If you have already repaid your mortgage, you can take out another primary mortgage.

Taking out a second mortgage is an additional option to consolidate debts for those homeowners who still have a primary mortgage.

How sound of an idea is it to use a mortgage to consolidate your debts?

You should never use a mortgage to consolidate your debts if the interest rate for your debt is lower than the interest rate you would have on a mortgage.

This would mean that you are paying a higher cost for the mortgage than you were paying on your debts. This is not a sound financial decision.

There is a slight exception to this rule.

If you your current debt has some kind of introductory rate that will expire and leave you with an interest rate that will be higher than that of the mortgage, then a mortgage to consolidate debt is worth considering.

There are other factors, in addition to interest rate, that you should take into account when you consider using a mortgage to consolidate your debt.

When you have less than 20% equity in your home, you are required to pay private mortgage insurance.

If these premiums plus the amount of your mortgage without consolidating your debts is the same as or less than the amount of your mortgage with consolidating your debt, then you do not incur extra costs by consolidating.

However, if the private mortgage insurance causes your monthly payment to increase, then consolidation is costing you.

A lot of homeowners make the mistake of thinking only about the monthly payment of their mortgage in addition to what they are paying on their debts without consolidating in comparison to the mortgage with debt consolidating.

Take into account that when you consolidate debt with a mortgage, you are paying it over a longer period of time, which accounts for the lower monthly payment.

Before you apply for a mortgage, you should find out your credit score.

Chances are if you are having trouble with credit, then you have a less than perfect credit score.

Remember that your credit score will affect the interest rate and terms you receive on a mortgage.

If your credit score is below 600, the likelihood of you receiving favorable loan terms is low; not impossible, just low.

Keep in mind that when you use a mortgage to consolidate your debt, that the debt is not eliminated. Instead, you are transferring your debt from one form to another.

The best way to determine what it will cost you to consolidate your debts using a mortgage or pay them straight out is to use a mortgage calculator as well as a debt repayment calculator. Logic can be flawed, but numbers never lie.

Bankrate.com has calculators that will assist you in both of these calculations. Use the calculator to test out different loan amounts and mortgage rates to get a good picture of how much consolidating will cost you.

Tweet This Post

For a lot of people this can be a very attractive option.

The interest rate on the mortgage periodically adjusts based on an index.

Because of the varying interest rate, borrowers may notice their payments changing over time.

Adjustable rate mortgages are sometimes confused with graduated payment mortgages. With a graduated payment mortgage the interest rate remains fixed while the payment amounts change.

With adjustable rate mortgages much of the interest rate risk is transferred from the lender to the borrower. Borrowers benefit when interest rates on the mortgage fall. On the other hand, borrowers lose out when interest rates rise. Usually the loans are available when fixed rate mortgages are more difficult to obtain.

Key Terminology
Index - the guide used by lenders to measure changes in the interest. Each adjustable rate mortgage is linked to an index.

Margin - the part of the interest rate from which the lenders profits. The margin plus the index rate is the total interest rate. While the index will change throughout the duration of the adjustable rate mortgage, the margin will not.

Adjustment period - the period between interest rate adjustments, usually denoted in the format of 1-1. The first number is the initial period of the loan for which the interest rate will remain the same. The second number is the adjustment period. It shows denotes the frequency at which the interest rate can be adjusted.

Loan Choosing Tips
The index is one of the most important considerations in choosing an adjustable rate mortgage. Even though you don't have control over the specific index that is used by a particular lender, you can choose a loan and lender according to the index that will apply to the particular loan in which you are interested.

A lender you are considering can give you an indication of the performance of the loan in the past. The ideal loan is one that has an index that has historically remained stable. As you consider loans and lenders, make sure you also consider the margin rate that the lender offers.

Many borrowers wonder about the benefits of an adjustable rate mortgage since the payments can increase over time. In most cases, the benefit of an adjustable rate mortgage comes into play when the interest rate of the ARM is lower than the fixed rate mortgage. The possibility of a payment increase is sometimes inconsequential. This is true if you do not plan to occupy the house for an extended period or if you expect your income to increase over the life of the loan.

Avoid Negative Amortization
Negative amortization is a key watch-out when you are choosing an adjustable rate mortgage. This can occur when a particular loan as a cap on payments that keeps them from covering the amount of interest on the mortgage. As a result, unpaid interest is added to the loan, causing the amount of the loan to increase, even though you are making payments.

You can start out with a positive amortization on your adjustable rate mortgage but end up with a negative one due to interest rate increases. The best way to avoid negative amortization is to avoid adjustable rate mortgages that have a payment cap.

Tweet This Post

I think what endears people to Rich Dad Poor Dad is the story. It seems to me that whenever a non-fiction book teaches with stories, it does very well. So, if you're going to write a non-fiction book, weave your info into a story.

