Some Investor Options When You Get Fast Cash For Your House
Good morning. It is Friday once again. It’s time for Fan Mail Friday, where we answer questions from sellers just like you.
All right, the question we have from our seller this week was one I very rarely ever get. “What do I do with the money?” What do I do with the fast cash once the house is sold? I do not usually get that question from sellers, but this gentlemen is moving in with his daughter once the house is sold. And he really doesn’t have a plan for reinvesting all that money. So, he’s going to get a nice, fat fast cash check. He just doesn’t know where to put it. So, I shared with him some of the places that an investor would look at, if he was going to be suddenly having a large amount of cash sitting there in his hands.
The first one was an investment company that makes loans to rehabbers. All right? The advantages to him was, number one, he gets an 8% return on his money. So he’s getting a good return on it. They find the borrowers, and they also service the loan. The downside to using this particular firm is that your money… First off, you have to have all the money for any particular borrower. All right? So that’s number one. You may not have at all. Secondly, is that your money may sit idle from time to time and between loans. So that was one option. It does give him some more liquidity than he would have and some of the other options, though.
Another option is a similar type of firm. Only this firm allows you to invest in a fund that they then loan out to rehabbers. Now, the advantage that the seller in this case was that he gets an 8% return, just like the other firm does, but now his money is in a fund. So, he doesn’t have to come up with the entire amount that the rehab is going to borrow. All right? The other thing is he can take his interest, and he can keep it in the fund, which basically increases his returns over time. And he does not have to worry about idle time that his money may experience as in the first example,.
The third option I presented to him was selling the house with seller financing. Now, his house would rent for between $1,200 and $1,400 a month. He could sell that house to a landlord type. As long as they can get the terms that they need to generate good cashflow, they would not be as concerned with the price. So, the price we came up with was $150,000. He could easily sell it to a landlord with favorable terms to the landlord for $160,000, so it actually increases his return on the sale. He could get 8% on his equity in the house, and that would be written up in the note. We talked about the fact that he’s getting a monthly check that enhances his retirement income. The third thing is that his balance is always secured by a mortgage on the property. So if things did happen to go south for whatever the reason, he can step back in and take over the property. And fourth, if the term of the note exceeds his expected lifespan, he can have written in the note, a successor beneficiary. The note payments, in that case, would go right to his successor beneficiary and bypassing probate altogether. And so, it also acts as a form of estate planning off for him on his behalf.
Of course, he could always put the money in the stock market. He could buy cryptocurrency, or he could buy a bank CD. He did not like any of those options.
So, the point is an investor realtor has more tools in his or her tool belt than a normal realtor would. While we are trained in the normal sales process, we are also trained in creative financing techniques and alternative investments. Our pony knows more than just one trick. So, when you’re looking to sell your house, look for an investor realtor versus a straight realtor because an investor realtor can craft solutions that would better fit your needs than just a normal sale.
So, as always, at the end of these sessions, if you know somebody who’s looking to sell their house here in the Ocala, Gainesville, Leesburg, Tavares area, have them call 352-480-0955, or go to our website www.rapidhomedeals.com. And we’ll see you next Friday.