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What is the difference between a 1031 Exchange and an IEE or Contract Assign. I recently contacted a Realtor to work with and when I explained the IEE and Contract Assign strategy she said it was a 1031 Exchange.

Jim

Unfortunately, for this Realtor they do not seem to understand both 1031 exchanges and IEE.

Instant Equity Exchanges are similar to assignments of contract. It is a way to profit from a transaction without ever owning the property. You will get an offer accepted with the seller. You will then get another offer accepted between you and the new buyer at a higher amount than your first offer. Once this is done you will have the seller and the new buyer create a contract for the same amount the investor and yourself set up. The difference is your profit which you set up with the seller to pay to you.

1031 tax exchanges are like kind exchanges. You don't want to pay taxes right now on property you sell. Instead, you sell, then transfer all or part of your profit into another property without taxation. There are some limits to this and you must use a qualified intermediary but this is the sense of the process.

You would start by creating some type of business entity whether that is a LLC or a Corporation or whatever. Once you have this you will receive an EIN (Business identification number). When you have the EIN number you can take this to a bank and ask for a business account. They will set up a business account using your EIN number. This is the first part - getting a business account.

When you have a business account you can ask for a loan. You do not want to get a loan using your credit score. Instead you want to get a loan using the EIN number. As explained in the EDGE conference to get the EIN number used as the primary security you will add money to a checking account. When you have money in a checking account you can ask for a loan using just the EIN number and not your social with the checking account as collateral. This works because the bank has nothing to lose. If you fail to repay them they take your checking account.

Setting up EIN number loans will improve your business credit and/or credit line depending on what you are trying to do and how you repay the loans.

You can find them by going to the left hand side under "Forms and Docs" or you can click here:

http://www.deangraziosi.com/documents/Lease-Agreement.pdf

http://www.deangraziosi.com/documents/Lease-with-Purchase-Option.pdf

You may also want to get a lease and option from a Realtor in your area. This way you know that you are getting a contract that is state accepted and approved. Most contracts are general contracts and it is always suggested that you have a lawyer look at your contracts if you use a general contract.

Enjoy and best of luck.

I drilled for more info on that place! the House after the demo inside Is apr.( $22,000+ $25,000 )the RE-Hab cost Is $ 35,000 , and I found a intersted Buyer. the comps in the area are ( $60,000 + $80,000 )3 bed-1Bath.the person that is interested in buying said he has about $70,000 on a va loan .I think I can make $500. to $1000. and just assign it to the new Buyer. the Market is a little slow out here for sales.this is what I got so far.

thanks for any ideas.

JayBob

How Does Bird dogging work in detail,

do you have to have a contract for both sellers and buyers?

How Can we know for sure we can get paid for finding great deals?

Whats the limits to Bird Dogging?

Can We Do this in NY State?

I just want to know More about this...

Thank you And God Bless

Dear Coach,
Is my membership still valid for Dean's coaching program?
I want to get started with it again. I need to change my life around.
I joined it in December of 2007, but was only able to do it for a few months.

Unfortunately I have not bought a property yet.

In 2008 my husband I started a business with an awesome new product, which we had great hopes for.
It has failed and our savings are used up. We are in a big debt - $82k, and
my husbands job and my part time job doesn't pay the bills. We are both
looking for better paying jobs. We got behind because we had son who was born 3 months premature at 1 lb 8 ounces. I have had to stay home with him to insure his health.

I have the EDGE program and have been calling
personal rep. about Probates and liquidating the home of the deceased. No opportunities yet, but I keep trying.

I would really appreciate your help to let me continue the course, so we
have hope to get back on our feet soon. The last few years have been very trying times. I need the coaching to help give me direction and support.

I love Dean's amazing products and the support you guys have.

Please let me know as soon as possible.

Thank You,
Skylar St. James-Wilcock
skylarstjames@****

Hello Coaches,
My question is how many buyers should I have before I start marketing for houses?
And what have you found to be the best way to find retail buyers?
And where do the 24 hours message company for automation?
We recently joined the success Team and we have been marketing for buyers. We have a few wholesale buyers on our list and just a couple retail. It took a while before I menatally made the difference between retail and tenant buyers. We have a couple retail.
Thanks in advance

What is really step one when you have super bad credit and maybe $2000 to play with.

Thanks for the reply and the good information. I've got some work to do in order to get this into place.

Ok,here's a deal I want to pursue.

I found a large rental farm that a gentlemen wants to get rid of(that is not listed with a realtor)because he wants to retire after doing it for 20-30 years.

There are many of each of the propeties Duplexes, Triplexes, 4-plexs, 15 Units with 30,000 sq ft of commercial, more commercial in one of the Triplexes. Couple of 12 Unit bulidings.garages etc. About 54 units total

All the buildings are up to code and in good/great condition if not just built and in good neighboorhoods.

They are all rented out with really good rates for our area. Tenants pay most of the utilities if not all on the majority of them.