Rich Dad Poor Dad is the story of Robert learning the habits of the rich from his best friend's dad. Robert's own dad was a highly paid, highly educated government official, but who ended up poor (this is his "poor dad"). His best friend's dad was not highly educated, but he started lots of businesses, bought lots of real estate, and invested in stocks. He is "rich dad".

Some lessons or themes that keep coming up:

*School prepares you for a job while financial education prepares you for better financial habits that lead to a more prosperous life

*The rich invest in ways that the poor and middle class do not

*The rich invest in assets that produce class flow, and then reinvest that cash flow into other assets

*The poor invest in liabilities, or things that take money out of their pockets

*The middle class tend to go to school, get a job, buy everything on credit, get raises, then buy bigger houses and nicer cars, under-save and under-invest, and then retire on less than what they should have.

*There are 3 kinds of income:
-Earned income (what you make when you're there)
-Passive income (money that comes to you when you're not there...that can come through businesses, real estate income, intellectual property, etc)
-Portfolio income (money that also comes when you're not there...but specifically from stocks, mutual funds, and other such paper investments)

As it turns out, Robert didn't go on to become a rich guy too soon into his adult years, like his best buddy did. Robert went into the Navy to learn how to sail ships, then to the Marines to fly helicopters in the Vietnam war. I might have the timeline wrong, but he he was a top-selling Xerox sales rep for several years. And then he went on to start a successful business importing/selling those Velcro nylon surfer wallets from the eighties. Remember those? After a few years, that business went bust.

Eventually he made the jump into buying assets...income producing real estate...and within 8 to 10 years, he and is wife retired. Then six months later he came out of retirement to start his financial education business...which includes his books, board games, tapes, seminars, etc. In reality, it sounds like he's started a whole ton of other businesses too, but that's what I've pieced together from other books of his that I've read. Notice that most of his activities center around passive income?

It's a great and easy read and should shock you out of your usual way of looking at money. Another one of his books that I like a lot is one he didn't even write by himself...aptly named "Success Stories". It's a collection stories by many of Robert's students that have taken his advice and who started businesses or are collecting assets that produce cash flow.

There's so much more that can be said, but it's time for you to start the adventure of reading a new book. Try to think of "Rich Dad Poor Dad" as financial education; it will make the purchase that much easier to justify.

Tweet This Post

Someone who has truly begun their own real estate journey knows, however, that these successful investors are utilizing a skill they have developed over time. Perhaps they have developed a knack for being in the right place at the right time, and in a sense that is indeed luck. However, that seeming luck developed over years of learning. These investors learned where to go so that deals could find them.

It's like considering a hunter lucky because he tends to find deer in the woods, while you never see any in the city. The hunter is lucky because he knows he has to go to the forest if he wants to find deer. It's mindbogglingly simple when you really think about it.

Ken McElroy, who wrote “The ABCs of Investing,” one of the Rich Dad book series, said that, if you begin to do the things that investors do, you will start to see patterns. You can use those patterns to determine your course of action. It's just another way of saying, “Fortune favors the prepared mind.”

People who just don't get that concept, or who refuse to accept it because it is attached to the concept of work, tend to be magical thinkers and get-rich-quick schemers. They think there is something mystical at work, when the only thing really at work is the investor. McElroy says that there are some people who just don't really have the desire to do the work. Those tend to be the magical thinkers, and they are that way because they want to be.

However, if you do have the desire to do the work, and all you need is to be told what work to do, then there is hope. You can learn the technical skills. Those are the people, McElroy says, for whom he wrote “The ABCs of Investing.”

Elsewhere in the Rich Dad series, Robert Kiyosaki, who started the series, said that the people who do lose big in real estate investment are typically the ones who jump in without first taking the time to learn about investing. They simply don't know how to do it. That is what people don't understand about getting rich, and more specifically about real estate investing, that it is a process. You are no more going to swagger into the arena, plunk down your money and make a killing any more than you would swagger into a hangar, jump into an airplane and start doing loop-de-loops. That approach is likely to get you killed. That approach in real estate investing is likely to cost you a lot of money.

But if you take it slowly and allow yourself to make plenty of small mistakes that won't make you crash, then you will begin to build a base of knowledge. You will begin to see how it all fits together and you will start to make money.

It is a process.

Tweet This Post

Because if you do, I'm going to tell you how.

You MAY not want to read what I'm about to write because it WILL remove excuses you have. In fact, after this very simple tip, you will no longer have the ready-made excuse that perhaps you've used in the past. I will strip it away like Dad rips off the warm covers on a winter morning.

The most common excuses that I hear folks offer for not getting off their duffs and starting their investment careers are (1) time and (2) knowledge. (The number one unspoken excuse is fear.) For this article, I am REMOVING the time and knowledge excuses. I'll get to the fear part…briefly.

