Private Lending Made Easy

How To Use My Strategy For Bank Loans

Alan Cowgill — Tue, 02 Dec 2008 10:11:50 +0000

Here is how the loan works. I buy the property with cash. The bank (typically a small local bank) will then give me a personal line of credit with the property as collateral. It is important to use this terminology because it seems to be common among small banks. The banks that I work with give either 75% or 80% of the appraised value. Because I buy them at a great discount, the 80% of appraised value is usually enough to pay me back and pay for most of the repairs. They charge me for an appraisal, a title search, and recording fees. The closing costs are typically $400-$500. The loans are either 6 month or 12 month notes with one extension option. This is usually more than enough time to buy and sell the property.

If I rent or sell the property on a land contract that requires additional time, I either opt for the extension or refinance. There is no prepayment penalty, and usually I don’t have to make any monthly payments. Instead, I pay off the loan plus interest after 6 months. Because of my business plan and professionalism, my interest rate is usually prime minus .75. However, only one bank has offered me this rate. The other banks have offered prime. Thus I do the majority of my loans with the first bank.

I do just enough loans with the other banks to maintain a healthy relationship. I.E. I actually pay a higher rate with the other two banks even though I could do them all with the one bank for a lower rate. I don’t know if this is the right strategy, but I recognize that the rules could change with my favorite bank at any time, and I would rather have established relationships with multiple banks than save the extra couple of hundred dollars per year.

This strategy of asking for a personal line of credit with larger banks, or with mortgage brokers has not worked for me. Typically they have been unwilling to lend money to me in my L.L.C.’s name and they have been unable to lend on the appraised value until I have owned the property for more than 6 months.

Note that this strategy only works if you have the cash to pay for the property up front. The good news is that if you find the right lender, and the right property, you will receive most of the money back fairly quickly.

I like to do this method because I do not have to pay the typical closing costs of a mortgage. It saves an upfront cost of about $1,000 to $2,000 per property. Additionally, if I get the loan for 7.5% and pay closing costs that represent .5% of the loan; I essentially have an APR of 8.5% if sold after 6 months. This rate is less than I have gotten from most private investors, it is much better than the typical 12% APR that is calculated if I have normal closing costs on a 6 month loan, and it is easier than doing either of the above.

While this is the method I use, I know that it will change in the future. Rates will change, and programs will change. At that time, I will have to reassess. If rates go too high, I will look for private investors who have money in CD’s or in other investments that they are not happy with. Who knows, maybe another product will come along that is even better.

The only way to know what works best in your area is to exhaust all possibilities. Talk to all the banks. Talk to other investors, and talk to private lenders. Once you have exhausted all your resources, you can make the most intelligent decision.

Brad Zitzner is a real estate investor, coach, and realtor. Brad has bought or sold over 150 properties. His web based Property Management System “ZZZ Real Estate” helps real estate investors remove the chaos and paperwork from their real estate business. To get Brad’s FREE real Estate ebook go to www.zzzinvestors.com

How To Use Expert Mechanics In Rehabbing A House

Alan Cowgill — Sat, 29 Nov 2008 10:11:36 +0000

Are you an expert in the mechanics of fixing up a house? I can’t tell if being an expert in the mechanics of a house help or hinder your chances to be successful. I am not an expert. I would call myself unqualified to comment on any aspect of how to fix up houses; however, I think this may serve as a benefit. Because I am so unqualified, I don’t feel the urge to step in and help. I’ve never been tempted to save money by doing the work myself. I never tell the contractor how to do the job, and I never take time away from finding good deals because I’m busy rehabbing the house.

On the flip side of this, if I were an expert in the mechanicals of fixing up the house, I could save a significant amount of money on each house by being my own general contractor. I could show my own team of employees how I want things done, and not be at as great a risk of being taken advantage of. I might have ideas for my own houses that my current contractors might overlook.

I’ve seen both types of people be successful at this business. I am not convinced that one method is better than the other. I think that those who fix the properties themselves make more money per house than those who hire out all the work. They seem to be quicker at managing bids and other contractors. At the same time, however, they tend to miss a lot of the good deals that come by because they were busy at their houses doing the work. Their focus becomes more associated with the job as opposed to the big picture of buying, fixing, and selling.

