Backside Benefits

* Car dealer “take any trade, running or not”

* Lot dealer “property in foreclosure can be used as down payment”

* “No down payment” house buyer comes into the brokerage to see if the TV ads for “No Down” classes are really possible. R.E. salesman Cliff Weaver says, “Not often, but what is possible is to use something you have, like a car, tractor, RV, or other real estate as a down payment in lieu of cash.” The buyer proposes a used above the ground swim pool and a deal is made where the buyer now owns a home for his family with some TLC needed and his payments are only $110 a month more than the rent he was paying. (One off shoot, is to have it be a shared equity where the seller keeps 40-60% of the appreciation as part compensation when later sold or appraised for refi).

* Famed S.E.C. member from long ago, Jim Reid, used to offer 4 lots valued at $8,000 each with $900 loan on each payable at $65 a month ($32K – 3,600 = $28,400 equity) in exchange for a $15K over priced lot (or retail priced 4plex with a big loan to assume) providing he could get $300 cash right there at the meeting to pay his room with (pleading cash shorts).

* Proposed client hears about exchanging and asks what he can exchange for with the lot he bought 4 years ago promotionally sold at “Resume Speed Ranches” for $16,500 and now has paid down the carry-back loan to $8,500 payable at $110 a month. Even though the exchange broker knows (like timeshares) the cash market for these lots might be $4-5K), “I think we can put you into this 4plex over here providing you are capable of managing tenants and doing the maintenance with a combination of financing that will be a slight negative cash flow after income when it’s 100% occupied, as it is now, of only $100 a month. As the loan is reduced and the property appreciates, you may eventually be able to raise rents and refinance to get away from the negative cash flow, while having some tax deductions from the first day, and a deal is cut.

* A start-up non-profit org that needs a facility to operate from was found to occupy an upstairs residence over commercial. While the cost of preparing the residence for renters was prohibitive, the non-profit could use volunteers to retro the space for their own use if they could get occupancy. A deal was cut where the non-profit would lease “as is” with all the
responsibility to comply with municipal requirements for a 2 year period, and options to renew at a rental amount equal to what it would be if fully fixed, but NNN such that taxes, insurance, and utilities were also paid by the tenant. The landlord committed to make contributions to the non-profit for two years of an amount that covered all the rent owed down to $10 a month NNN. The non-profit was delighted, paid $50 advance 5 months rent, and reported 6 pickup loads of debris removed the first week.

Many more stories or alternative situations could be related here, but suffice it to stimulate the transaction thinking of DEALING FOR BACKSIDE BENEFITS.

See if you can project what the backside benefits were in each of the given examples. If you don’t see them, go back to the stock market where a computer can tell you your benefits in 20 second time delay.

There’s a whole world out there without cash.

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