Joseph Idaye

https://purchaserealestatebelowmarketvalue.com | 1 Purchase Real Estate Below Market Value The New Opportunity to Purchase Real Estate BOB BISHOP https://purchaserealestatebelowmarketvalue.com | 2 Copyright Purchase Real Estate Below Market Value by Bob Bishop Copyright ©2021 by Bob Bishop. All rights reserved. All rights reserved. No portion of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means – electronic, mechanical, photocopy, recording or scanning, or other – except for brief quotations in critical reviews or articles without prior written permission from the author, Bob Bishop. For information, please contact Bob Bishop, at-, or visit http://www.purchaserealestatebelowmarketvalue.com Disclaimer: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to its accuracy or completeness. In addition, this book contains no legal or financial advice; please consult a licensed professional if appropriate. Editing by Joseph Idaye Book Design and formatting by Joseph Idaye First Edition: Published in 2021 Published in the United States https://purchaserealestatebelowmarketvalue.com | 3 Table of Contents Copyright ............................................................................................. 3 Table of Contents ................................................................................ 4 Introduction ........................................................................................ 5 Chapter 1: The Old Way to Purchase Real Estate ........................... 11 Chapter 2: Motivated Sellers - The New Opportunity .................... 19 Chapter 3: How Using FHA Loans Correctly Will Make You Financially Wealthy .......................................................................... 27 Chapter 4: The Main Advantages of the New Opportunity ............ 32 Chapter 5: What About Competition ............................................... 37 Chapter 6: How to Start This Process – Tricks to Getting Preapproved ...................................................................................... 43 Chapter 7: Doing This New Opportunity Over And Over again..... 49 https://purchaserealestatebelowmarketvalue.com | 4 Introduction H ello and welcome, I appreciate you downloading this e-book. This is actually a condensed version of my course "Purchaserealestatebelowmarket value.com". Even though this is a shorter version of my course, I cut no corners in helping you purchase your home below market value. There is no fluff, no theories, only the information you need to purchase your home at $50,000, $100,000, $150,000, or more below market value. You will learn what 99.9% of homebuyers don't know about purchasing a home; you made a smart decision by getting this e-book. https://purchaserealestatebelowmarketvalue.com | 5 This is the new opportunity in America today; savvy homeowners are now purchasing their homes below market value, renovating their homes to their likings with very little money out of their pockets, and building financial success while getting their dream home. The days are gone when you have to purchase a home that just fits your needs, today not only are you going to find a home that fits your needs but one that has every amenity that you’ve always wanted. With the information I provided in this book, you will be up and running in a few days looking to purchase a home below market value and living in a home you’ve always dreamt of. We all want that perfect home, but the reality is that the only way you can achieve this is to renovate the home to your likings. It's very unlikely that you’ll go out to look for homes and find one that truly has everything you want in a house – that is extremely rare. There’s always something that you want to change unless you completely renovated your home yourself. Instead of looking at 20, 30, 40, or more homes and taking months to find your desired home, today you just need to find the home you like and have it renovated to your liking. https://purchaserealestatebelowmarketvalue.com | 6 This book contains a 10,000-foot overview on how to purchase a home the right way, how to purchase your home at a price that is tens of thousands below market value, how to get the money to renovate your home, getting pre-approved and closing on your new home. In times like today, many people are struggling to make ends meet. A lot of people are living paycheck to paycheck, and don't have enough money to live life the way they want to, and the money they do have is usually in the equity of their homes. These homeowners who have equity in their homes have usually been living in their homes for 10-20 years or more. They will have plenty of equity because over time their homes appreciated and that results in some nice equity. Equity is the difference between market price and what is owed. In other words, if the market value of your home is $250,000 and you owe $100,000 you will have $150,0000 in equity. Wouldn't it be nice to fast-forward this process? I mean getting the equity right upfront when you're purchasing your new home? It is possible and is very easy, the whole trick is to purchase below market value, which is what this e-book is all about. Real estate can make you wealthy; most millionaires today became that way through real https://purchaserealestatebelowmarketvalue.com | 7 estate. Throughout history, real estate will always appreciate; hence, it is one of the best investments you could ever make. There are years when real estate prices may stay flat, but in the long run, real estate always appreciates. The key is to purchase real estate correctly, but most people don't do this. Again, welcome and thank you for downloading this ebook, and welcome to the new opportunity of purchasing real estate the correct way. You will learn how to purchase your home for less cash, get a lower down payment, and a lower monthly mortgage payment. You will also learn how to purchase your home below market value and get a house totally renovated the way you like, all below market value, sometimes as low as $100,000 or more, with little cash out of your pocket. If this excites you, read on. This new change in real estate is happening today, and