For me, I know that I am better off knowing nothing rather than being the general contractor. While I may overspend for the rehab according to other’s standards, I feel that I underpay for the house. I.E. I spend so much more time looking for good deals that I am able to buy them for cheaper than others. Additionally, I don’t have to spend much time with the rehab. Sometimes, I only see the property once or twice during the entire rehab process. From a financial perspective, I must consider what I make per hour in the business and weigh that against what I would save per hour by learning to rehab properties. I would save significantly less than I could earn despite having smaller margins on each deal.

This question must also be addressed by asking you what aspect of the business you enjoy the most and are most gifted at. If your greatest abilities lie in being the general contractor, you may put yourself at a huge disadvantage by trying to turn that aspect of the business over to somebody else. First, nobody else will satisfy you because that is your area of expertise. Secondly, you will be taking yourself away from the things you enjoy the most to focus on the things that you think will earn you the most money. Doing this may cause you to lose your passion for the business you may find yourself giving up.

Many will tell you to stay away from the rehab because that will take you away from finding good deals; and others will tell you to avoid overpaying for the rehab. My assessment is that you should focus your attentions to your strengths and try to find others to help you with the parts of the business where you are weaker. My strengths are finding good deals, and finding cheap financing. These two aspects are where I focus the majority of my energy, and others help me with the rest.

Do you have contractors that you know and trust? Part of the reason I am free to focus on finding good deals and finding cheap financing is that I have a number of contractors that I trust. I trust the opinions of the contractors, their assessment of how to proceed, and I trust that their prices are fair. I have this trust because I have a history of dealing with them over time. They come recommended by others, and they have extensive experience. These contractors have done hundreds of rehab projects, and their experience works to my advantage. I pay the contractors very well, and I tend not to talk them down in their prices. As a result, the contractors are very independent, and free me up to focus on what I am good at.

If you do not have good contractors that you know and trust; and if you do not want to do the rehab yourself, you must consider doing extensive interviewing before deciding that you will not be involved with the rehab process. Finding contractors that you trust is one of the most important aspects of the business and you probably cannot be as effective and efficient as you want until you feel mentally free to trust others with the details of the rehab. Don’t be afraid of paying what others consider to be too much money. You can afford to pay too much if you are able to buy properties at great discounts. If you don’t find them at great discounts, then you cannot afford to pay too much money for the rehab.

How To Stay Front And Center

Alan Cowgill — Wed, 26 Nov 2008 10:11:20 +0000

Your primary purpose is to stay in front of the REO agents for future good deals. It relaxes them because they will begin to understand that you are persistent and professional in your pursuit. Additionally, it will serve as a constant reminder and keep you on top of their mind. If your email happens to be in their inbox, they don’t even have to look up your information. They can simply respond to your email, or they should be able to find your phone number on the signature of your email. Sometimes just having your number on the first page of their screen will be the difference between them calling you and forgetting to.

The email campaign works great when you are consistent. If you are diligent about doing this every two weeks, you will be amazed at the long term results. You will typically only get responses from those agents with whom you have spoken. You may find it helpful to send to 40 or 50 agents, but it really only works if you take the time to call them. When I send the email to 100 agents with whom I have never spoken, I will get responses from about 8-10 agents the first day and another 5-6 agents within 7 days.

After being consistent for a number of weeks with the email, you will have better conversations with the agents on the phone. I recommend that you try to talk with all 20 agents at least once a month. Call them about a specific property and then ask if they have any good deals. Do not spend too much time on the phone with them unless they are encouraging long conversations. Because they are so busy managing these properties, you may put yourself at a disadvantage by talking with them too long. You will be rewarded in the long run. Visit www.zzzinvestors.com for more tips and information about getting ahead in the real estate market.

How do you get to the good deals first? To start, you need to personally know the top 20 REO agents in your area. If you do not know who they are, you can discover that quickly by searching all the listings or through the websites. Visit www.zzzinvestors.com to learn how to obtain this vital information. The best way to get to know them is to meet them face to face at least once. Either show up at their office, or invite them to lunch. At the very least, make sure that they know you from multiple phone conversations. Do not put them on the defensive.

How To Refinance A Land Contract

Alan Cowgill — Sun, 23 Nov 2008 10:11:07 +0000

If the owner does not have the cash to sell and to pay off the mortgage, the owner may be able to sell on land contract and keep his or her own financing in place. This could be considered a safer method, but it requires more upfront research with the lenders. Before doing this, be sure to check with the new lender to see how they refinance land contracts. Some lenders cannot refinance the land contract off the higher value. They don’t place the same value on the transfer of ownership of a land contract as they do a sale with seller financing. You may need to write the land contract for $100,000 stating in the land contract that you will accept $80,000 as full payoff – depending on the lender, however, even this might not work. If the lender does allow this, the lender would refinance based off the number $100,000 instead of $80,000.

