delivered by email, audio and teleseminar which you can get for free at: http://www.FreeRealEstateInvestingCourses.com You can find more information about David at http://www.DigitalSuccessCoach.com



Article Source: http://www.1888articles.com/author-david-neese-591.html

Related Posts by Categories



Widget by Hoctro | Jack Book
  1. 12 comments: Responses to “ How You Can Use Rehab, Refinance and Cash Out as Long-Term Wealth Building Real Estate Investing ”

  2. By Anonymous on 4:04 AM

    I’m not that much of a online reader to be honest but your sites really nice, keep it up!
    I'll go ahead

    and bookmark your site to come back down the road. All the best
    Check out my blog post ... anne-anichi.de

  3. By Anonymous on 11:49 AM

    I think this is one of the most important information
    for me. And i am glad

    reading your article. But should remark on some general
    things, The site style is

    ideal, the articles is really nice : D. Good job, cheers
    Take a look at my webpage ; credit consolidation

  4. By Anonymous on 5:37 AM

    Usually I do not learn post on blogs, however I wish
    to

    say that this write-up very pressured me to check out
    and do so! Your

    writing style has been surprised me. Thank you, quite nice
    article.
    Here is my web-site day job killer

  5. By Anonymous on 6:01 AM

    Excellent site. Plenty of helpful

    info here. I’m sending it to a few friends ans also

    sharing in delicious. And obviously, thanks in your

    sweat!
    My blog ... visit this website link

  6. By Anonymous on 6:06 AM

    Useful info. Fortunate me I discovered your website

    by accident, and I am stunned why this accident did not happened in
    advance! I bookmarked it.
    Feel free to visit my web blog ; apply for a master card

  7. By Anonymous on 7:20 PM

    Thanks - Enjoyed this update, can I set it up so I receive an email

    sent to me whenever you write a new article?
    My web site > http://www.foreverabrave.com/

  8. By Anonymous on 7:54 PM

    Thanks - Enjoyed this update, how can I make is so that I receive an alert email every time there
    is a new article?
    My site - kies operation timed out

  9. By Anonymous on 7:54 PM

    Thanks - Enjoyed this update, how can I make is so that I receive an alert email every time
    there is a new article?
    My webpage :: kies operation timed out

  10. By Anonymous on 5:01 AM

    A person essentially help to make seriously posts I would state.
    This is the first time I frequented your website page and thus far?
    I amazed with the research you made to

    make this particular publish extraordinary. Wonderful

    job!
    Also see my webpage :: andalusia spain church

  11. By Anonymous on 8:15 PM

    Just desire to say your article is as astonishing.
    The

    clarity on your put up is simply spectacular and that i could suppose you're

    knowledgeable on this subject. Well together with your permission

    allow me to grasp your RSS feed to keep up to date

    with drawing close post. Thanks one

    million and please keep up the rewarding work.

    Here is my web-site - https://wiki.blagblagblag.org/index.php?title=Moving_To_Spain
    Look into my webpage - renfe trains in spain

  12. By Anonymous on 9:02 PM

    I like what you guys are up too. This kind of
    clever work and exposure! Keep up the very good works guys I've you guys to my blogroll.

    Feel free to visit my homepage: Www.causak.org
    Here is my web site 2011 nfl draft mock mel kiper

  13. By Anonymous on 7:46 PM

    Thanks a lot for sharing this with all of us you really know what you're talking about!

    Bookmarked. Kindly also visit my site =). We could have a link exchange

    arrangement between us!

    Here is my weblog :: 3 Letter Words Starting With Qu
    Here is my blog post ... 2011 world series of poker final table replay

About Me

Hai! Odie is here to help YOU get in shape! Bookmark my blog now, and hoping you have a great knowledge from my blog!!

Want to subscribe?

Subscribe in a reader.