you're at the forefront of it all. So, sit back and enjoy. Why Should You Listen to Me About This New Opportunity? You might be asking who I am and why should you listen to me. Well, before I go any further, I'm Bob Bishop, and I would like to give you a little background information on myself and how I got involved with this. https://purchaserealestatebelowmarketvalue.com | 8 First, I have been a realtor for 25 years, and it's always been my goal to help homebuyers get into homes below market value. It's a funny story of how I became involved with this; I think many of you reading this are going through the same emotions I went through. About 26 or 27 years ago, my wife and I figured out that renting is no good and that we ought to purchase a house. Not having much experience, we called a real estate agent and started looking at homes. We found one we liked, we put an offer in, and went home. When we finally got home, we realized that the agent never told us how much money we need for settlement, so I gave him a call. I almost fell out of my chair when he told me it was around $11,500. At that time, we only had $12,000 and there was no way I was giving the settlement company all of our money to purchase a house. I called the agent again and told him we are withdrawing the offer. I also told my wife we will rent for the rest of our lives. Thank God my wife didn't listen to me. A few days later, my wife showed me a foreclosure, and reluctantly I went with her to take a look at it. My wife talked me into it and we did purchase that home, and thank God we did. The funny part of the story is that after settlement, we both realized not only did we purchase the foreclosure for https://purchaserealestatebelowmarketvalue.com | 9 less than half the cash needed for our original home, but we had almost $40,000 in equity. I didn't want to purchase a home because I believe it would make us broke, but in reality, buying the home was the best thing we ever did because it made us more financially secure. I believe home buyers today think that purchasing a home will set them back, and it is true if you buy a home at fair market value. That's why it's so important to purchase your home below market value. https://purchaserealestatebelowmarketvalue.com | 10 Chapter 1 The Old Way to Purchase Real Estate L et's first start by saying how most people purchase a home. With most people, what they do is go out and talk to a lender and get pre-approved. Then they call up a realtor to look at some houses. They might look at 15, 20, even 30 homes, or more. If they see the one they like, they’ll buy it and end up, usually, paying fair market value for it. This is the old way of purchasing a home. The modern way, or I should say the new opportunity way is to use your computer and your realtor in a special way to find your home very quickly and below market value. Going through websites such as Zillow, Realtor.com, Redfin, etc. you can find homes below market value once you learn the basics of how these websites work, also you will have your realtor look for below market homes on the Multiple Listing Service (MLS). So instead of looking at 20, 30, or more homes, you might only have to look at three or four homes to find your perfect one. https://purchaserealestatebelowmarketvalue.com | 11 What most people don't realize is how much time goes into looking for their desired home. They could spend months looking for their desired home, but the reality is they will not find their perfect home; they might come close but won’t get exactly what they want. There are only two ways to get your dream home. One way is through new construction, where you tell the builder exactly how you want your house to be built. Although this is a great way to get your perfect home, it comes with two big disadvantages; you are purchasing your home at fair market value and second, it can take 3-6 months to have your house built. You might ask yourself, why is it a disadvantage to purchase a new construction home, or for that matter, any home, at fair market value? Well, there are two major problems that you will face when you construct a home or purchase it at fair market value. The first one is, when you purchase at fair market value, there's no equity in the house. In other words, you purchase the house, but if you need to take out money for any reason, such as for a vacation, bills, new car, etc., you can't take any out because there's no equity there. Just think about that. Think of all the work that goes into finding your home. First, you get pre-approved, looked https://purchaserealestatebelowmarketvalue.com | 12 at four, five, twenty houses or more, paid for the home inspection and an appraisal, you put down an earnest money deposit and then off to settlement where you pay more money. Sadly, you can't take any money out on the very next day or at any time in the near future because there is no equity there. There's nothing there, and that is not the way to purchase. Paying fair market value is not the way to go, it makes no sense. The second reason is that if you purchase at fair market value and you decide to sell within three years, statistics show that you will have to bring money to the table to get out from underneath the home. What that means is that you have to come to the settlement table with money to pay off your mortgage. Realtors are the main reason for this. They won’t charge you when you're looking for a house, but when you sell a house, they're going to charge you 5%, 6%, or maybe more. On a $300,000 house, you're going to be paying as high as $15,000 to $18,000 alone just in their commissions. Plus, you're going to have some closing costs for your own home. Then the buyer is most likely going to ask for some closing cost help. So, usually on a $300,000 home, they're going to ask for $7,000 to $12,000 in closing cost help or more, and they might even ask you https://purchaserealestatebelowmarketvalue.com | 13 to come down a few thousand dollars on your asking price. Let me give you an example, let's say two years ago you purchased a house for $290,000, and you're selling it today for $300,000. Since you have been paying down