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Invest with instant equity cash flow and more
Invest in real estate without large down payments, new loans, or large cash outlays. We are looking for
cash investors to buy cash flowing beneficial interest in a property held in trust. The trust we use is very similar to that which
President Obama had on his Chicago home.
You can buy the beneficial interest, most of the time, for 67% of value, giving you instant equity.
The beneficial interest comes with cash flow. You are placed in an equity shared situation, where you will get a share of any
future appreciation.
You have three profit centers:
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Beginning equity
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Cash flow
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Shared equity
Generally you start out with purchasing 100% of the beneficial interest offered for about 67% of value.
So, if $45,000 is offered in beneficial interest, you will contribute to the trust $30,000 in cash. When the property is
sold or refinanced, you will get $45,000 returned.
In figuring what monthly payment we can offer you, we need to take into consideration of the current
mortgage payment, area rents, our positive cash flow goals, and resident beneficiary income tax savings.
The amount of monthly cash flow is based on the resident beneficiary's income tax savings versus the cost of
rent. In general, you can figure it to be about 0.5% of the amount tendered per month. With the $30,000 you put into the
trust, you will get $150 per month for the life of the trust.
You will receive about 25% of any new equity acquired, if any, during the trust period. This is an
unknown variable and may or may not produce a profit. As with the beginning equity, this is paid at the termination of the trust.
How the Trust works
When we find a seller that is welling to keep their loan in place, but would like some of their equity in
cash, this is the steps to accomplish this.
We first ask the seller to create an Illinois style Land Trust.
This is followed by the beneficial agreements being signed to create the beneficiaries. You will
be a beneficiary.
The next step is to create the assignment of beneficial interest. The amount of beneficial
interest offered will show as your contribution to the trust. Your cash investment is 67% of the amount offered. If you are
buying $45,000 beneficial interest for $30,000, you beneficial interest contribution will show $45,000.
The last step in this process is to have the resident beneficiary sign the Triple-Net Occupancy Agreement.
All the costs of setting up the trust are paid by the seller and the person that will be the resident.
The resident beneficiary will pay the majority of this cost.
Example #1 of a profitable investment
We have an owner of a home willing to keep there loan in place, but would like cash out to move and buy
another home. The current value of the home is $200,000 and the mortgage is $150,000.
We offer them $180,000 with $30,000 cash out. For this example, they except.
You come in and put up the $30,000 (to be held in escrow until we close). We give you a contribution
of $45,000 for you 25% beneficial interest you are buying.
You now have $15,000 in instant equity in the form of a contribution to the trust.
We will get you approximately $150 in cash flow each month the the property is held in the trust.
You own 25% beneficial interest in the trust, so, any future appreciation is shared with you at 25% of the new equity.
On a trust that goes for 5 years, then the property is sold on the open market, you get $15,000 in
beginning equity, $9,000 in cash flow, and assume, in five years, the value when up by$50,000. Not taking closing cost into
consideration, you will get $12,500 of the new equity (note: this amount is actually smaller when closing costs are considered).
You have not netted $36,500 in profit for a $30,000 investment, with no management issues, no new loans, no repairs, no maintenance
issues, and no vacancies to deal with. You can figure the ROI on this example.
Example #2 of a profitable investment
We have an owner of a home willing to keep their loan in place, but would like cash out to move and buy
another home. The current value of the home is $200,000 and the mortgage is $170,000. They would like $20,000 cash out now.
We offer them $190000 with $20,000 cash out. For this example, they accept.
You come in and put up the $20,000 (to be held in escrow until we close). We give you a contribution
of $30,000 for you 25% beneficial interest you are buying.
You now have $10,000 in instant equity in the form of a contribution to the trust.
We will get you approximately $100 in cash flow each month the property is held in the trust.
You own 25% beneficial interest in the trust; so, any future appreciation is shared with you at 25% of the new equity.
On a trust that goes for 5 years, then the property is sold on the open market, you get $10,000 in
beginning equity, $6,000 in cash flow, and assume, in five years, the value when up by$50,000. Not taking closing cost into
consideration, you will get $12,500 of the new equity (note: this amount is actually smaller when closing costs are considered).
You have now
netted $28,500 in profit
for a $20,000 investment, with no management issues, no new loans, no repairs, no maintenance
issues, and no vacancies to deal with. You can figure the ROI on this example.
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