How to Get Paid to Buy an Apartment Building with Other People’s Money!

 

 

 

Greetings,

My name is Jeffrey D. Smith, and I am a Commercial Real Estate Entrepreneur. Are you interested in the huge rewards of investing in commercial real estate, but you don’t have money or credit? Most real estate investors start small with single family housing, and they promise themselves to move up to commercial real estate and apartment buildings when they save enough money. They get stuck in the rut of single family houses, fixing and sell, or fixing and renting, struggling with high debt cost, low or negative cash flow, tenants, toilets, and turnover.

Maybe you’ve tried some “creative financing” ideas on single family houses, but with very limited success? I’ll clue you in on a secret: Creative financing works best on larger commercial properties than single family houses! Why? Multiple streams of income from multiple tenants and the lower per-unit cost!

A 100 unit apartment building with a per-unit cost of, say, $25,000, and a monthly rent of $650 ($65,000 gross rent per month) is far superior than a single family house that costs $200,000 and a monthly rent of $1,200.

The house is not cost effective unless you can pay all cash from your own bank account. Your return on equity ($200,000) for the house is roughly 6.20%, assuming $1200 for property tax, $500 annual for insurance, $300 annual for repairs and maintenance. Your monthly cash flow averages about $1030. If you get a loan to buy the property, then most of that cash flow goes to the lender. $160,000 (80% Loan to Value) at 6.0% per year for 30 years is $959, leaving only $70 per month for your cash flow (that’s 2.1% yield on your $40,000 equity investment).

Why is this such a lousy deal? Because houses are valued according to comparable sales, rather than income valuation! You cannot compete against the higher prices paid by owner-occupants. An owner-occupant will pay more than the property can afford as a rental. The owner-occupant gets the benefit of living there, and the future benefit of paying down the mortgage and building equity.

Here’s the real kick in the head: Your single family house is either 100% rented or 100% vacant! If you financed the house with debt and have a vacancy for just one month, you could lose more than your entire net cash flow for the full year!

I’m here to say that you don’t have to start or stay with single family houses!

Stabilized apartments maintain 90% or more occupancy throughout the year, they are professionally managed (you just manage the managers), and the financing and cash flow are calculated from the net income. The income valuation uses the cost and structure of financing to determine how much to pay for the property. Your cash flow is locked-in when you calculate the amount of debt that the property can support according to the required cash flow after debt.

When you buy an income property, whether an apartment building or an office building or a warehouse, you are buying an income stream. Therefore, you must calculate a valuation for the property based on the value of that income stream.

The value of the income stream is expressed as the capitalization rate (also called the “CAP rate”). The CAP rate is a blending of the cost and structure of the financing (debt and equity) to acquire the property. The property pays for its financing from its Net Operating Income (NOI). The ratio of the NOI divided by the Annual Debt Service (ADS) is called the Debt Coverage Ratio (DCR).

The DCR is a very critical number, because it expresses how much of the NOI is dedicated to debt service and how much is left for your Cash Flow Before Tax (CFBT). The CFBT is your income stream (profit) from owning the property.

I know this seems complicated. Most real estate “guru” and some CCIM (Certified Commercial Investment Member) brokers don’t understand income valuation. I can teach you in just a few minutes how to master Income Valuation in seconds!

For example, the 100 unit apartment building grosses $65,000 per month or $780,000 per year. Even with vacancies and expenses at 60%, that’s a Net Operating Income of $312,000. If you pay all cash $2,500,000, then your annual yield (capitalization rate) is 12.48%.

So, a 100 unit apartment building seems nice, but you don’t have $2,500,000 sleeping in your checking account? That’s the beauty of commercial real estate! Real estate is a borrowed money business! You’re expected to finance the property with Other People’s Money (OPM)! If you fully finance with Other People’s Money with a Debt Coverage Ratio (DCR) of 1.5411, annual interest 5.89% over 20 years, the net cash flow is over $109,000 per year after expenses and debt service. The property is professionally managed, so you won’t worry about tenants, toilets, and turnover!

Now here’s the real gotcha!

However, it seems like commercial lenders only lend to people who can prove they don’t need the money! Have you ever tried to get approved for commercial financing and sadly realized that, even though the property is the primary qualifier for the loan, the lender also wants you to qualify with experience and assets? The lenders want to see your financial statement of assets to prove your commercial experience. How can you get the commercial experience when you first need commercial experience to qualify for financing? It’s like trying to decide which came first, the chicken or the egg?

