The $7 Million 7 Years Wealth System

Jeff, looks like your moving at a nice clip. Are you looking for other foreclosures to take advantage of; times like these may not be around for long.

Josh, I keep looking…I’m just not sure where I want them at. I’d like to keep them close by, but I don’t plan to stay up here in Boston for the long haul.

Adrian makes a good point above about my NW and the effect one property had on it. My conclusion is that it’s probably going to take an ever increasing cascade of properties to keep that rate up.

@ Jeff – I also have another concern about business as it relates to your Number: you are committed to your current job, so you can realistically only start/acquire a ‘hands on business’ – and, aren’t they all 😉 – in [insert year here].

So, your real compound growth rate is whatever you can realistically achieve net worth-wise with property b/w now and then, compounded out for fewer years until your date.

On the other hand, a property strategy can take a while to ‘mature’ … unless, you find a way to ‘add value’: one way, of course, is to simply “buy under market”, which is easier when you are in a foreclosure market (of course, financing then becomes a problem), or ????

Any thoughts, Jeff?

@Jeff It looks like you are on the right track. I am in the same boat as you, just trailing a little bit.

@Adrian Financing is CRAZY! Read below, its getting tougher to finance without cash on hand!

Hopefully, you guys are familiar with my name now. I love this stuff.

I am doing 7m7y training on the side and am looking to move into MM201 just like you guys. You talk a lot about purchasing foreclosures. I am currently looking at a short sale in my building. 122k for a 1Br 1 Ba condo that has FMV of 175k. Is there any reason a foreclosure is more attractive or talked about more often than a short sale. I am the first in on this short sale, due to a connection with the previous owner..

They are telling me I need 20% cash down payment to purchase as an investment and they won’t let me finance as a second home in the same building. I think I am going to turn my property into a rental (or investment property) so that I can qualify for a better deal on the financing of this short sale. What do you think? The broker also suggested me purchasing the home as a non-habitatting co-borrower, but that sucks because the property wouldn’t be in my name, right? Any helpful hints for the guy on the side? Maybe one day I can be a real millionaire in training!

BTW, I owe 86.5% FMV on my current home. I am only within the 20% rule because I am currently tied to the prime rate on the interest only loan. I will eventually have to refinance or I will be in the danger zone in several areas. Right now, I am paying down all other debts (car and student loans) like a hawk, until it is really time to refinance!

@ Bluefoot – Thanks for joining in … in fact, this is exactly how Jeff elbowed his way in! And, we are REALLY glad to have Jeff …

I can’t comment on the detail of you short-sale and “non-habitating co-borrower” strategies as I am not familiar enough with US … maybe, others can comment?

But, I agree that you want to be careful whose name you put on the deed!

I see no issue with either short-sale or foreclosure (other than possible financing differences?) as long as you get in cheap enough to make it cashflow positive. Will it?

I have been talking to brokers the past couple of days…The RE investment game has changed in the US. They are much more strict on how you finance your second property. Rules are different based on whether you are buying “personal property” or “investment property.”

Since the property is so close to my home (same building), the brokers say I can only do a 20-25% down payment “investment property” finance in this economic climate. I don’t have that type of cash on hand. It looks like I am going to miss out on this property, which would will sell at about 70% FMV. It was going to be a break even property (rental to a family member), until I sold it a year later.

The search will continue on. With things becoming so much more strict in US real estate, they are making it tougher for me to break in without much cash on hand. It would have been a different story 3 years ago.

Thank you for your advice. I love this blog. It is changing my outlook on my financial life!

@ Bluefoot – Sounds like a great time for cash-rich-vultures – a.k.a. me 😉 – to swoop in and make a killing in multifamily.

@ Bluefoot – I’ve heard the short sale can be a tougher/longer deal to put together. Basically you are dealing with the owners and however many banks they owe money to. In the short sale, the banks are deciding how much money they are willing to lose.

As one example of the time differences that can be involved, I’ll use my current home as a case study.

I bought in foreclosure. It took me about 5 days to have my offer accepted (I made it two days before Christmas) and I closed the deal in about 35 days total.

My neighbors across the street tried to by this same house when it was in a short sale situation. They made several offers on the home and spent EIGHT months of their time trying to by the house.

OBTW, the short sale offers were about 140K more than what I paid for the house when it was in foreclosure.

In my limited experience, I think the deal may move faster when the property is fully in foreclosure and the previous owner is out of the home.

Also, I like the fact that an emotional homeowner who is watching his home, investment, and credit rating go down the tubes is NOT part of the bargaining process.

Good luck,
Jeff

@ Jeff – I tend to agree with you: dealing with a financial institution is going to be MUCH quicker/easier than dealing with the owners in a private sale, especially if they are oversupplied with stock.