If you have an existing piece of revenue producing real estate that you bought within the last merge years, you most likely have a critical number of equity in that property. Even if you put a former 80% mortgage on the asset when you purchased you may now have everywhere from 20% to as much as 60% to 70% equity on the property. How do you get that money out and put it to use in a new venture or use it to pay bills without selling your property.
Well, here are my top 4 ways to put cash in your pocket without having to Sell your real estate...
Place a underground second mortgage on your asset - One of the best ways to get cash out of the asset is by borrowing money from a underground lender and giving them a second mortgage on the asset as security. By way of an example, if you bought a asset 5 years ago for 0,000 and put an ,000 mortgage on the asset at the time of buy you had ,000 equity. That asset today may be worth 0,000 and mortgage paid down to ,000 leaving you with ,000 in equity. If you borrowed ,000 from a underground lender you now have 5,000 in total debt on the building. This leaves the debt-to-equity ratio at a very cheap 81%. We do not recommend ever going above 90% debt-to-equity to allow some margin for future down turns. One of the former ways we attract underground lenders is straight through group luncheons and underground meetings. We use the underground Lender Presentation Kit as our former marketing tool to originate leads and convert individuals into our program.
Put a Rent-to-Own Tenant in the building - Under a rent-to-own program a renter with the desire to ultimately buy is given 12 to 24 months to rent while fixing or improving their prestige to the point where they can get a mortgage and cash you out. The great advantage of this method, and are many, is the tenant/buyer typically pays you 3% to 10% of the value of the asset upfront in the form a non-refundable buy deposit. This deposit can be everywhere from ,000 to ,000 cash in your pocket. If the tenant/buyer does not cash out or decides to move out you can legal keep the deposit and do the whole thing over again. an additional one advantage is that a tenant/buyer feels much more compelled to pay rent on time to get the buy price prestige that is only given if the rent is paid on time.
Refinance the existing mortgage with a new underground lender mortgage - If you have an existing first mortgage on a asset you can refinance the whole number for new higher first mortgage using a underground lender as your lender. Using the above example, if you have asset worth 0,000 with a ,000 first mortgage, you could refinance the first mortgage with a underground lender for 5,000 and cash out ,000 for yourself. The advantage of this formula is that the cost of first mortgage alone will be lower than a first and second blend as divulge above. You also avoid having the loan show up on your prestige description and this usually improves your prestige score.
Use your asset to acquire a line of prestige - If you have one or more properties with a critical number of equity you can use that equity to get a line of prestige from a bank or local salvage and loan. Again using the above example of asset with ,000 in equity you may be able to get as much as a ,000 line of credit. We have found that banks will never go above 80% debt-to-equity with these types of lines. This type of financing has some advantages including no interest cost until you actual use the money and commonly the interest rates are very competitive in the prime plus 3% to 6% range.
In Conclusion, I have outlined four ways to originate cash from your real estate with out having to sell your property. This has immense advantages in allowing you passage to cash to do new projects or pay operating expenses.
Four Ways to Get Money From Your Real Estate Without Selling