your mortgage for the last two years, you might owe around $277,000 (including your down payment when you first purchased your house). If you add up all your fees, realtor fees, closing costs fees, settlement fees, etc., it can be as high as $35,000. At settlement, after you pay your fees of $35,000, it leaves you with $265,000, but you owe a mortgage of $277,000, which means you have to bring $12,000 to the settlement table to sell your house. Just think of all the work you had to put into finding that house, and all the maintenance and repairs you put into the house while you lived there, as well as paying two years’ worth of your mortgage. If your mortgage payment is $2000 a month, that means you paid about $48,000 to live in that house (at the beginning of a mortgage, most of the payment goes towards interest, some towards insurance and taxes). Read that last paragraph again, you had to pay $48,000 to live in your house for the past two years and when you go to settlement, you have to bring $12,000 https://purchaserealestatebelowmarketvalue.com | 14 more to get out from under the house. This makes no sense at all to me, and yet this happens all the time. The point here is, you don't want to pay fair market value for a house, since you might have to bring money to the settlement table if you need to sell your house in the first few years. In the example I gave earlier, instead of selling your home for 300,000, maybe you decide to sell it for $310,000, or maybe the market is bad and you put it up at $290,000. Either way, you take a big gamble when you pay fair market value for a home and you want to sell your home in the near future. I have seen people bring as much as $15,000 to the table to get out from underneath their homes. Let's get back to the second way you can get your dream home. Remember, the first way is through new construction, which is not a good idea because you buy at fair market value and it takes a long time to build it. The second way to get your dream home is to have it totally renovated the way you want it to be. It's just like a new construction house, the only difference is that you take an existing home and you renovate the inside of it the way that you want it. These are the homes you want to purchase. I will show you how to find and get these homes https://purchaserealestatebelowmarketvalue.com | 15 way below market value and how the government will give you the money to renovate your home the way you want it. Just for your own information, if a seller doesn't have enough money to bring to the table, this could be turned into a short sale. What exactly is a short sale? A short sale is a sale that is made when the seller owes more on the house than what it is worth. In this situation, the homeowner/seller will have to sell the house at a lesser amount than the one due on the mortgage. To sell a house on a short sale, the seller will need permission from the bank, and if the bank agrees then he/she can sell it at a lower price, if not he/she won't be able to sell the house and will be stuck with it. Not only are there two disadvantages to purchasing your home at fair market value but you're not getting your dream home that you’ve always wanted (unless it's new construction). The house you get might be close to your dream home, but not what you’ve always wanted. The point is, you will find a house that you like but not exactly your dream home. What if you could find your home $50,000, $100,000, $150,000 or more below market value and get the house renovated the way that you want it – the kitchen you’ve always wanted, the hardwood floors, the large deck you’ve https://purchaserealestatebelowmarketvalue.com | 16 always wanted for that large family gathering, etc. – doing all of these with very little cash out of your pocket. This is the correct way to purchase a home. You may ask, where do I find these homes? Well, one way is through websites like Zillow, Realtor.com, Redfin, etc. Simply choose the area you want to live in and go to the search box. Enter words like ‘quick sale’, ‘motivated seller’, ‘must sell’, ‘calling all investors’, ‘home below market’, etc. When the houses come up, take a look and see if any of them meets your needs. If you like what you see, call a real estate agent and look at it. In my new course, PurchaseRealEstateBelowMarketValue.com", I dive into this deeper and show you exactly how to find https://purchaserealestatebelowmarketvalue.com | 17 excellent buys, also I will show you other ways to find homes below market value, including having the realtors find the homes for you. https://purchaserealestatebelowmarketvalue.com | 18 Chapter 2 Motivated Sellers - The New Opportunity A s you just saw, most homeowners don't have any equity in their homes when they first purchased them. To build equity, they need time for their homes to grow in value, and to pay down their mortgage (when paying down your mortgage, in the beginning, you're paying very little towards the principal). Not much equity means that you will bring money to the table if you decide to sell the house in the first few years. As I said before it's not a good way to go, but 99.9% of the people purchase that way, they purchase at fair market value. There's a better way to purchase a home, and it's buying below market value, this is the new opportune way. If you purchase a home below market value, you can sell your home the very next day, month, or following year, and you’ll walk away with money at the settlement table. So how do we find these homes that are way below market value? Well, we need to look for certain sellers called "motivated sellers". Purchasing a home from a motivated seller is the smartest way to purchase a house below market value. These homes are everywhere, and https://purchaserealestatebelowmarketvalue.com | 19 new ones come on the market every single day, you just have to know where to look. In real estate, you might have heard of the term, "It's a deal of a lifetime." To some people, a deal of a lifetime might mean making $100,000, $120,000, $180,000, or more. Yes, for some people, that could be a deal of a lifetime. But what most people don't realize is that a