Some lenders can refinance a land contract after three months, while others need to wait 6 or 12 months. By doing this, one can sell a property to another investor with no money down. It may simply take 3 or more months depending on the bank and the strength of the buyer. It also keeps your (the seller’s) original loan in tact.

What is really happening with the land contract refinance?

If you sell to the new buyer on a land contract for 3 or 6 months and the buyer cashes you out, essentially, your bank is lending the buyer money to buy the house for 3 to 6 months, enough time for the buyer to obtain their own financing based off the appraised value instead of the purchase price. Whereas through seller financing, you were lending the buyer the money until they could refinance.

When would a seller want to utilize either of these methods?

Selling a property in this fashion is only advisable if the seller and buyer have a history of trust together. I have a number of people with whom I have dealt with over a long period of time. The only people I would sell this way to are people with whom I have a lot of trust. I also need to know that the buyer has a long history of being able to obtain mortgages on rental properties. The reason I would not do this with somebody else is that if they fail to keep their end of the bargain, I have sold the property to them with no money down and for only 80% of its value.

If the buyer has a number of rental properties but has not bought any properties lately, I would have them get approved with a mortgage broker or bank that you trust before entering into any part of the transaction, including paying for the initial appraisal. There are a lot of things that can go wrong and you need to have all your ducks in a row before starting the process.

Another reason that I would only do this with buyers whom I have had a number of dealings with, is that I need to know for sure that this buyer is capable of obtaining financing for this property. If the buyer does not obtain financing, I have the same problem again; I’ve sold them a property with no money down, and I’m still holding the note.

Another word of caution is that I need to be very confident that I know the value of the property. If the property does not appraise for the $100,000 like anticipated, I now have a huge problem. I have already sold the property, and now the new buyer cannot get enough cash to pay off the full $80,000.

A good way to hedge this risk is to have an appraiser (hopefully the appraiser that the new bank will use) do the appraisal before I sell the property in the first place. This appraisal is not 100% foolproof because the appraiser might have a different value for the house for the bank as for us as individuals.

In other words, the bank may have requirements about which comparables can be used that prevent the appraiser from establishing the value they anticipated. Typically, however, they will appraise for the exact same number – only in rare situations will there be an issue.

How To Motivate Your Realtor

Alan Cowgill — Thu, 20 Nov 2008 10:10:53 +0000

Do you have realtors whom you know and trust for advice? While I am a realtor, I have seen a lot of bad advice given out by some realtors. At the same time, I have seen a lot of realtors give excellent advice. Only after working with a realtor over an extended time will you be able to decide if their advice is good or misguided.

Hopefully, realtors will be willing to talk you out of a deal if it is not in your best interest. If you are working with a realtor who tries to talk you into deals that don’t make sense, they will probably hurt you more than help you over time. If you find a realtor who is willing to advise you against a purchase, then this person may provide a great long term service.

A second thing to consider when working with realtors is to assess how you motivate the realtor through monetary means. Realtors are generally paid by either helping you buy a house, or helping you sell a house. They are generally paid a portion of the sales price. Because their incentives are structured this way, they are not motivated to find you a property at a huge discount, nor are they motivated to help you sell for a higher price. It is extremely important to note this fact before getting involved with realtors.

Realtors are motivated to sell you more houses, and sell more of your houses. If you make nothing, the realtor will generally receive the same commission as if you made $50,000 for the same house. Why do I bring up this point?

There are two reasons really. The first is that you should always be aware of what it is that actually motivates what they do. Because they receive generally the same amount regardless of your profit, many realtors will do whatever they can to get you to buy and will do whatever they can to get you to sell. In other words, they will be motivated to get you to work for less profit. Many of the realtors will not be conscious of their intentions, and they will disagree with my assessment; however, I ask you to think about it logically. Why would a realtor talk you out of taking an offer for $112,000 even if they felt you should get $115,000? They are paid almost the exact same commission. They generally will only make an extra $45 for telling you to hold out.

Additionally, they will probably have more than $45 in additional advertising expenses. The longer they have the listing, the less they make and the more time they have to spend on your property.

