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(your email address) - where the real estate investor market is always hot. With real estate credit virtually non-existent, facilitating a direct 1031 exchange between property owners is a great alternative. is the oldest, most trusted, and fastest-growing online exchange website for the trading or property swap of commercial real estate properties.

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When -   When a person has a high interest, low equity, negative cash flow property.
Situation -   Jones had been forced to take another property in an exchange situation. He didn’t really want the property as it consisted of a small house worth approximately $40,000. The loans against the house totaled $36,000. With the interest rate at 14.5%. The property payments were $447.00 per month and the property was rented at $325.00 per month. Accordingly, this “$4,000.00 in equity” was costing him almost $200.00 monthly negative cash flow including the taxes, insurance, and upkeep.
How -   Jones approached the lender, indicating there was really no equity in this property and he was interested in “deeding back” the property rather than allowing it to go delinquent, bringing about a foreclosure. The lender appreciated his contacting them and working out arrangements to allow the “deed back”.
Results -   The lender did not have to foreclose on the property and Jones got out from under a big negative on a small property.

Situation -  
Jones and his wife are a young couple just getting started. They don’t have a and down payment and don’t qualify for the loan on a house they would like to Situation - own. Smith is an investor who likes the benefit of real estate ownership and shelter but doesn’t want management.
How -   Smith and Jones agree to purchase the home Jones wants. Smith puts up the down payment and qualifies for the loan. Jones then “rents” the house for the payment and pays all taxes, insurance, utilities, and any and all repairs. The lease period is for 5 years with the contract between Smith and Jones stating that at that time the house would be appraised and Jones would pay Smith all of his down payment, plus ½ of the appreciation.
Results -   Smith has a 50% equity getting all the shelter and 50% of the growth. He has no management. Jones gets the house he wants and 50% of the “growth,” at the end of the 5 years Jones can qualify for a new loan.
Danger -   In some cases, such as divorce, the occupants of the property have sued the investor for “their share” of the growth even though they haven’t lived up to their part of the bargain and gotten it. The author believes a “lease” with “option to buy” may be a better vehicle for all. Consult your attorney!

When -   Jones wants to acquire more real estate but doesn’t have the cash.
Situation -   Jones want to acquire a single family home for more tax shelter and growth but doesn’t have the cash for down payment.
How -   Jones finds a motivated seller who really wants out. He has a $60,000 home with a $30,000 equity. Jones offers a $30,000 note payable interest only at 10%, due in 10 years for the equity. Proposal is accepted!
Variation -   Jones offers to get a new loan for $45,000 cash, gives seller $5,000 cash and puts $10,000 in his pocket. He then gives seller a $25,000 2nd back on the property.
Warning -   Author highly recommends against this kind of transaction. They usually end up in lawsuits and everyone loses!
Variation -   Jones gives seller a blanket note for $30,000 covering property being acquired and other property Jones already owns with a reasonable equity. Note calls for a release clause when $15,000 in principal has been paid.
Results -   A no down payment transaction can be good for all if it is properly structured!

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