real estate deal of a lifetime happens every day. You just have to know where to look. Below market homes are out there every single day, they are in every town, city, county and state, you just have to know where to find the motivated sellers. You might be asking, what exactly is a motivated seller? Well, let me say this, motivated sellers are all over the place, they might own a $100,000, $250,000, or over $1,000,000 home. They are in every state and in every price range. When you go out to look for your new home, there will be plenty of houses and motivated sellers in your price range. How do you find them? First, let's go over what a motivated seller is. A motivated seller needs money, and the seller is going to sell his/her house for less than fair market value for a quick sale. Sometimes, when motivated sellers are selling their home, there will be a need for some work to be done to the house, and this can be to https://purchaserealestatebelowmarketvalue.com | 20 your advantage. Since it's going to need some work done to the house, you should be able to get a great price on the house. Who are motivated sellers? Motivated sellers can be a bank foreclosure, short sales, people getting divorced, someone who inherits a home, people who are relocating to another state, people who need money to pay medical or other bills, etc. I think you get the point. Anyone who needs money now and has to sell their house is a motivated seller. There are different types of motivated sellers, but the ones you want to buy from are those who need to sell quickly and just get out of the situation they are in. Let's look at an example. Consider Mr. or Mrs. Homeowner have medical bills, but they can't afford to pay them, or let’s imagine they are getting divorced, or they lost their job, the point is Mr. or Mrs. Homeowner have to sell pretty quickly. The way to sell a home very quickly is to list it below market value, the more they need the money, the lower the price – it can be $20,000-$200,000 or more below market. I'm not talking about taking advantage of anyone, no, it's not about that. Some homeowners sometimes need money quickly, and as a result, they will sell their homes at https://purchaserealestatebelowmarketvalue.com | 21 a deep discount for a quick sale. The truth is that if you don't purchase their discounted home, someone else will. Moreover, it’s a win/win situation, the seller gets money to solve their problems and you get a house at a deep discount to have renovated. Sometimes, motivated sellers not only need money to solve a particular problem but often times don’t have any money at all. Since they don't have much money, they usually neglect their homes. They don't maintain or take care of their homes correctly, and this usually means the home will need some work. Taking these two factors into consideration (needing money and house needs work), these motivated sellers will sell their homes for a big discount. Some people come up to me and they say, "I'll find a house on the MLS, and I’ll buy a house there. I'll come in with a low-ball offer" (the MLS stands for the Multiple Listing Service; it has every home on the market that's for sale, listed by an agent). In other words, assuming the house is $300,000, some people think they’ll go in there and offer $200,000 or $250,000 for the house. That isn’t going to work. Just think about it. If you have a house you're selling for $300,000 and someone says, "I'm going https://purchaserealestatebelowmarketvalue.com | 22 to pay you $200,000 or $250,000", you're going to tell them, "Go take a walk." You're not going to sell that low. Unless you're a motivated seller and you need the cash, then you would. But it doesn't work for 99% of the homes on the MLS. You have to find that 1% and they're out there. I will show you where to find them; where you can find homes $30,000, $50,000, $80,000, $150,000 or more below market value. You might be asking yourself, "If I find these houses, and it needs all this work, and I don't have any money, how am I going to fix it up?" It’s very easy! The government came out with a renovation loan. Though it’s been around for years, most people never heard of it, including some realtors, and if they did hear about it, most realtors don't know how it works. The renovation loan from the government is called an FHA 203(k) loan. If you purchase a home that needs work, the mortgage company will give you a loan and also the money to renovate the home. If you need $30,000 to do the renovations, they will give you the $30,000, or if you need $70,000, they will give you the $70,000. Whatever you need to renovate your home, you will get the money for the renovations. https://purchaserealestatebelowmarketvalue.com | 23 I'll give you an example of how this would work. Let's say you find a foreclosure for $150,000, and you know it's worth $300,000 after it's renovated, but you need $50,000 to do the renovations. The mortgage company will give you the $50.000 for renovations, and add that to your purchase price of $150,000. That will make your total purchase price $200,000, right? The $150,000 plus the $50,000 makes it $200,000, and you get a house that you will renovate. Just think about that. You can have the kitchen the way you want it. You can have the bathrooms the way you want them. The hardwood floors, tile, or whatever, you’re going to have it the way you want it. That is awesome. Plus, you're going to have a $200,000 mortgage; when in reality, the house is worth $300,000. That means you have $100,000 in equity. You just can't beat it. https://purchaserealestatebelowmarketvalue.com | 24 Think about it for a moment, you have $100,000 in equity. In other words, you just made $100,000 purchasing a home that you had renovated the way that you wanted it. Let's say you have to sell your home within two or three years after purchase, then you will be walking away from the table with $65,000 or $75,000, or even more. I don't know about you, but I would prefer to walk away with $65,000 or $75,000 or more rather than coming to the table with a few thousand dollars. This is a no-brainer; it is the new opportune way to go. If you purchase a