A Story Of Financial Freedom, Infinity, And Magic: Written for the masses to achieve success and financial freedom
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Could real estate be the path to abundance for your family? Discover the secrets moguls use to negotiate favorable deals and achieve success. This book is for those who are ready to put every penny to work, the world of real esate investment offers substantial opportunities. Experienced investor B. Floyd Smith believes that with enough planning
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A Story Of Financial Freedom, Infinity, And Magic - bill f. smith
Table of Contents
Chapter 1: How to Read This Book………………………………..8
Chapter 2: Down Payment…………………………………………10
Chapter 3: Leverage Can Be Your Friend………………………….12
Chapter 4: Change Your Thinking…………………………………15
Chapter 5: Kid Stuff………………………………………………...22
Chapter 6: Another Deal, Another 100-Year-Old Home…………...24
Chapter 7: $100K Amortization Schedule………………………….28
Chapter 8: Finding a Good Deal…………………………………….30
Chapter 9: My First Deal on Hillway Rd……………………………35
Chapter 10: Owner Carry, Portland St………………………………38
Chapter 11: Mobile Homes………………………………………….39
Chapter 12: Earnest Money Agreement……………………………..42
Chapter 13: Amortization Schedule…………………………………45
Chapter 14: How I Sold Beekman…………………………………...47
Chapter 15: Land…………………………………………………….48
Chapter 16: Delinquent Buyer……………………………………….49
Chapter 17: Legal Documents……………………………………….51
Chapter 18: One-to-Four or Pentagram Retirement…………………88
Chapter 19: The Internet Sells……………………………………….90
Chapter 20: Rent to Own, Option to Buy……………………………92
Chapter 21: Nothing Succeeds Like Success………………………...93
Chapter 22: Source Energy…………………………………………..94
Chapter 23: Buying and Selling Notes/Trust Deeds…………………96
Chapter 24: Fannie Mae and Freddie Mac…………………………...97
Chapter 25: 408 N. Ivey St…………………………………………...98
Chapter 26: Rent to Own, Option to Purchase……………………….99
Chapter 27: 537 Mary St…………………………………………….100
Chapter 28: Insurance Companies…………………………………...101
Chapter 29: Jackson County Assessors……………………………...103
Appendix 1: Definitions of Highlighted Words……………………..105
Appendix 2: Schedule of Real Estate Owned as of January 1994…..109
CHAPTER 1
How to Read This Book
Many chapters in this book are drawn from personal experiences and should be viewed as such. The deals are real, and new and old investors alike can repeat them over and over. I have found using a cookie-cutter approach to success in real estate to be the best and most powerful strategy for me. Do what works for you in your area of the United States over and over again until you achieve your financial goals and freedom.
Learn to adjust to the property values and pricing in your own backyard first. Then take your business global. Alternatively, move to an area that has financial promise and/or a growing market. For instance, move to the Dakotas, where oil fracking is booming. The housing market has grown in leaps and bounds due to a shortage of single-family homes and/or rental units. The population has outgrown the available units. The fracking industry has triggered a huge demand for homes and jobs in such regions.
Florida is also growing in leaps and bounds. This is because its warmer climate is attractive to retired baby boomers and hurricanes hammer the region annually. California is also experiencing a shortage of homes. Most California residents (40M) want to raise their kids in Oregon, just north of it, where only 4M people live. Texas has grown tremendously due to the increase in the cost of fuel.
Look for the trends, and capitalize on them. Keep your eyes open to new developments all over the country, or stay in your own backyard and roll with the ups and downs of the market. Learn about value and what makes a good deal. Study, and glean knowledge.
Some words are printed in bold type throughout this book. They are all defined in the back of the book to facilitate understanding of them and their contexts.
Real estate laws have changed and will continue to change. Smart investors will change with them, adapting to new challenges. My approach and examples may or may not apply to your area of the United States, so check your state laws for details. Concepts such as owner carry, rent to own, options to buy, and becoming a landlord will work. They are all solid concepts, usable methods for contemporary and future investors.
My experience is limited to the state of Oregon: southern Oregon, to be precise. If you are from a different state, look into its landlord–tenant laws and laws related to buying and selling. Find and befriend a mentor in the real estate business. A veteran real estate broker/agent or property management company will have a wealth of knowledge to offer you. Call them up, set up an appointment or lunch date, and ask a lot of questions. They may help you find your first deal.
I sincerely hope that those who read this book will feel inspired to look deep within themselves and use these techniques and principles to succeed in acquiring financial wealth, abundance, and freedom in life.
Work from the depths of your heart and soul. Stay in touch with who you are. Your power and direction will come from the knowledge you gain and your burning desire to succeed. You have to be passionate and take a leap of faith in order to complete your mission of emerging from the masses. Change your thinking for the better.
This book is the average Joe or Jane’s guide to success. You must have a strong work ethic and stay the course to find abundance in life. Become the pinnacle of power that you have always dreamed of. Despite the challenges and obstacles ahead, you must never give up. Forge forward one step at a time and one day at a time. Make this your passion and new lifestyle.
There is a connection between heaven and earth that makes possible success in all fields. Remember who you are, and stay connected to the power that comes from within. It is the power and source at the center of your being. Be careful what you wish for. Source energy and the universal law of attraction will make all your wishes and dreams come true.