His asking price approx. $2.6 mill. He is willing to owner fiance and here is the terms he is asking. 10% down, 8% interest at 30 year rate and a 5 year balloon. He says this is his way to know if your serious or not. He is willing to give a 5% discount on the prices if I buy him straight out.

Not that any of this scares me- I am just fine with this many and I would like to have more-but here's my stumbling block. How do I pursue this with no money down from me, because I don't have it or the credit to get it.

I have done a little research and two of the properties that are in my local town, he is asking 40K more and 80K more than the FMV. The others are in a different State across the bridge from us and not sure as to looking them up yet but I will figure it out today. And I am going to go and use the total market tool from Dean right now.

I have read Dean's books-several times and reading on the site many, many stories. I just need some very clear directions. And some bargining tips. I am not even going to ask if this is possible- I know I can make it work. Just need some help-Please.

No is not a option.

Thank you for your time and valuable info that you provide to all of us here! I feel that it is truly a blessing to have been directed towards Dean and the DG family.

hillvalley

Hi guys,

OK here is my question. It concerns buying notes for cash flow in similar fashion to Talmadge Bell's presentation at The Edge event.

My question is hypothetical. Say you had $50,000 in capital. Do you, as coaches, think it is possible to be making $2000-$3000 / month cash flow within 12 months?

For example, you buy a $20,000 note for $3000 (deep discount because it is a non-performing second). Talmadge's rule is that you recover your investment within a year, so on that note, you'd have to get about $300 / month. Therefore $300 X 10 is $3000 a month if you can get 10 of those notes. And 10 notes would cost $30,000.

I understand it takes time to market for and acquire these notes but my main concern is how do you get the "payee" to actually "pay" you since, historically he hasn't been!

If someone who knows the note business can validate my numbers above and there is a good chance of making $2000 - $3000/ month, then I am very interested in purchasing non-performing notes!

Thanks,
Steve

The answer to what you are looking for is yes.

Yes, technically you could get about $3,000 a month in income. You will of course run into situations where the payor does not pay and where you will not be making $300 a month on each note.

The example you give where you purchase a $20,000 note for $3,000 is a great idea but getting $300 a month for 12 months would put the note interest in the area of 18%. This would be hard to get.

You can work with the payor to get them to pay more so they can catch up but in all you may find it a little more difficult to get the kind of numbers you are looking for.

However, consider getting the note payor to pay $150 (about 8% interest) for 6 months then resell the note for 3-4 times your investment because the note is a paying note now.

Nathan,

Thank you very much sir.

I understand what you mean. Lower the interest rate on the note, let it season (improve the note) for 6 months, sell it. Cool.

That makes complete sense. I'm going to reread this post later when I have some downtime to digest it all.

Steve

Great question. Because of the nature of the properties you are working with you will need more information to determine the offer price and whether or not this is a good / great deal.

First off what are the profit and loss statements telling you? Once you know this you can find or determine the NOI (net operating income).

Once you find the NOI the question I would ask is what is the cap rate (noi divided by the asking or selling price of the property)? Once you know a measure such as the cap rate and items such as debt coverage ratio the question I would ask is how does this compare to the surrounding area?

Though the properties may be rented right now what is the yearly vacancy rate as well as have you seen two years of rent rolls?

Another note: Pro-forma numbers are not what we are looking for.

The answer to this will all depend on what you end goal is. Are you trying to purchase and hold property? Are you planning on flipping and / or assigning properties?

My bet or guess would be that you are planning to flip properties. This works well to create large amounts of cash quickly so that you may use this for later.

If I was going to go down this route I would first find buyers. Particularly, I would be looking for investor / wholesale buyers that can purchase cash. Once I had this I would find the properties they are looking for and do an assignment of contract.

Question 1) Ii would generally suggest obtaining 5-10 buyers. If you are looking to add retail buyers I would suggest 5-10 qualified retail buyers as well as 5-10 investor / wholesale buyers.

Question 2) My favorite ways to find retail buyers are by placing specific ghost ads in grocery stores and by delivering flyers to rental properties. We also have a local service similar to Craig’s list that is provided by a local radio show. You may check for one of these as they tend to do well for me.

Question 3) I do not understand the question maybe restate this and I will answer it.

I have looked you up and found that you have recently contacted the advisory line. This is a great re-first step. I would suggest as you have done contacting and continue contacting the advisory line.

I may suggest that you contact the advisory line and ask for a specific course of action for you to proceed from this point forward. I give this suggestion because as I was looking at your account I did not find that you had a specific path. This would help a lot when getting back into real estate. What we will do for you is run through your resources, goals, hopes and knowledge. Based upon this we will create the specific course of direction to get you going.

Keep with the advisory line and the professionals here and we will help you stay on this path and do great.

Bird dogging works essentially this way: You find a property where the seller is motivated. You then contact an investor and tell them about the property. The investor does the due diligence, negotiations then makes an offer. When they purchase the property they pay you a fee for telling them about the property. Usually the fee is about $500 - $1000 for the information.

Bird dogging is different from assignments of contract in that during assignments you do the due diligence, negotiations and make the offer then sell the offer to the investor. Because you control the deal and have done the work you get paid more.