home, purchase it correctly, and get it below market value. And what’s more, there is no extra work on your part. If you have to go looking at houses, do home inspections, get an appraisal, go to settlement, you might as well purchase the home below market value. It's the same https://purchaserealestatebelowmarketvalue.com | 25 exact steps as buying a home at fair market value, but you save so much money, time and energy in the process. This is how you can make $50,000, $100,000, $150,000, or more, purchasing the home below market value. This is the new opportunity that puts you on the right track to financial success. https://purchaserealestatebelowmarketvalue.com | 26 Chapter 3 How Using FHA Loans Correctly Will Make You Financially Wealthy G etting your home renovated with no money out of your pocket is made possible using an FHA 203(k) loan. It does not matter how much money you need to renovate your home, this loan will get you there. Moreover, these loans are only for owneroccupants, no investors are allowed. First, what is an FHA loan? Well, FHA stands for the Federal Housing Administration. It's an agency through the United States government, and it was founded by President Roosevelt in 1934. They came up with the idea of an FHA loan back in 1929, during the great depression, when people were losing their jobs and houses, businesses were going under, and even banks were failing. Also, the unemployment rate at that time was as high as 30%. Now keep in mind that house buying is very important for the economy. When most people purchase a home, one of the first purchases they make is usually furniture, blinds, carpet, paint, wood for a deck or fence, etc. Maybe they'll finish off the basement or add a deck. Whatever it https://purchaserealestatebelowmarketvalue.com | 27 might be, they're buying these supplies or items through companies and that's how these companies are making a profit. These companies will, in turn, go to their suppliers to order more supplies, and the circle keeps going. All these actions keep the economy going, so house buying is very important. So, getting back to the Great Depression, FHA was developed to keep the housing market going strong. After the Great Depression, banks did not want to give out mortgages, fearing that the homeowners might not be able to pay back their loans. However, the establishment of the FHA-insured loans means mortgages that are insured by the US government gives banks protection against any homeowner who defaults on their loan. In other words, for any homeowner that has an FHA loan and ends up getting foreclosed on, there is no financial risk on the banks part, the U.S. government takes all of the risk. Now that FHA is in place, banks don't have to worry about homeowners not paying their mortgage because the banks are protected. There are two types of mortgages that the FHA insures, the 203(K) and 203(B) loans. These two loans are usually for first-time homebuyers. However, you don't have to be a first-time homebuyer to use them. Homeowners like these loans for the lower down payment https://purchaserealestatebelowmarketvalue.com | 28 and they are easier to qualify for. Remember, investors cannot use any type of FHA loan. As I said before, the FHA 203K renovation loan is one of the best out there. It’s a shame most people never heard of this loan. I want to give you a quick rundown on how it works, although I go through it more thoroughly in my course. These are the steps to be taken to do for a 203K loan: 1) Find a home of your choice and get it under contract. 2) You will meet with a HUD consultant or a licensed contractor at your new house (your lender will give you a list to choose from). 3) This is where you’ll decide what renovations you want to be done to your home (this could be new HVAC, roof, kitchen, bathrooms, basement finishing, etc., almost anything that increases the value of your home). 4) The HUD consultant or licensed contractor will determine how much money you’ll need for your renovations, and that amount will be given to your lender to add to the purchase price. 5) Find licensed contractors to do the job. https://purchaserealestatebelowmarketvalue.com | 29 I want you to realize that you don't have to use a 203(k) loan. If the house doesn't need any work, you can use an FHA 203(b) loan, which is the loan most first-time home buyers use when purchasing a home. But if it needs work, you want to use a 203(k). Here is my point, if you find a house $100,000 below market value, which doesn't need a lot of work or you're going to do the work yourself, you don't have to use a 203(k) loan, you can just use a regular FHA 203(b) loan. The FHA 203(b) and the FHA 203(k) loans are basically the same; they are both insured by the US government and are easier to qualify for than most other mortgages. There are basically three differences, when using a 203(k) loan: 1. the 203(k) loan is a renovation loan. 2. the interest rate is usually 1/2% higher. 3. when using a 203(k) loan, you can request up to six months of your mortgage payments to be paid for you. You heard that right? When you purchase a home with a 203k loan, you can live in that house for up to six months without making a payment. Let me give you an example of how this works. Let’s say you need $40,000 for repairs and your mortgage payment is $1,500, and you https://purchaserealestatebelowmarketvalue.com | 30 want six months of mortgage payments to be paid for you, the mortgage lender will take $9000 ($1500 x 6) and add that to your renovation loan. In other words, instead of the government lending you $40,000 for renovations, it will give you $49,000, with $9,000 going toward your monthly mortgage payment. For the life of me, I do not understand why most people do not use this loan; this is the way to go. A word of caution though, to get the six months of mortgage payments paid for you, you have to use a regular FHA 203k loan, not an FHA 203k streamline loan, and it basically means one of the conditions is your repairs need to be $35,000 or more. I cover that in detail in my new course "PurchaseRealEstateBelowMarket Value.com". https://purchaserealestatebelowmarketvalue.com | 31 Chapter 4 The Main Advantages of the New Opportunity T here are 5 advantages of purchasing a home way below market value. The five advantages are as follows: 1. Equity (if you sell after 1 year, the profits could be tax-free, talk to your accountant) 2. Lower monthly mortgage payment 3. Lower down payment 4. You have a renovated home that you love to live in 5. You’ll find your home a lot quicker The first advantage of buying from a motivated seller is the potential of the money you can make. There are homes out there right now that you can purchase $30,000, $60,000, $90,000, $120,000 or more below market value. You just can't beat that! Also, you can have instant equity. In other words, the very next day after you purchase your house, you can take money out of it, like take a second mortgage, a line of credit, or you can sell your home. The second advantage of buying from a motivated seller is that you will have a lower monthly payment. You https://purchaserealestatebelowmarketvalue.com | 32 might ask, “How could that be?” Well, first let's go back to the example I used before. In the example, a purchaser buys a home for $150,000 plus needs $50,000 for repairs, which gives him a $200,000 mortgage. This is in contrast to another purchaser that paid $300,000 at fair market value for basically the same house. Not only did he pay fair market value for his home, and has no equity in it, but his monthly payment is higher. Remember, he's paying a mortgage on $300,000, whereas you are the purchaser and paying a mortgage on $200,000. He is paying $100,000 more on his mortgage than you are. Depending on the interest rate, he/she is paying an additional $400$600 per month plus you might have higher homeowner insurance and higher property taxes. Just think what you can do with an extra $400-$600 or more per month. This money can take care of certain expenses, including a new car payment, kids’ college education, vacations, etc. That is another smart reason why you need to purchase your homes below market value. The third reason why you need to buy your home from a motivated seller is that you will have a lower down payment. With most FHA loans, you need to put down 3.5% of the purchase price. The buyer who is purchasing https://purchaserealestatebelowmarketvalue.com | 33 the home for $300,000 needs to put down $10,500, whereas the buyer who is purchasing for $200,000 needs to put down only $7,000. That is a savings of $3,500. This is really amazing when you get to think about it – you're saving a whopping $3,500 compared to the buyer who spent $300,000 on basically the same home, just because they paid fair market value for it. I don't know about you, but for me, $3,500 is a whole lot of money. This is just another positive reason to purchase your home below market value. The fourth reason why you need to buy your home from a motivated seller is that you can have it renovated the way you like it. Let's go back to our example. If you look at the guy that paid $300,000 for his house, there is a likelihood that the house was already renovated, but he's getting only what is there. He can't change anything. He gets that kitchen the way it is. It might be a nice kitchen, but maybe he wanted different appliances or different cabinets. Maybe he would have preferred that the flooring in the family room be done differently, perhaps he wanted a different color. Whatever the case may be, he has to take what's there. On the other hand, someone who buys a home from a motivated seller can renovate it, and have https://purchaserealestatebelowmarketvalue.com | 34 it renovated totally how you like it. That’s a huge advantage. The fifth advantage is time. Most people spend so much time looking at homes or finding the perfect home, which we all know is very hard to find or may not exist at all. Today, all you need to do is find a motivated seller in the area you want to live in and find the right size house. After settlement, you can have the home renovated the way you like. There are also other advantages of buying your home from a motivated seller. Remember, I said earlier that you can have up to six months of your mortgage payments paid for you through the renovation loan. Also, think how it's going to make you feel when you purchase a home well below market value and have a totally renovated home compared to your neighbors or friends who paid full price for their homes. Another advantage is knowing that you're on the right track towards financial freedom. All of these build confidences within yourself; the more financially secure you are, the better you will feel. You're going to have your dream home the way you want it. Everything in the house will be renovated by you – you can change the colors, the tile, the carpet, the cabinets, etc. It's just like having a brand-new home built https://purchaserealestatebelowmarketvalue.com | 35 for you and this money does not come from your pocket per se, it's only added to the mortgage. Not only can you end up with $100,000 in equity, but you get to live in the home you’ve always wanted, which most people never achieve. Yes, those are the five great reasons why you have to purchase your home below market value. Not only are you building financial success, but you get to live in the home you’ve always dreamed of – a home that you can renovate to meet your taste. If most homeowners knew these five advantages, I bet you, a lot more people would be purchasing homes below market value. It's the smartest way to purchase a home. https://purchaserealestatebelowmarketvalue.com | 36 Chapter 5 What About Competition W hy most people don't purchase homes below market value blows me away. Maybe some homebuyers don’t realize these homes exist, maybe the realtors never showed them any homes from any motivated sellers or maybe they think there’s too much competition. The reality is everybody always wants a good deal. Consider this, if two different stores sell exactly the same product and one store has it at a discount of say 30%, which store are you going to purchase it from? Without a doubt, you will go to the store that's giving the 30% discount – everyone likes to save money. It's