Reader TTS

The following is an edited excerpt from _Guns, Drugs or Wealth_ by Jerry Ford. One of my favorite ways to buy properties is OPM, which stands for Other People’s Money. If you are serious and

really do your homework to find great deals, people will invest in the great projects you find. You can negotiate their share of the ultimate profits as you see fit. For example, if Katie

doesn’t have money for a down payment, but has a great credit score and a consistent job and income, she can partner with Nate, who has cash but bad credit, on a deal. The partnership is

good for both because each brings something unique to the table: One of them supplies the cash and the other is able to get the mortgage. In a deal like this, I typically structure it so

that eighty percent of all profits go to the person who fronted the cash (here, that would be Nate) and twenty percent of all profits — plus the tax break — go to the person who obtained the

mortgage (in this case, Katie). You can also come to an agreement about when you want to discuss selling the property — depending on the market, of course. If you agree to wait at least a

year and one day before considering a sale, you save a ton of money on capital gains taxes. For an extra sense of security in a deal like this, you can execute a promissory note to secure

your investments. This is a written promise by one party to pay the other a specific sum of money. An alternative is a joint venture (JV) agreement, which clarifies all of the terms and

conditions of the arrangement between the parties. Additionally you can put all parties on the home insurance for more security. These types of agreements prevent anyone from getting any

funny ideas — like running off with the money or property. Let’s take a look at how the specific profits would break down in my example. Nate gets eighty percent of the rental income every

month and will eventually get eighty percent of the profits when the property is sold. That’s in addition to getting back his initial investment. Katie gets twenty percent of those same

things, plus the tax incentive of paying a mortgage. So, what does that amount to in real numbers? Let’s say the property cost $100,000, Nate puts down twenty percent, or $20,000. They rent

it out for $1,600 a month, and after all operating expenses ($300 mortgage payment, property taxes, insurance, maintenance fees, etc.) the profit is $1,100 a month, to be split eighty-twenty

between the two parties. After two years, Nate and Katie sell it for $160,000. The rental income for the two years they owned it was $26,400. After they pay off the remainder of the

mortgage ($92,800, give or take, depending on the interest rate) and Nate takes back his initial investment ($20,000), they have $47,200 to split. Nate’s share overall is eighty percent of

that rental income ($21,120), plus eighty percent of the sale price ($37,760). Nate makes a total of $58,880 before taxes. Katie’s twenty-percent share of the whole deal — not including the

tax breaks she’s gotten, especially if she lived there — is $14,720. Not bad for no money down. Katie has made enough money to put a down payment on another property, or to pay for a lease

on a luxury car for two years. This is all without lifting a finger. This is one way to get creative, but the options are limitless. _For more advice on buying property with other people’s

money, you can find __Guns, Drugs & Wealth __on Amazon._