CHAPTER 2
Down Payment
The majority of real estate purchases require a down payment. It could be a promissory note, a trust deed, a car, a boat, a quad, a jet ski, personal labor, a piece of land, cash, stocks, or bonds. Cash is the most common form of down payment for purchasing a home.
Banks want you to have some equity or skin in the game when making a purchase. So save, save, and save some more. You must live well below your means in order to save enough money for your first down payment. Think of money as a tool; you should put it to work for you through investment. Alternatively, you could be blessed with parents or relatives who have plenty of cash to spare. That would give you a silver spoon from birth, but it is not likely to happen to ordinary folks.
If your take-home pay is $3,500 per month, you should bank (save) $900–$2,000 or more each and every month. Be vigilant about your money and about saving for your future. Live well below your means. Do odd jobs for extra money, or get a second job. Within one to two years, you will be in a position to make an offer or qualify for a first-time homebuyer program. In the meantime, start looking for good deals. Study the market in your area. Learn to recognize a good deal when you see it, even if you know you cannot afford it. Look for a home that’s being sold at wholesale price rather than one that’s being sold at market value. It is a real estate agent’s job to sell properties for the maximum price possible.
If your personality is such that you can’t wait (was the case for me), use your credit card for a down payment. Be warned, though: Interest starts being charged immediately when you get a cash advance from your credit card. No interest is charged on regular purchases if you make a full payment (paying off the total balance) every month. Instead, you get to enjoy an interest-free loan for 30-45 days. If you make the minimum payment each month, the credit card company will make you pay dearly. You could be charged an interest of 8% to 26% on your credit card debt. It will take you years to pay off a small loan from a credit card. Your best strategy when using credit cards is to pay them off every month. Avoid maintaining monthly credit card debt.
Another strategy for credit card uses entails having two cards. You can charge a down payment on one card and, when it comes due, use the second card to pay off the first one. This will not zero out your debt or interest obligation, but it will prolong the payoff long enough for you to refinance your investment property through a bank or financial institution.
I have used this method in the past when beginning to purchase investment property. It is not the best concept or paradigm but does work when you can’t wait to get your investment real estate portfolio started.
Another method of making a down payment involves applying for an executive or personal line of credit with any local US Bank. As I had good credit, I was granted a line of credit of $40K on my signature at age 32. It came with a Visa credit card and a $40K buying limit; the interest rate was 8%.
My nephew, a state trooper in Washington, told me he had a $70K personal line of credit. My, how times have changed! It’s called inflation. Back in 1956, $89 would have been equivalent to $890 in 2018.
If neither you nor your spouse has bought a home, you will probably qualify for our government’s first-time homebuyer program. Ask your local financial institution how to qualify for the first-time homebuyer program. To buy my first home, all I needed was $3,500 in cash. I had a $42K loan and payments of $337.94/month with P&I (principal and interest). Many of these first-time home loans require you to live outside all major cities. Another approach would be to apply for an FHA first-time homebuyer program. They require only 3.5% to get you started on your first purchase.
Make your first home an investment property. Look for a duplex, four-plex, or six-plex. Then live in one unit and let the others pay for your first-time homebuyer loan. If you crunch the numbers correctly, you should get to live there for free and still have a monthly income above your monthly principal, interest, taxes, and insurance payments. If you have a home that pays you every month, you will be well on your way to saving for your next property. In addition, look at the experience you will gain as a landlord: priceless!
The government requires you to physically live there for a minimum of one year. After one year, you can move into your next investment property. Buy one home a year for 10 years, and you will be en route to financial freedom. I was 32 years old when I bought my first home. Looking back, I wish I had started at the age of 18. Time is your friend when your goal is to buy and hold real estate. Don’t wait to get started; do it today.
You will get a huge tax break if you live in your personal residence for two years or more before selling and moving into your next home. All of your gains will be tax free upon the sale of your personal residence. There is a ceiling of $250K per person for this tax-free gain. That amounts to up to $0.5M per couple.
Start looking for tax-free money. Talk to a reputable certified public accountant to learn about the tax advantages of buying, selling, and holding real property.
If you decide to have kids, your first home will be a great place to raise them in. When your kids draw their favorite Picasso on the walls, put dents and scratches in your hardwood floors, and break the windows and more, you will learn how to make all the necessary repairs or find someone to do them for you.
That might be your first experience of making repairs or improvements. There is nothing like learning from necessity. You’ll never forget how to complete the job once you begin the task. If you don’t like repairs and maintenance, go shopping for a handyman. Check Angie’s List for competent contractors and handymen in your area.
CHAPTER 3
Leverage Can Be Your Friend
I found a 100-year-old home that needed some serious repair. It was a 3-bedroom, 1.5-bathroom home. It needed sheetrock, siding, and understructure work. There was dry rot in the bathroom and kitchen. The floor joist was within six inches of the dirt. This home would not have qualified for conventional financing. That was why I liked it. No one else made an offer or wanted a project, so I bought it.
Sounds crazy, right? But I gained knowledge through research on what was necessary to qualify. I talked to various loan officers at several banks and mortgage companies. Always exercise due diligence before making a purchase. Do your homework. You will be amazed at how far a little investigative knowledge takes