the same way as purchasing a home. It's not hard to find good deals; you just have to know where to look for them. There are plenty of good homes out there. Every single day below market value homes come on the market and are in every single neighborhood and every price range. You might be asking, “What about competition? Am I going to be competing with investors?” Before I answer https://purchaserealestatebelowmarketvalue.com | 37 that question, let's look at where investors get most of their best deals. In one word, foreclosures! Yes, investors get their deals from foreclosures. We have HUD foreclosures, VA Foreclosures, bank foreclosures, Fannie Mae and Freddy Mac foreclosures, etc. There are plenty of foreclosures in every state, city, or town – they are everywhere. This is where most investors make their big money. When most people hear the words ‘foreclosed homes’, they think the homes are in bad areas, or homes that are dirty or are falling apart. Well, while this may be true for some homes, it is not the case with most homes. Foreclosed homes are all over the place – they are in every neighborhood in this country. They might have to be cleaned, painted, or even renovated, but if you can make a $100,000 purchasing it, isn't it worth it? Remember, your focus is not on why the motivated seller is selling his house. Rather, your main focus is on the deal. It just so happens that foreclosures are great deals and there are so many of them out there. What makes them a great deal is that banks need to sell them quickly. The presence of too many foreclosures in their inventory makes the bank or government institution look https://purchaserealestatebelowmarketvalue.com | 38 bad. They are very motivated to sell these homes, and this is where some great deals come into play. Now, getting back to competition, owner-occupants have a better advantage over investors when it comes to purchasing foreclosures. Believe it or not, when it comes to selling foreclosed homes, most banks give the homeowners the first shot to purchase the homes. Homeowners have a 7–15-day window period (a window period is a certain amount of time in which only owneroccupants can bid; no investors can bid during this period) to purchase first before investors can have a chance. Let me give you an example, let's say a house comes on the market for $150,000 and it is in a 15-day window period, and is worth $300,000 after renovation. An investor sees the home and wants to put an offer in for $180,000, but you decide you want the same home and you bid $150,000. The bank will give you the house and won't even look at the investor's bid because the window period is not over. You will get the house for $150,000 and have a nice deal. The banks are on your side, they could have taken the investor's offer and made $30,000 more, but they took the homeowner’s offer for less. The most interesting part is that not many homeowners are purchasing these homes. https://purchaserealestatebelowmarketvalue.com | 39 Think about what that means to you, you will have very little competition among other homeowners, allowing you to find many good buys. You see it on TV, you hear about it in the newspapers, and you hear your friends talk about it, investors are making a ton of money flipping homes. But you have a major advantage over investors; you have first priority over these homes that investors are purchasing. Many of the homes on the market for sale today have been purchased and renovated by investors, and after the renovations, they turn around and price them at fair market value and sell them to homeowners. You'll be following exactly the same process, except for the fact that you will be cutting out the middleman. And what’s more, you won't need the cash like investors do because you will be using an FHA 203(k) loan. Remember, I said earlier that most homebuyers don't look at foreclosures, and this is good news for you – there is less competition, and you will have many good opportunities to find the home you want. Sincerely, I just don't understand why more people don't look at foreclosures. https://purchaserealestatebelowmarketvalue.com | 40 Now, don't forget that there are other types of motivated sellers, and you could be competing with investors for these types of sales. For example, a motivated seller that's getting a divorce will need to sell their home. Others might want to sell their home as a result of job loss, etc. Yes, there are plenty of these motivated sellers out there, and you have to compete most likely with other investors. Don’t worry, I'm going to show you what you can do to successfully compete with these sellers. There are a couple of tricks you can use that can give you an advantage over them. One of such tricks is that you can use an escalation clause, which will protect you from paying too much. Again, we'll get into that and many other items on my new course "PurchaseRealEstate BelowMarketValue.com". https://purchaserealestatebelowmarketvalue.com | 41 The point I want you to understand is that when you're trying to purchase a foreclosure, which is a motivated seller, you will not have much competition from investors or homeowners. Most homeowners don't purchase foreclosures. I assume the reason for this is the 'realtors'; almost all realtors are trained to show buyers regular homes, the ones at fair market value. You definitely want to look at the foreclosures; there will be many foreclosed homes in your areas, and every week more homes will be added. You want to find realtors who specialize in foreclosures, as they can send you a list of foreclosures every week. If you have problems finding any realtors, don’t worry, I will show you how in my new course. For years, investors have been purchasing foreclosures and making a fortune from them. Now you can do the same. Most investors concentrated only on foreclosed homes or short sales, but you will have first priority over them. I will also show you how to find motivated sellers that are getting a divorce, sellers who need money to pay bills, people that have to sell inherited homes, etc. https://purchaserealestatebelowmarketvalue.com | 42 Chapter 6 How to Start This