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The End of Creative Financing?

Congress is trying to greatly restrict seller financing. This is a taking of our private property rights. The US House recently passed HR 1728 which limits you as an individual to sell real property using seller financing to only once every 36 months (HR 1728 Sec 101 Definition (3)(E)).

HR 1728, which you can view in its entirety here: http://www.govtrack.us/congress/bill.xpd?bill=h111-1728

Here are the types of transactions that you would be restricted from doing more than once every 36 months:

·        Selling YOUR OWN HOME using a land contract or owner-held mortgage so that you can get a quicker sale, higher sale price, or better rate of interest than is available in other investments

·        Carrying back owner-held second mortgages on investment properties that you sell
 

·        Doing any kind of installment sale on residential properties including homes, condos, mobile homes, and even raw land that is zoned residential

There will be creative ways to get around this but in will definitely eliminate a significant portion of investors.

I’m not sure if this will pass now but eventually it will happen. It will be revisited by different politicians until someone brings it home.

I’ve been preaching for over a year about how the government will try to eliminate the small investor. Now more than ever investors need to become educated about this country’s financial system. Also it is important to invest in updated relevant information pertaining to your career. Look beyond what the gurus are saying and do your own research.

“That’s food for thought; you do the dishes”

Why not me? This is a phrase often repeated by famous ad exec Donny Deutsch and a question I often ask myself when I begin to doubt my abilities.

A couple of years ago I made a very important decision that greatly impacted the rest of my life. I was tired of being a pawn in the game of corporate chess. I knew I was worth far more than what my salary indicated. I also knew I would never be completely fulfilled if I continued on my chosen path. Although I knew I deserved better, I had become an expert on how I could fail. I could give a seminar on all the various reasons why my ideas wouldn’t work.  I often told myself ‘The other guy is successful because he was connected, or lucky, or had perfect timing’.

 One night while lying in bed I decided “I’m through feeling second class. I immediately jumped up, grabbed a pen and notepad, and wrote down the names of five people I’ve known for several years who had far surpassed me in earning power and job responsibility. Next, I compared myself with them on intelligence, education, work ethic, appearance, and people skills. I discovered that none of the individuals blew me away; in fact I was better than all in one area or the other. The only quality that separated us was THOUGHTS. Successful thoughts consumed their minds and they spoke about successful things. I on the other hand thought failure and spoke about failures.

Today I live a far different life.  I no longer feel underappreciated or have problems sleeping because of work anxiety. It all changed when I started to believe I was entitled to success.

Why Not You? You have to believe you deserve success and think success. You must feel entitled to being successful. Success doesn’t always go to the smartest or most talented but to those who believe they deserve it and whose actions are consistent with that belief. Think success, create your moment and own it.

A real estate partnership can be a good way to invest in properties if the partnership is formed correctly. A partnership allows investors to pool their resources in order to reduce their risk and increase their leverage.

In today’s real estate environment partnerships are becoming a common tool for investors to acquire property. Because of tightening credit markets and oversupply of housing, it’s important to leverage your money to prepare for surprises.

There are some things to look out for when forming partnerships. If a partnership is not properly formed and maintained it could cause you some serious financial damage. Follow these 6 tips to limit your risk while investing.

 1.  Know your business partners

Always partner with someone you know and trust. It may be a good idea to have an attorney check out your partners to make sure they are clean. It’s better to investigate upfront then to find out later that your partner has been sued several times.

2. Have an attorney review all documents

Having legal paperwork done right will keep you out of trouble and protect your interests if you need to go to court. Even if the paperwork looks legit, have an attorney review it to make sure you are protected.

3. Do your own research

Double check the facts presented to you by your partners. Obtain comparable sales and market research from your own sources when you are not sure of the values in the area. If you can, do a drive by of the target property and area to gain a comfort level.

4. Control your money

 Keep any deposits for an investment in an escrow agent account until you move forward with the project. This will help protect your money in the event the project falls apart.

5. Use contingencies as escape routes

When investing, you should incorporate contingencies to protect yourself. Give yourself plenty of room to walk from the deal if something goes wrong. You don’t want to be stuck in a bad deal that you can’t get out of.

6. Treat everyone involved fairly

When a successful deal is completed it’s important to preserve the relationship. It’s hard to find quality partners so make sure all parties are happy and fairly compensated.

As you can see, preparation is the key when forming real estate partnerships. I hope these tips can help lead you down the road of financial success.