Okay, if you're still reading, here goes…but I warn you. You may not like it.

Turn off the stinkin' TV!

I mean, avoid it like the plague! It's robbing you blind. To be precise, it's costing you tens of thousands of dollars per year if you are like most Americans and tune into TV or watch movies for 1-3 hours a day.

What a country we are. The average American buys a TV and then that TV costs many times more than the cost of the set per year in opportunity loss. We buy, bring it into our homes, and give it a place of prominence, and let it steal from us!

As many of you already know, I boldly say you and I can make an extra $10,000-$50,000 per year on a mere 10 hours a week by rehabbing real estate. I know this because I do it.

A little math…let's say you watch TV a mere 1.5 hours a day on weekdays, and sports on the weekend at 2.5 hours a day. If you give up all TV, that's 12 and a half hours a week.

In other words, you can watch a game on the weekends and STILL have 10 hours a week to devote to a real estate investing career.

Let's say you are someone who is on the LOW end of American TV watching habits and you watch an average of 1 hour of TV a day. (Which means you probably don't watch sports.) In that case, turning it off means you need to invest a mere 3 hours a week. Do you have 3 hours a week if it pays $10,000-$50,000 per week?

Reality check. If you watch football, you probably watch a college game on Saturday, a pro game on Sunday, and Monday Night football. In that case, that's a minimum of 7 hours per week of the 5-month season…gone! Many football fans watch more!

So what could you do with that time? Get the knowledge you need to start with. How many books or courses can you work through if you honestly devote 10 hours a week? Since the process of rehabbing real estate isn't rocket science, it's a process that must be learned, it isn't going to take many weeks to be flush with knowledge and ready to put a business plan into action.

There will be a few reading this that don't watch much TV at all. (You are rare indeed!) Examine your habits and see where you time is going. There is often time sinks that you can capitalize on by changing your habits. Do you surf the net for hours on end? Do you spend 2 hours a day pumping iron.

Or…oh, this one might hit close to home…do you sleep 10-12 hours a day?

Chances are there is a way to eek out some hours by a relatively minor change in habits.

I can hear it already…GIVE UP TV?! That's not a minor adjustment!

Baloney.

Let's see how important TV really is to you. There are two ways to think about this.

Approach number 1:

Let's say I knock on your door and wave ten thousand dollars in front of your face. All you have to do to get it is give me your TV for a year. Would you go for it? What if I offered you twenty grand?

Approach number 2:

Let's look at what giving up TV would mean to you.

- You wouldn't be able to talk about what happened on TV last night at the water cooler at work. I mean you could, but you would not have watched it.

- You would miss seeing first hand who beat who to a pulp on the field, or on the court.

- Shows will come and go, and you will have never have seem them.

Perish the thought! You'd miss stuff on TV, but the sun will continue to come up, the Earth spins, and your financial picture gets a lot rosier!

Is the time you spend in front of the TV really worth what it's costing you? $10,000 or $20,000, or even $30,000 or more…every year?

I'll go a step further. You could stop watching all your favorite programs and guess what, your life would be unchanged. If you did something positive with that time you spent watching them, your life will be changed for the better.

For you sports fans…Let's say "your" team wins the championship this year. Does that change your life in any way? Do you get a raise? Do you move into a better house? Does it really change anything that matters? Sure, you get to tell folks that they are "your" team even when they aren't and nobody on the team knows you from Adam. In fact, if "your" team wins you will probably be even more into them, spend more time watching TV, so the cost to you goes up!

I don't mean to sound like I'm on my soap box, but there are many folks who need a wake up call. Capturing TV time and using it to your financial benefit is a relatively minor habit adjustment that can result is some serious financial gain. Spend a month learning, then put a plan into action. That's how things get changed.

My close friends and family know that I rarely turn on my TV. Years ago, I made the commitment to use my time better and since I have improved my life immensely by doing so. So, I want you to know that I am living my own advice. While it's true that I've never seen a minute of "reality" TV, and I prefer to see my sports live, my life is quite different now! I'll never look at TV the same again!

You can do the same. This minor habit adjustment can mean you take the reigns of your financial future and drive it where you want to go.

I knew some of you would not like it, but there it is…the formula to free up a LOT of time and how to gain the knowledge you need to make this coming year the most profitable yet. Will you do it?

Now, what about the fear part? This article is getting kind a bit long, but I have written a six part set of articles to help in that combat fear. I encourage you to click through to my website and click on the "Nothing Held Back" newsletter. There you will find out how to get the articles, or mini-course I call it, at no cost.

Tweet This Post

Developers are purchasing run-down apartment buildings in properties that are close to jobs and schools, converting them into affordable condo units, and refurbishing them with more extravagant upgrades, such as carpeting and stainless steel appliances. They then will revamp the common areas and put them on the market. To help them sell, many are including incentives and even offering to pay the closing costs for buyers. Many first-time homebuyers and retirees
are purchasing them as they feel more secure.