Wealthy people have financial statements. Non-wealthy people have credit reports. The commercial lenders only want to lend to people with impressive financial statements that prove financial literacy.

Most commercial lenders won’t lend more than 70% of the property value. If you bring your own 30% cash (plus closing costs), then your return on equity (yield) is actually less than the capitalization rate! That’s badly structured financing.

Learn from me how to structure the deal the right way, so that everyone, including the lenders, get fairly compensated for their risk.

What you need is leverage for financing and experience.

Here are the basic secrets of commercial real estate:

OTHER PEOPLE’S MONEY!

OTHER PEOPLE’S EXPERIENCE!

Would you rather have 100% of a very small pie with single family houses or would you rather have, say, 40% of a very large pie with commercial real estate? I think it’s obvious. There is so much private money available for commercial real estate, the amounts are staggering! That money is owned or controlled by people who understand a good deal, they know the risks and rewards of investing, and most important they don’t have the time to find great deals on their own.

Private financiers need you to put together those great deals for them, and they want to pay you for your effort! They are thrilled to write the check, because they know how much money they will make! They are thrilled to qualify for the financing, because they know how much money they will make! How do they know how much money they will make? You ran the numbers and showed them how much money they will make!

You can be a Commercial Real Estate Syndicator!

As a syndicator, you get paid to buy the property, you get paid a percentage of ownership, and you get paid a percentage of the exit strategy (e.g., resale profit). In the above example, you could get a premium fee of 4.0% of $2,500,000 (that’s $100,000) for finding the deal, and you could get 40% of the net cash flow (that’s another $44,000 per year). When the property is sold, you’ll get 40% of the future profit! And your private financiers are thrilled, because they are realizing 22% return on equity (cash on cash return)! The tenants are paying down the debt, so your private equity financiers also get the benefit of principal reduction, and you get paid 40% of that created equity!

A syndicator is a special kind of entrepreneur. A syndicator uses other people’s money and other people’s experience to acquire commercial real estate. A syndicator gets paid to buy income property for other people. The other people qualify for the financing, they qualify for the experience, and they provide the equity cash investment. A syndicator can also use upfront money from select private financiers to cover earnest money deposits and due diligence cost, in exchange for giving them a greater percentage of the deal! This is the ultimate “Nothing Down” real estate investment business!

As a syndicator, you will operate your business as a professional:

• Get paid to buy income property for other people (your private financiers).
• Get paid a generous percentage of the cash flow with no liability on expenses. That’s an infinite yield, because you have no net cash invested.
• No (or very little) qualifying on the commercial financing.
• Your private financiers and your selected professional property management company qualify for the commercial financing, not you!
• Get paid a generous percentage of the profit when the property resold.
• When you use an experienced attorney for the paperwork, you don’t need a real estate broker license, because you are a principal party to the contract!
• Understand how the Time Value of Money can make you wealthy and financially free!

An asset puts money in your pocket. A liability takes money from your pocket. Assets are positive cash flow. Liabilities are negative cash flow. Wealthy people don’t work for a paycheck, because a paycheck from a job can go away with very little warning. Instead, wealthy people work to build or to acquire control of assets that put passive income into their pockets.

“Rich” is measured by the size of your bank account. “Wealth” is not measured by the size of your bank account. Wealth is measured by time. That is, the amount of time that you can survive your expenses with passive income and no paycheck from a job. Wealth is the measure of the positive cash flow from passive income assets compared to the negative cash flow of your expenses (liabilities).

Ask yourself this question and be very honest: If your paycheck disappeared today, then how long can you survive on your passive income? If you’re like most folks, the answer is very sobering and sad. Even when you have an MBA (Major Bank Account), unless you have a way to replenish it, you’ll soon run out of money. Most folks survive on paycheck to paycheck, and they would be devastated if they lost their JOB (Just Over Broke).

It’s time for you to learn how wealthy people think about money, and how they use money to make more money. It’s time for you to learn the difference between a paycheck and a stream of passive income from positive cash flow assets.

When you understand the Time Value of Money and how to calculate the Income Valuation of an income property, then you have the power to acquire assets for wealthy people and they will gladly pay you a fee and a percentage of ownership of the asset. Wealthy people don’t care how much money it costs; they care how much money it makes! If you can show them how to make double digit yields on their investment, backed by solid commercial real estate, then they will beg to be on your Very Important Person (VIP) list for deals!

It all comes down to the numbers. You must understand:

• The Time Value of Money.
• How to calculate the income value of a property.
• How to structure the deal so you can get paid as a syndicator.

