Real Estate Buying Tips Part 4

On terms deals you make sure that the property can afford to pay for it long enough for it to go up in value enough to resell at a profit. Or you make sure the property is one in which the financing is so valuable that you are able to use it to make your money regardless of whether or not the property goes up in value.


Good debt is debt that the property itself can afford to pay and debt that is no recourse. Bad debt is debt that you have to personally feed, and its debt that you have to personally guarantee.

Money that you borrow and personally guarantee repayment on is called recourse financing.

Rules of safely structuring a terms deal

1 The property must be able to pay for itself

2 Don’t take on domino debt – no recourse debt is one of two criteria of good debt because it isolates and partitions off your risk

Ideally you want all your terms deals to cash flow- to have income in excess of the expenses producing a net profit- by a minimum of 10 %

If the property is in a great area that is strongly appreciating and that has a good long-term outlook, I am much more willing to take a break-even deal or maybe even a small negative cash flow. However, I will make sure that if I do this that I am getting my initial price low enough sot that I already have some equity from day one so that, if need be, I can immediately sell a property for a small profit should my personal circumstances change.

Also, if there is some other sweetener in the deal that I am able to negotiate that makes the deal good enough, I am more than willing to take on a small negative cash flow.

Subject-to= seller deeds you the house and you make payment every month on the existing loan in the seller’s name…. the reason/money made in subject to is by avoiding buying costs associated with the loan?

We recommend beginning investors get started investing without using their own cash.

Ask around for referrals for the best agent in the area of town and for the specific type of property you are selling

Interview at least three agents prior to listing your property and get a written commitment from them of the specific actions steps they will take and by when to get your property sold fast

The way you build deep affinity and trust in any relationship is to really listen for what the other party’s needs are and honor them by doing your best to help them get those needs met in a way that wins for you too.