Luxurious condos are also on the rise. While the ownership of these are centered more around a buyer looking for a quality lifestyle, extravagant amenities, and great locations, there are many that are willing to pay the price. In Florida last year, a 4,800 square foot condominium was sold for $4.65 million dollars. In 2005, California experienced a 90% jump in condominiums priced over one million. There were 1,677 condo sales, all in the one million dollar price range.

Many of these luxury condominiums are located in areas of wealth and many have top-notch views. Amenities in such luxury condos may include quality furnishings, such as appliances, granite counter tops, and window treatments. Many luxury condo buyers like the fact that the properties are secure and feel their items of wealth are protected in this type of environment and they don’t have to pay the added cost of security.

Condo hotel developments are on the rise in larger cities, as well. This type of luxury living affords one the opportunity of living in their own condominium with all the amenities of hotel living, such as room service, maid service, and concierge service. Research shows the average condo hotel buyer to be between the ages of 35 and 50 years old and many simply are purchasing them as either an investment property and vacation property.

The 576-unit condo hotel, the MGM Grand in Las Vegas, sold all its units during its preconstruction stage within a two month period. In other areas, such as Florida where the first condo hotels were developed, sales are doing well. In many of the areas, such as Miami, there isn’t any undeveloped land available. Therefore, developers are simply taking advantage of the market in any way they can. These condo hotel sales are hot and when they are not on the water, they offer luxurious living at an affordable price.

There are several reasons why many prefer condominium living over a single-family dwelling. Many consider themselves to be living in a community within a community. While there may be strict regulations or rules in the condominium development, most find themselves feeling safer, as well as more involved, than they were when they lived in a single-family dwelling. Condominium developments generally charge a monthly fee to all owners to take care of the outdoor maintenance, as
well as security of the building and upkeep of the common area. This allows the condo owner to simply enjoy all the amenities of condo living.

The fact is condo development is on the rise all over the United States and Canada and will continue to do so as long as there are buyers. These condo buyers are simply looking to purchase the lifestyle of condo living. For many, feeling more secure in an affordable home, being pampered by a doorman, and living close to the city is what condo living is about.

Tweet This Post

What are some sources for buyers?

Your local real estate investment club is a great resource for buyers. If you are an investor it is absolutely critical that you know the investors in your area and have contact with them. When you meet them find out what part of investing they focus on and take note. Certain investors at your local clubs may not be interested in buying properties from other investors because it is not their particular concentration. But those that are looking for those types of deals are great. You know they are investors so your real estate investment clubs should be your first source for creating your buyers list.

Another source for potential buyers is from signs and classifieds. When you see any advertisement that says “We Buy Houses” or any other advertisement that is clearly from an investor, write down the number. When you get home call the number and just start talking to the investor. Find out what sort of properties they are interested in. Take notes on each conversation that you have and keep meticulous records

One of the best sources for a buyers list is your local section 8 office. Call your local office or visit them and get a list of the local landlords in your area. This will give you a large list of people who are active in real estate investing and are potential buyers. Again, once you have the list contact each investor and talk to them and try and get a feel for what types of properties they are looking for. On a side note, you may also be able to find a burnt out landlord that would be willing to sell you their rental property or properties at a discount. So not only can this step help create a buyers list but you may also generate a few good leads from this easy step.

Remember when you are collecting all these names to take lots of notes. Get each persons contact information and as much other information as you can. One critical piece of info is the email address. When you have a property and you have 100 emails of potential buyers, all you have to do is send out one email and you have reached 100 potential buyers in literally seconds. Regardless of the strategy I am going over next, this is a very powerful way to flip your properties very quickly.

So now you have a buyers list, what next?

The next step that I recommend is to sort your buyers list. The reason you do this is to take away a lot of the hassles you might face. If you have your list separated into an A, B, C, and D list; you will find wholesaling a lot easier. You're A list may be those that can bring cash to the table within a week. Your B list may be those that have pre-qualified for a specific loan amount. Your C list may be those who have not pre-qualified but you believe could be able to get the financing in a month's time. Then your D list may be those who you have no reason to contact because you don't believe they will be able to get the money from anywhere.

However you divide your list up, this process will help out because you simply progress down your list. Start with your A list then your B list and so on down the line until you have a buyer and the property is sold.

I have also found it helpful to have a website where you can put pictures and descriptions of your properties. This however is not necessary however due to a new program a good friend of mine has created where you can list you properties and anyone can view them. To listen to an interview I conducted with this person and find out more about his program visit .

I hope you have found this information helpful and you are able to grow your buyers list bigger than ever before. To find out more strategies for wholesaling as well as other investment techniques, please visit us at .

Tweet This Post