The second reason that I point this out is that real estate commissions are entirely negotiable. You do not have to pay a realtor a set split. You can entice your realtor by offering them more money for finding you a better deal. Additionally you can offer a realtor more for selling your property at a higher price. For example: Let’s say that a realtor wants to list your property for $100,000 at 6%. If that property sold for full price, you would net $94,000 minus the other costs. What if you told the realtor that he or she could have all the commission for anything that netted you more than $94,000? Do you think the realtor would take this arrangement? I don’t know. It depends.

Some realtors might not be allowed by their broker to work for this arrangement even though it is entirely legal. Other agents will be so confused by your question that they don’t have an answer at all. Other agents will actually see this as an exiting strategy. It would be interesting to see what the same agent would want to list the property for if their incentives were changed. You AND the realtor might net more because you align their incentives with your incentives.

How To Have An Outstanding Feel For Your Market

Alan Cowgill — Mon, 17 Nov 2008 10:10:27 +0000

The benefit to generating offers without actually presenting them is that you will get the needed practice that is essential to being successful in the business. If you had some offers that were thousands higher than what the property ultimately sold for, then you may have made an error in that assessment. It is important to figure out why you made that error.

The most important reason that you want to do this lengthy exercise is that you will begin to have an outstanding feel for your market. If you begin to know exactly what others will pay for properties then you will understand what you need to do to make a profit. You will simply offer less than others would be willing to pay. But you do this on many properties. Thus when you begin to purchase properties, you can immediately sell them to others who might pay a little more, or you can go through and rehab the house.

The second thing you should do in the information gathering stage is to begin to go to auctions. Go to the sheriff’s sale auctions and go to other real estate auctions. But do not bid or have the intention of bidding on any of the houses. You should not do this until after you have graduated your 120 day training program. Instead, go to the auctions and practice.

Pretend you are buying the house and analyze it. Have an offer ready in your mind. See what the house ends up selling for. Pay special attention to the people who are bidding the most for the properties. After the auction, get to know those people and get their email address. Tell them that you will email them if you come across a good deal.

There are large segments of the investing crowd who only buy homes at auctions. Because they limit themselves to only auctions, you will be able to find better deals to sell to them. These investors may be willing to pay you a finder’s fee if you truly come across a great deal. Also talk with the people at the auction who did not bid. Many of the people who did not bid would have bid if nobody else did. These investors may be quite experienced and may have insight into your market. But most of the people there were either being nosy or did not have a serious intention of buying.

One note of caution. A weird phenomenon occurs when you try to sell an auction buyer a home that is not being auctioned off. Because they are not at an auction, they will not pay as much for the exact same house. During the auction, their juices get flowing and they want to win. However, when you bring them a deal on the side, their negotiation juices will start flowing and they will want to win the negotiation. This is where you need to be creative and help them satisfy their negotiation ego. Start higher than you normally would to leave room for them to negotiate you down.

If they don’t feel like they won, they will not buy the property from you, even though it may be the same deal or better deal than they just bought at an auction. Their motto is to buy low and sell high. What they don’t realize is that they can still buy low and sell high even if they are not at an auction. This phenomenon has frustrated me over and over. It has frustrated other investors in other markets and I don’t think is specific to my area.

The same phenomenon will occur from foreclosure or REO buyers. Some people will only buy a foreclosure. Even if you bring them a deal that is equal or better than another deal they just bought, many will pass because it is not a foreclosure. Their mindset is that they should have found it the first time, and they are not going to let you profit just because they missed the deal. In situations like these, it is important to have many buyers working against each other so that you create the same environment of competition for the property.

Foreclosure buyers want to feel like they won as well. Except they want to feel that they won by beating other buyers to the punch and finding the deal sooner. Satisfy their ego by having them compete against each other. Some buyers could not care less how they find the deal as long as the numbers work for them. These buyers are generally the easiest to work with and will be most likely to buy a property from you if you find a great deal.

How To Get The Good Deals First

Alan Cowgill — Fri, 14 Nov 2008 10:10:12 +0000

To start, you need to personally know the top 20 REO agents in your area. The best way to get to know them is to meet them face to face at least once. Either show up at their office, or invite them to lunch. At the very least, make sure that they know you from multiple phone conversations. Do not put them on the defensive.

Understand their perspective before you meet with them. Here are some important things to know. REO agents tend to get more commission from selling the property to a buyer that they represent than they do from listing it. Often they must pay a referral fee to list the property, but they are not required to pay a referral fee on the selling half of their commission, so they are very motivated to sell it to a buyer that they can represent. Thus if you are working through a buyer’s agent, the listing agent will be motivated to sell it to their own clients first.

