Epic Real Estate Investing - How to Pay Off Balloon Payments on Short Term Loans | 3rd Degree Thursday

Episode Date: November 20, 2014

A few weeks ago, Matt talked about the power of getting personal financing from friends and family.  Today, he answers a listener question regarding how to pay off those loans quickly (3-5 years).  Enjoy! ------- The free course is new and improved!  To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com or text “FreeCourse” to 55678. What interests you most? E ducation P roperties I ncome C oaching Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello and welcome to another episode of third degree Thursday. This is the show where I subject myself to you giving me the third degree. So I've got a question today, question from Andy B and Andy writes. Matt, I liked your financial freedom message last week about utilizing friends and family money. One question. How do you do that and return their money within a short time frame? Two or three years. Thanks, Andy.

Okay. So good question. The fast answer to your question, Andy, is you would have to, either sell the property or refinance the property to return their money in a short time frame or pull the money from another source that you might have. That's the fast answer. But it's not how it typically pans out. You know, many people get stuck with this concern. And mostly it's, it's because they're focused on just one deal. You know, if you only do one deal in a three-year period where the balance of a loan is due in three years, that could be tricky. That could be a little

scary. If you don't know in three years, where are you going to come up with a balance to pay this loan off? So, yes, you're going to have to sell the property or sell something else or pull your money from another source that you have, or you're going to have to refinance or renegotiate the terms. Those are all of your options. However, the idea is it's not to focus on just one property, but rather your portfolio as a whole. I mean, I would hope you weren't going to just purchase one property using a friend's money and then stop there. that probably wouldn't be a good idea for such a short-term loan. You see, one property anyway, it's not going to solve anyone's problem. So it's a portfolio of properties where the difference is really made,

where the streams of income really start to make sense. So you would keep acquiring property after you purchase that one. You know, the more properties you have in your portfolio, the more options you'll have to manage the debt on that portfolio. You know, for example, if you acquired, say you acquired two properties, properties a year under those types of terms using friends and family money in these short-term loans. If you're buying right, you could sell one or two of those properties to pay off a third of which you would own then free and clear. Then you could get a traditional 30-year bank loan on the

free and clear property and use the cash out of that to buy another one or two properties. So that's just one basic scenario, but you can't do that unless you have multiple properties. but of that one scenario, I mean, like I said, that's just one. The options are endless. I mean, you're limited only by your own creativity. So if you have just one property, it may be tricky when it's time to pay off a balloon payment. But if you have multiple properties, it becomes less tricky, really, really fast. And this is why I recommend right now to acquire as much as you possibly can before builders start rebuilding.

I mean, there's some signs out there that the builders are. starting to think about it. Some parts of the country where new building permits are getting pulled, but we've still got some time. And that time being to purchase existing homes for cheaper than what it would cost to rebuild them. See, the home builders aren't really flooding the market. They're not coming in and taking on that business again until they're able to sell those properties for more than what it cost them to build, new ones.

But right now, you can buy existing homes for a lot cheaper than it would cost to rebuild them. that's changing, it's shifting. So right now, though, I'm in the mindset of acquiring as many of those types of deals as I can because I know when this little window of opportunity closes, and it will close, it'll be much easier to manage the debt on all of the deals that I acquired, then it will be to acquire new deals. Make sense? And this is the philosophy that really kind of inspired our acquisition assistance program

over at Cash Flow Savvy. You know, we're providing three-year loans, which are actually same as cash loans if settled in the first 18 months. But we started providing these three-year loans to help build our clients' portfolio quicker so they could acquire more properties. It's why it's called acquisition assistance, because we're giving them assistance on acquiring, to give our clients the ability to build now and then pay later. So more information, actually, that's something that you'd be interested in can be found on the cash flow savvy. website. Go to cash flow savvy.com, click on the hot properties tab, and all the details are right there. Anyway, hope that answers your question, Andy.

It's a good one. It's a comma one. In a nutshell, the answer is focus on the portfolio of properties, not any one property. All right. So this episode's winner of a $100. Amazon.com gift card goes to Larry B. Larry B. Are you related to Andy B?

I don't know. Larry writes, this is my favorite podcast. I never miss an episode. I walk away from every episode with something that I can put to work in my real estate business. Thanks, Matt, three exclamation points. Well, Larry, you're very, very welcome.

Send me an email to podcast at epic real estate.com and I'll reply with a $100. Amazon.com gift card for you. And if you'd like to enter, all you need to do is go over to iTunes and leave a review of the show and each show in November. I'll be spinning my mouse

and stopping on a random review and reading it on the air and rewarding those. people with a $100.com gift card. Now, if you've already left a review in the past at some point, there's nothing for you to do. You're already entered. All righty.

That's it for today. I'll see you tomorrow for Financial Freedom Friday. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.