Your Landlord GOOD-BYE!
Thinking About Buying A Home?

There are certain rules you need to follow when you are buying a home.

Rule #1

You can buy just about any home anywhere in the world (with a few exceptions), regardless of your cash situation, your credit, your job, or anything else. [If you have a problem believing this statement, you may be renting forever or never get your "dream" home.]

Rule #2

You must be able to afford the mortgage payment, upkeep, maintenance, and the maid or butler.

Rule #3

There are two good ways to buy a home. One is with as little cash as possible. The other is to pay all cash and have no mortgage payment.

Rule #4 P>You are not buying a home just for the tax deduction! You are buying the home to improve the quality of your life, for your enjoyment, privacy, freedom from a landlord, enjoy a garden, a pool to relax in, a place for the kids to play, pets to run around, and finally create income in the future. As the mortgage gets paid off and home values appreciate, the home will function as a security investment in your financial picture.

Explanations of the above rules:

Rule #1: If you use creative financing, you can buy just about any home, anywhere with very little cash down. You can buy these homes using a Contract of Sale, Wrap Around Mortgage, Installment Sale with a tax deduction for the buyer, or a Lease Option with a tax deduction for the buyer. All of these methods give you ownership of the property regardless of actual title transfers to your name or not.

a) You don't have to qualify with any lender.
b) You don't have to have good credit.
c) You don't need a job. (It would help if you know how you are going to pay for the monthly payments.)
d) In many cases - not always - you don't need much cash. In some rare cases, no cash at all.
e) If your real estate agent tells you these methods are illegal, please let them see the following:

The best way to learn about creative financing is to buy my book, Creative Financing Please click on the title for more information.

Rule #2: No need for an explanation.

Rule #3: This rule is the most difficult for many people to understand. Let's start with paying all cash. Cash now is worth more than cash in the future. (To better illustrate this, go to my "Million $ Real Estate" site and read the Time Chronicle to see what items cost 50 years ago and today.)
Let's say you used a lot of cash, $30,000, for the down payment. You could have possibly put down $3,000 - $5,000 and use $25,000 for another purpose such as starting a business or more investments. Some real estate investments could double or triple your return with no work and no worry. Another problem arises when you want to pull cash out of your house in a hurry and you have $25,000 equity. Guess what. Lenders usually lend on an 80/20 loan to value ratio. This means you will get the difference between your mortgage balance and 80% of the appraised value of the home. In most cases that will be zero.
Example: $130,000 Price paid for the home
25,000 Cash down payment
$105,000 Mortgage Balance
Your ratio on 80% is $104,000 which means you will get $105,000 less $104,000 = $1,000 for your equity + costs of doing the loan, approx. $2,000. You would lose $1,000 on this deal.

Of course, the worst part of paying the mortgage are the full costs at the end of 30 years. You pay almost $200,000 in interest on a $100,000 home over 30 years. So the house really cost you $300,000. But, if you don't learn enough about real estate, you have to pay.

On the other hand, wealthy people pay cash for their homes. Why? It gives them huge buying power. If someone paid cash for the same $100,000 home someone else mortgaged, they save $200,000. They can then buy cars, boats, more houses, whatever they want, with the same money they saved.

However, there is no right or wrong way to buy. It is just a matter of circumstances. It depends on what you can do in your situation. On one thing I do stand firm. If you are going to mortgage your home, use as little cash as possible.

Rule #4: There is no explanation needed. However, today, there are some circumstances when renting can be more beneficial than owning. I never thought I would ever consider this could be possible until I came across the following:
We were visiting our friend who has a beautiful home in an exclusive gated community on one of the lakes (Yes, we have man-made lakes here) in Las Vegas. Regardless he made a heavy down payment of $150,000 on a $385,000 home, he still has a mortgage of $2,500 per month. We noticed during one of our visits that a few homes were vacant and a few had tenants. We asked our friend how much rent the tenants were paying. $1,200/month! The sellers could not get higher rent and were happy to get $1,200 to offset their mortgage payment of $2,800. My wife and I would not mind renting a beautiful 3,000 sq.ft. home on the lake for $1,200! So, if you can rent the right property at the right price, there is no need to buy. Especially if you are in your own business -- you often have enough tax deductions through the business.

IF YOU WANT TO BUY A HOME ...

I strongly recommend you buy some books, especially my book, How To Buy a Home (click on the title for information).

If you feel you need my help to put any real estate deal together, please contact me. I will charge a consultation fee to be paid up front and I will help you until you get what you want. The amount of the fee will depend on how much work we estimate and what is involved. For example, estate sales, IRS and tax sales can go on indefinitely. So, yes, I am for hire. However, quick advice by e-mail is free.

Send e-mail to George Paukert