I can teach you how to calculate the income valuation and syndication parameters for a structured financing deal. It all comes down to an easy yet powerful spreadsheet and my 56-minute video presentation.

I simplify all of the algebra and jargon. With just a few numbers plugged into the spreadsheet, you’ll know exactly how much to offer on an income property, how much your private financiers will invest and how much they will receive, and most important you’ll know how much you will be paid to buy commercial real estate for other people.

When you arm yourself with the power of the Time Value of Money and the knowledge of structured financing, you can buy income properties with none of your own money, get paid (cash out) at closing, get paid a percentage of the cash flow, and get paid a percentage of the profit when the property is resold.

Order now for $17, download now, get started now!

Order now for $17, download now, get started now!

Order now for $17, download now, get started now!

Order now for $17, download now, get started now!

Order now for $17, download now, get started now!

The 40-minute 56-minute mp4 training video plus the software bundle would cost you many times more in a classroom setting with a live instructor, plus travel time and other expenses. You can order now and download now this essential education from me for pennies on the dollar compared to live classroom training.

When you order now for $17, you get:

• My 40-minute 56-minute mp4 video PowerPoint presentation that demystifies Income Valuation and Syndication. I teach you about  the language of real estate finance, the multiple levels of financing (called “tranches”), the time value of money, the cost and structure of financing, and most important how to structure a syndication to get paid to buy income property for other people.
• A macro-enabled Microsoft Excel 2007 Pro-Forma Stabilized Income Property spreadsheet. This easy yet powerful spreadsheet lets you specify the cost and structure of financing, and then it instantly calculates the dollars and yields for your syndication deal. You can instantly recognize a great deal! Let the amateurs and financially illiterate buy the losers! You will focus on the winners!
• Three mp4 video tutorials for the Pro-Forma Stabilized Income Property spreadsheet.
• Four Microsoft Word 2007 Mail Merge Templates for generating a Letter of Intent, Common Equity financing summary, 1st and 2nd tranche private financing summaries. Also a “Common Debt” financing summary when you want to borrow the equity investment, rather than bring in equity members.
• Two mp4 video tutorials for the mail merge templates that are specifically designed for the Pro-Forma Stabilized Income Property spreadsheet.
• A bonus 17-minute mp4 video tutorial showing the simplified algrebra for calculating the Capitalization Rate and the Return on Equity (also called the Cash on Cash Return) according to the cost and structure of financing.
• A macro-enabled Microsoft Excel 2007 Private Financiers spreadsheet. This is a “data filter” database for managing your  own list of private financiers. This spreadsheet quickly and easily filters your list of private financiers based on your specified criteria, and then generates a mail merge sheet. Then you can use Microsoft Word 2007 to pull in the filtered list for mail merging with your own mail merge templates, or just copy-and-paste the filtered email addresses into Microsoft Outlook 2007 and then email blast your latest deal to your private financiers.
• An mp4 video tutorial for the Private Financiers spreadsheet.
• A “Master Lease and Option” spreadsheet for calculating the seller financing parameters for taking over an income property with a “Master Lease and Option”. Includes a mail merge template for generating a “Letter of Intent” with all of the seller financing parameters. Includes a 10-page PDF tutorial file that explains how to analyze and negotiate for a Master Lease and Option.
• Three Five Eight Nine mp4 video tutorials for the “Master Lease and Option”, spreadsheet and mail merge templates.
• The 8-page PDF Quick Start Guide that explains Income Valuation, the basics of syndication, and where to look for private financiers.
• My 28-page PDF Special Report – Strategic Real Estate Investing that provides in-depth explanation of Time Value of Money, structured financing, income valuation, and syndication parameters for you to get paid to buy income properties. This is “Nothing Down” on steroids!

Order now for $17, download now, get started now!

You have my 60-day no nonsense guarantee!

If within 60 days of purchase, you are not completely satisfied with this software and document bundle, you can get a full refund with no questions asked!

Free updates for 12 months! During the next 12 months after you order, anytime that we improve this product, we’ll re-activate your download link for free!

There are only one or two times in a person’s lifetime when opportunity is knocking on their door. The real estate meltdown has hit both residential and commercial real estate. Now is the time to capitalize on low prices, motivated sellers, and the vast amounts of private money sitting on the sidelines looking for great deals! If you wait until the crowd jumps in, then it may be too late!

Order now for $17, download now, get started now!

P.S.: All income properties are always fully financed with some combination of debt and equity. The secret is understanding how to structure that financing to pay yourself to buy the property with other people’s money.

Order now for $17, download now, get started now!