A tough question posed recently by a would-be investor in the East:
“Where I live there hasn’t been any appreciation in real estate for several years now. If I truly want to pursue being a real estate investor, should I move elsewhere, or wait for the market to turn?
To some this might seem a reasonable question; however, my response was: “Stay put! Empowering such bogus rationale is what keeps the millionaire ranks as low in number as they are.”
The key to creative real estate investing is to have a plan that adapts quickly to ANY market…it doesn’t matter which direction market dynamics flow, the force is still there: water flows east with the same strength as when it runs west. In a “down” market, there are few willing buyers; but obtainable properties abound, and they’re all for sale at the best prices.
In an “Up” market there may be fewer “easily” obtainable properties: but there are more buyers, and they’ll do just about anything you want them to in order to get in on the action.
The fact is that market dynamics in creative real estate have always required “thinking outside the box.” The true creative entrepreneur lives with, copes with, and makes his/her living with…’that fact always in mind.
Think about it…a fisherman who goes fishing armed only with catfish bait, most probably won’t catch trout. All he can expect to bring home is catfish…’if they’re biting that day. If the catfish aren’t hungry, the fisherman will be.
On the other hand, the serious and well-studied angler, carries a “full” tackle box, so that when the catfish aren’t biting, he can hook up for trout, bass, walleye…or a sperm whale, if he wants to…’at a moment’s notice.
Understand that when real estate appreciation trends are up, a seller’s market prevails: sellers set high prices and hang in there till they get them. On the other hand, when appreciation is down or stagnant, that’s a buyer’s market: fewer of those kinds of properties may be available, and their sales are sparse. It’s during these downtimes that most folks are counting pennies and digging in for a long winter, rather than looking for a new home.
In other words, a seller’s market pushes prices and circumstances toward the seller’s benefit; whereas a buyer’s market pulls everything down to suit more buyers’ needs. But none of this should be a concern of the well-studied CRE investor. In an up market you sell, in a down market you buy and hold.
During our last major downturn, a common cry was: “Help! Houses are a dime a dozen, but I can’t find any buyers.” But now that the market has turned, the current entreaty is, “Help! Buyers are everywhere, but I can’t find any houses!” And (for the most part) who do you suppose these two disparate plaintive moans are coming from?
Right! Exactly the same people: ‘those who choose to blame their own shortcomings on market condition, having failed to plan to “bend with the trend (as it were).”
To excel in any market, we need education…and dependable tools that work in all circumstances. In a seller’s market, we must be able to attract and serve buyers who would love to climb on the home-buying bandwagon, but who haven’t yet saved up the cash or garnered the credit to do so. In a buyer’s market, that knowledge and those same tools must attract sellers of no, low, or negative equity properties; fixer-uppers; distress sales; NOD filings; and “hard-to-moves”…while simultaneously wedging us, the creative investor, into the middle.
This is where Equity Holding Corp’s Equity Holding Trust Transfer™ comes in.
The Equity Holding Trust Transfer™ is, in essence, a third-party title-holding (land) trust system (“on steroids”) , which works virtual wonders for investors, buyers and sellers in any market.
With this remarkable tool, the existing mortgage stays in place—without a due-on-sale compromise; as full income tax write-off is transferred to the tenant-buyer (‘i.e., in exchange for higher payments than rent can provide a landlord; but significantly lower payments for the tenant-buyer (due to the many ownership benefits including full income tax deductions for mortgage interest and property tax, as well as profit sharing).
By virtue of the anonymity of ownership, the Transfer™ property is well shielded from creditor judgements, tax liens, lawsuits, bankruptcy action and marital disputes. Think of it: No down payment; No bank qualifying; No payments; No expenses; No recourse; No eviction (dispossession) problems; and No tenants, toilets, trash and trouble.
THIS is creative real estate investing!
Imagine telling a seller who may be reticent about “carrying,” that he needn’t transfer the title to you until you opt to sell or refinance in the future. Or that he needn’t worry about liens, suits, judgements or personal problems ever compromising the property’s title… while he remains on the loan (‘nor do you need to worry about such occurrences on his behalf).
The Equity Holding Trust Transfer™ gives your tenant full tax write-off in exchange for paying (your) full mortgage payment, property tax and insurance (and HOA?). For a share in future appreciation potential, they’ll gladly pay 100% of the (your) maintenance, repair and management costs. In other words: “Mr. Buyer, if you can afford the payments (which include a few hundred in positive cash-flow for me) and a few thousand dollars in closing costs (most of which goes into my fuzzy little pocket)… I’ll give you the property. The only thing I want out of it is to have you refinance it in yur own name, or sell it, in a few years, and at that time, ‘if there’s been any appreciation, we can just split it.” In the meantime you have 100% of the house, 100% of the tax write and 100% of all fee-simple real estate ownership benefits…’ and of course…’full pride of ownership.