There are a couple of reasons for this. First of all, it is the same amount of work (perhaps even less work) to sell to their own client as opposed to another agent’s client and they receive more than twice the commission.

Second of all, if they can sell the property to somebody who they know will close on the property and not waste their time, they will look better to the bank, they will not have to deal with closing issues, and they can receive their commission check quickly. The better they look to the bank, the more listings they will receive in the future. They are afraid of new buyers because new buyers tend to make their lives more difficult. They would rather sell the property to somebody they know. That is why you need to be somebody they know.

You also mush reassure them before putting in the offer that you are easy to deal with, and that you are willing to make their job easier. If they know that you are a person who will make their life easier, they will send you good deals when they have them. If you don’t give them both sides of the commission, and if you are difficult to deal with, they will not send you good deals. It really is not any more complicated than this. As I have a real estate license, I could take a commission from purchasing REO properties; however, I do not do this.

I understand that if I take a commission, I am removing any incentive by that agent to send me good deals. I understand that the other agent will be motivated by finding his own buyers. If I give him the commission, I make less on that particular deal, but I will profit in the long run. This is a difficult transition for most agents, but I have found it to benefit me over and over. If you have a real estate license, I strongly recommend taking this strategy.

If you decide that you only want to work with one agent, make sure that agent is able to get along with a variety of people. If your agent has a bad relationship with the REO listing agents, you will probably miss out on deals simply because the other agent didn’t like your agent. Your agent may be able to get you plenty of good deals, but it really requires that person to have an excellent working relationship with others in the market.

How To Find A System That Works

Alan Cowgill — Tue, 11 Nov 2008 10:09:57 +0000

When I first started in real estate, I thought that I wanted to buy 100 rental units. I was under the assumption that if I bought them for about 80% of appraisal that they would cash flow $100 per month per unit. If I did this, I would have a total positive cash flow $10,000 per month, and I would no longer require a job. Also, I would benefit from 4% appreciation per year, principle debt reduction, and tax depreciation. It really was a simple and elegant plan, but it was not founded on the reality of my market.

I failed to realize that in order to cash flow $100 per unit, I would have to do everything myself. I would have to take the maintenance calls, fill vacant units, fix the problems myself, go to evictions court, etc. I also failed to realize that even if I did all those things myself, that I would still probably fail to come close to $100 per unit positive cash flow. I overestimated the percentage of rents that I should expect to receive, and I underestimated many of the costs associated with owning rental real estate.

I am not only unqualified to handle all the details of property management, but I am also unwilling, unable, and unmotivated to do these things. I did not consider the time investment such a plan would take. Luckily, however, I did discover after 6 units that I did not enjoy managing real estate rentals, and I stopped buying them in the same fashion.

Are you willing, qualified, and able to manage rental units? If you are, perhaps this would be an excellent strategy. If you can commit yourself to 60-70 hours per week, late night phone calls, difficult tenants, finding properties etc. perhaps you may want to consider buying lots of rental properties. Please don’t take this as a negative thing. Some people can commit themselves to the phone calls, difficult tenants, and maintenance. They make a great living doing this and they have an excellent retirement plan. It’s just not something I am able to commit to.

In order for this model to work for me, I am required to hire out all those tasks. I am unwilling to show the rental, unwilling to fix the rental, and unwilling to go to evictions court. As a result, I do not show much positive cash flow. I actually show negative cash flow on some properties. I am in a position to handle the negative cash flow, and the appreciation of the 6 units will probably bail me out. I can handle the negative cash flow because the principle reduction is greater than the negative cash flow. However, I am not in a position to handle the same negative cash flow on 100 units. Had I stuck to my plan blindly, I could be in serious trouble.

I do many of the things that I enjoy, and I receive an income that warrants my time involvement. Additionally, I reduce much of the risk associated with real estate investing because my profit is not dependant on market appreciation, but rather on my own ability to spot good deals.

I rarely have to deal with tenants. I only marginally deal with contractors, and I rarely get involved with selling. It’s my system.

How To Finance A Good Deal

Alan Cowgill — Sat, 08 Nov 2008 10:09:43 +0000

Our method for financing deals has evolved over time to match whatever products were available at the time. In the beginning, there was an equity line available that allowed us to borrow 80% of appraised value immediately after closing on the property. In this scenario, I typically bought a property for say $30,000. Since the property appraised in as is condition for $60,000, I was able to get a loan for $48,000. This loan was $18,000 more than what I paid for the property. This loan had no closing costs, an introductory rate of 2.99% and adjusted to prime after 3 months.

