Investment Properties with 100% Financing

[Grant Greene]

Admittedly, the title is a bit of a teaser, but it's 100% true - and it's simple!

Let's say you have the means to purchase a property in cash - keep it simple, $100K.  You need to put $10K into it to bring it up to "lendable" condition.  Once you've done so, you get it appraised, and it comes back with a value of $160K.

You can immediately pull out 100% of the amount at which you purchased the property - yes, you get ALL $100K back.

Let me give you a real-life example:

An investor we work with in Arizona bought a distressed property (the kitchen had been completely torn out) for $111K.  He put $10K into it for a new kitchen, and the rehabilitated property appraised at $144K.  The loan product mentioned above allowed the investor to do one of two things: pull out 100% of the purchase price or 75% of the new appraised value, whichever is less.  In this case, 75% of the appraised value is $108K, $3K less than the original purchase price.

So, he pulled out $108K and had a mortgage (PITI) of just under $700/month. He rented the property at $950/month, so he made a little over $250/month. In one year, that's $3K.

Let me get just a little more nerdy here:

He put $121K into the project, and he pulled out $108K - all in, he invested $13K. In his first year as a landlord, he netted $3K - that's an ROI of 23% - and he owns a property that increases in value each year. With the $108K that he pulled out initially, he is in a position to find another distressed property and do it again (and again, and again). Questions?

[Mark Sewell]

Are you any relation to David Greene?