Rogue One, Note One
A Rebel's Way of Real Estate Investing
At AJA Realty Investments, we have done the traditional investing. We have bought apartments and we have had single family rentals. Now we have joined the Rebellion against the customary method of buying these assets. We are acquiring assets through an alternative method, the purchasing of non-performing liens. In simple terms, we buy the defaulted debt that is backed up by real estate. Most of the mortgages we buy were originated by a bank that then sold it to Fannie Mae. Fannie Mae will sell the non-performers to hedge-funds in large pools of hundreds of millions of dollars. What the hedge-funds don't want, we wind up getting from them. Sometimes we buy one offs and sometimes we buy small pools.
The one we are presenting here was sold to a hedge-fund who then created a Contract For Deed (CFD). Now this CFD is a non-performer. So we bought it. We like it because it is a great candidate to modify. Why? Because we bought it at an amazing discount. This CFD in Franklin, OH only cost us $5,000. And that $5,000 came from a Self Directed IRA. The annualized P&I payment is $3,264. It doesn't take a calculator to figure out how fast we'll get our capital back on this. And this is a Roth SDIRA, so it is all tax free. We can even reduce the P&I payment and make a good return. And should the borrower not want to reinstate the note, then we'll offer Cash for Keys or worse case, file a complaint and evict them.
So what happens if we have the property? The As-Is value is $25,000. The Rental Turnkey value is $45,000. Maybe we'll do some repairs and create a new note for $50,000. There are a dozen exits once you have a property. And with a price tag of just $5,000, there are a lot of ways to make a profit.
What does one do to celebrate? One goes to Disney. We will be at Disney with Scott Carson's Mastermind Group, coming up with new business ideas and buying more notes. Stay Tuned for next week's episode....
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