Typically the $18,000 extra gave me enough money to fix up the property without using any of my own cash. This loan product had a $350 prepayment penalty, but my mortgage broker had this fee waived every time except for once. This was by far the greatest deal I have ever seen financing properties. I got my money back, enough money to fix up the property, I paid no closing costs, and 2.99% interest for 3 months with no pre-payment penalty. As this was an equity line, I could pay down the mortgage if I had extra cash lying around, but I never did this during the introductory period as I was borrowing money at an extremely low rate. This product only allowed me to have 3 properties at a time under this product.

However, I did nine at once, because I put the properties into 3 different names. This allowed us to be able to finance most of our deals.

Good financing deals like this are rare, and typically don’t last very long. I was only able to do this for about 5 months until their rules changed. They eventually changed their rules and only allowed 80% of purchase price for the first 6 months. This eliminated my ability to get the cash required to rehab the property, and there were other products that allowed me to do this. As a result, I abandoned this method after the rules changed.

Since this method dried up, I was in search of a similar product. After talking with dozens of mortgage brokers about finding a similar product, I realized that I was unlikely to find it. I kept asking for non-owner occupied equity lines. Eventually I learned that I was using the wrong terminology. The correct terminology was to ask for a personal line of credit using the property as collateral – or a 6 month note.

Personally, I don’t know that there is a difference, but for some reason in the lending world, banks are quick to offer ‘personal lines of credit using the property as collateral’, but not ‘equity lines’ on investment properties.

Before talking with the local banks, I asked other investors to personally recommend me to the president of the bank. The first meeting should be with the president whenever possible. They are the ultimate decision makers, and they will help you to get where you want to be faster. I have found it helpful to send your business plan to them 7 days before your meeting. While they rarely read the plan, it is helpful to send them 15 pages of documentation about your plans and it will help ease their anxiety about working with a new client.

When meeting with the president, I explain my experience, I hand them a personal net worth sheet, and I explain that I keep finding exceptional deals that I don’t want to pass on. Out of the four local banks, three offered to finance my deals. What was even better what that they would finance them in the L.L.C.’s name as long as I personally signed for them.

How To Determine Which Financing Method To Use

Alan Cowgill — Wed, 05 Nov 2008 10:09:28 +0000

Selling the property with seller financing could be considered more risky than selling via the land contract. There are pros and cons to each. If the seller has enough cash, he or she can sell via seller financing and potentially get their cash back very quickly. It may only take a couple of weeks. Whereas using the land contract method, it will be a minimum of 3 months but most likely 6 months or more before the new buyer can obtain financing.

Secondly, by using the land contract method, there are many more hoops to jump through with the lender and you need to double check every aspect with the lender before entering into the original land contract.

At the same time, one could argue that the land contract method is less risky because the seller can keep their own financing in place. Plus a default by the new buyer is much easier to correct with a land contract than the foreclosure that is required by a defaulted seller financing transaction.

Since there are so many hassles associated with doing this, why would a seller want to take such risk to sell to a buyer at a 20% discount?

This is not something that all sellers would want to do. However, let’s say that you have 10 properties that you want to transfer to somebody else. This buyer and you have a long history of deals together, you know that the buyer can get financing, and you have a high level of trust with them. If the average price for those houses is $100,000, with conventional financing and to avoid PMI, the buyer would have to come up with a total of $200,000 to put down on those houses. If the buyer does not have $200,000, you cannot complete this transaction.

You could, however, transfer the properties perhaps just one or two at a time (to lessen the risk if something goes wrong) to the new buyer in one of the two suggested methods. The new buyer could eventually have all 10 properties with essentially 100% financing while having the advantage 80% financing. In other words, they won’t have to pay the increased interest rate, and they will avoid PMI. It just requires a little creativity, lots of trust, lots of patience, and a seller who is willing and able to work with the buyer.

Some people may tell you to simply have the new buyer assume your loans through a ‘subject to’ transfer. This is an option, only if you trust the new buyer to pay the loan. If the new buyer doesn’t have the down payment, I would not trust them to pay my loan. Also, it leaves more mortgages in your name without the benefits of owning the property. This method has too many potential pitfalls for me but is an option. Essentially, you maintain the risk of owning the property without any benefit to you.