CHAPTER ONE

THE BIGGEST OBSTACLE WHEN BUYING YOUR FIRST HOUSE

To most people, buying a home is their biggest single investment. Many peoples net worth (and many businesses as well) is made up mostly of the “equity” in their home. Equity is the difference between what the property is worth and what is owed on it. (Example: If a house is worth $100,000 and there is a $60.000 mortgage on it, the owner has an equity of $40,000 - $100,000 value less $60,000 mortgage = $40,000 equity).

What many people do (young couples especially) is try to SAVE for a down payment to buy their first house, while paying rent. That is the biggest obstacle to most people trying to buy their first house - they don’t have a big cash down payment.

A typical example is a young couple, John and Mary, wanting to buy a nice house they saw for sale. The price is $50,000. With their joint income they could qualify for an 80% first mortgage (which in this case would be $40,000) and their friendly banker tells them they only need a 20% down payment. Their only problem? They don’t have $10,000 cash for the down payment.

So John and Mary take conventional advice. They continue to rent (throwing their money down the drain) and scrimp and save and finally, after much sacrifice, THREE YEARS LATER, they have saved $10,000 for their down payment. Now they’re ready, they think. They go back to look at that $50,000 house and lo and behold, due to inflation and housing appreciation, the house that cost $50,000 three years ago now sells for $80,000! Their “friendly banker” now says they need, not $10,000 down payment but a $16,000 down payment (20% of $80,000 = $16,000). The couple is heart broken. After three hard years of scrimping and saving they STILL don’t have enough for the down payment.

But that’s not all. Their joint income, which was sufficient for $40,000 first mortgage, is not sufficient for a $64,000 first mortgage ($64,000 is 80% of the $80,000 sale price). And what about the THREE YEARS of paying rent? Their rent has gone up every year for the past three years to the point where it now exceeds what their original mortgage payment would have been.

And what do John & Mary have to show for THREE YEARS OF PAYING RENT with a RENT INCREASE EVERY YEAR? NOTHING! At least with a mortgage, each payment you make pays off some of what you owe. And the rest of the payment which is interest, tax and insurance, is TAX DEDUCTIBLE! So part of
the payment pays off part of your loan balance and the rest is tax deductible. But by paying rent, John & Mary are just helping to make their landlord rich.

But here is a whole different scenario. Bill and Sue had the foresight to order this manual. THEN they put it to work for them. They found a “motivated seller”, they put these techniques to work and were able to buy a $50,000 house immediately! They DID NOT have to scrimp and save for three years, only to be turned down, as John & Mary were.

Now, after 3 years, Bill and Sue have enjoyed the “appreciation” (rising of value from $50,000 to $80,000) of “their” home. Their mortgage payments are “fixed” - not going up every year like rent - and they also have enjoyed the tax benefits and greater prestige of home ownership.

In fact, Bill and Sue bought ANOTHER $50,000 house using these techniques and are currently renting it out for a positive cash flow, plus tax benefits. If Bill and Sue do nothing else but continue to rent out their rental house and make the payments on the house they are living in the will have 2 houses that they own FREE and CLEAR.

Assuming there will be ZERO inflation and ZERO housing appreciation, they could sell their rental house and have $50,000 that they got FREE! They did not pay off the mortgage. Their TENANTS did! And that is assuming no inflation and no housing appreciation.

Let’s get back to the real world (where inflation and housing appreciation really do exist). Even allowing minimum inflation and housing appreciation the rent will most likely continue to rise every year. The value of the house will also probably go up every year.

What will Bill & Sue’s rental house be worth in 20 to 30 years? Nobody can say for sure. It could realistically be worth $200,000 to $300,000 or more! Bill and Sue can continue to rent the house out, sell it, pass it down to their children, or whatever.

If Bill and Sue just did this simple thing (buy one house to live in and one to rent out, total of two houses) at age 21 and mortgaged their houses for 30 years, after 30 years they could perhaps sell their rental house for $300,000, put that money in safe certificates of deposit (C.D.’s) and earn (depending on the interest rate) $24,000 to $45,000 per year just in interest! And perhaps retire at age 51.

If that income is not sufficient, they could buy another rental house within a year of buying their first one, sell both houses for $300,000 each (for a total of $600,000). Put $600,000 in C.D.’s and earn between $48.000 and $90,000 per year just in interest on the C.D.’s., and still have $600,000 in the bank! If that’s not enough they can buy a third rental. If that’s not enough . . . . . . .

You get the point. In fact that is the point. You can actually become rich by investing in real estate! Most people are aware of that fact. But what most people DO NOT realize is that you can invest in real estate without any money! And without any credit! And even without a job! And, you don’t have to wait 30 years to be able to “retire”. Many people have “retired” in 3 to 5 years using these techniques.

I’ll teach you the very techniques I’ve used and others have used to accumulate a great deal of wealth by investing in rental property (single family homes are my preference).

It’s simple to invest in real estate, even without any money. It’s fairly simple to learn these methods of buying with no money down. But it is NOT EASY! It will take diligence on your part. It will take searching for properties (the first part of my local paper I read is the real estate classifieds). Sometimes part of my local paper I read is the real estate classifieds). Sometimes YOU WILL wonder if you’re crazy because bankers, realtors, and sellers will tell you “you can’t buy a house (or duplex or apartments) that way”. But that is not true. I’ve done it and thousands of others have used these very techniques to buy MILLIONS of dollars worth of real estate! It’s being done every day!

So don’t let uncreative bankers, sellers, or realtors discourage you. Keep on looking for truly motivated sellers. It’s like panning for gold or drilling for oil, only better! It won’t cost you anything but a phone call and some of your time to start looking for and working with motivated sellers. And with patience and diligence, you will hit pay dirt!

Get rid of your negative thinking! You CAN buy your first house without cash, credit, or even a job! I know. I bought my first house under those very conditions (all three conditions, actually!).

Read and re-read this manual. Then apply the techniques. Positive thinking alone will not make it happen. Think positive, but also APPLY what you read. You will be amazed at how quickly your net worth will accumulate and snowball!!!

Let’s get started.

TIME ELAPSED JOHN AND MARY BILL AND SUE
1 year Still renting.
Saved $3,200 approx.		 House appreciated.
Most of mortgage payment is tax deductible.
Pride of ownership.
2 years Still renting.
Saved $6,700 approx.		 House still appreciating.
Almost 100% of payment is tax deductible.
Bought 2nd house and renting it out.
After tax benefits, 2nd house is at break-even or slightly positive cash flow.
3 years Saved $10,000.
Ready to buy first house.
SURPRISE! They still can’t buy!

Bought 3rd house (for rental).
1st house now worth $80,000.
Have $30,000 equity in 1st house
Now at a positive cash flow even before tax benefits.

Every Year Thereafter Will continue to rent unless they learn these methods. Will continue to buy 1 house
each year.
After accumulating several houses, they will sell some, and re- finance others for cash. By using these methods, they are not paying for their houses. Their TENANTS are paying for the houses for them.
WHICH COUPLE WOULD YOU RATHER BE?

Yes, John, I love what I am reading so far! Take me to where I can buy the book!