Process – Tricks to Getting Preapproved T he very first step in purchasing a home is getting preapproved. You don't want to start looking at houses and then fall in love with one, only to find out you can't qualify for it. Besides, agents would not want to show you houses if you aren't qualified to purchase, it's a waste of their time and your time, so please get preapproved first. That's the most important step. Now you might ask me, “What’s the difference between being preapproved and being prequalified? A preapproval is when you go to the bank or a mortgage company, give them your pay stubs, your tax returns, social security number, and fill out a formal application, and the lender will come back with a yes or no. If it's a yes, they will give you an amount, say $350,000, and you can purchase anything up to that amount. A pre-qualification is when you call up the bank or the mortgage company, and you basically tell them how much money you make and how much are your bills. There's no application done, and they're going to give you a rough idea of what you can purchase. This is not the way to go. https://purchaserealestatebelowmarketvalue.com | 43 You can find your home of choice, only to find out later that your application was denied because of something silly the bank never saw until they did your application. Always get preapproved. To qualify for an FHA loan, you need a minimum 3.5% down payment and credit scores of 580 or higher. So, as long as you ask the seller to pay your closing cost, you will get into the house for a 3.5% down payment. For instance, let's say the purchase price is $300,000 and the seller is paying your closing costs, you will need $10,500 for a down payment (in my course ”PurchaseRealEstateBelow MarketValue.com” I will show you how to get into a home for less than that by using grants and closing cost assistance from your state). If your credit score is within the 500 - 579 range, you can qualify for an FHA loan if you make a 10% down payment. This figure does change every now and then, so check with your lender. If one mortgage company turns you down, try another one. You’ll be surprised by how many mortgage companies turn down one person and another mortgage company will approve them. If you do get turned down, find out the reason. If it's a legitimate reason, fix it, if not, go to another mortgage company. https://purchaserealestatebelowmarketvalue.com | 44 Here are some tricks to a higher credit score. First of all, you do want to have credit cards. Credit cards today are essential, and they will improve your credit scores if used right. If you can't qualify for a credit card today, you can always get a secured credit card. If you need a secured credit card, contact a major bank or google secured credit cards and choose the bank you want. With a secured credit card, you can put money in a bank's savings account and the bank will give you a credit card for that amount. The first rule with credit cards, and the most obvious, is to pay all with credit cards on time. In fact, make sure you pay all of your bills on time. The second rule is that you want to keep your balance under 30% of your credit card limit. For example, let’s say your limit on a credit card is $10,000; you want to keep your balance under 30% of that limit, which would be $3,000. So if you owe $2,000 on it, you're fine. But let's say you owe $4,000; you should pay at least $1,000 off to bring it under 30%. The third rule is not to get rid of any credit cards, especially the ones you had for many years. Getting rid of such cards will lower your score. If you don't like the credit https://purchaserealestatebelowmarketvalue.com | 45 card, don't use it; get rid of it only after you’ve settled in your new home. The fourth rule is to use your credit cards at least once a month, even if it's a couple of dollars. If you break any of these four rules, it might not disqualify you from getting a loan, but your score will go lower. Another idea to keep in mind is that you should not make any large purchases, such as a car, furniture, or a boat with a loan, as this will make it harder to qualify. Also, never cosign a loan, since this could hurt you in the long run. As for employment, you want to be employed for at least a year on the same job. Now, let's say you've been working on the same job for many years, and then you get another job, the requirements will start all over again unless it's the same or related field. If you are selfemployed, you need 2 years of tax returns; they’ll look at your net income, not your gross income. If you had a bankruptcy in the past, the waiting time is two years. Sometimes the FHA will make an exception after one year, you have to talk to your lender on this, but usually, it's two years. Foreclosures are three years. If you have a judgment, it must be paid off or you must have a https://purchaserealestatebelowmarketvalue.com | 46 payment plan in place. Remember, these conditions are for an FHA loan, which is the loan you be getting. The conditions for conventional loans are different. For judgments, just for your own information, they stay on your credit report for seven years, bankruptcy and foreclosures stay for 10 years, and inquiries stay for 2 years, then they come off your credit report. Now, the last thing I want to talk about is inquiries. When you apply for a loan or credit card, the company will pull your credit, and this is called an inquiry. Too many of them will lower your credit score. One year before you plan on purchasing a home, try not to apply for any credit cards or loans. A lot of people often think that when they are looking to get a mortgage, they shouldn’t visit many different mortgage companies due to the fact of the inquiries they think they’re going to get, but it doesn’t work like that in this situation. In other words, you have a window of about four weeks and if you get let's say five inquiries from five different mortgage companies, it will only count as one inquiry. This holds true for purchasing a car. The point here is that you want to get at least 3 quotes from different mortgage companies, and you want to get the best rate. Also, you don’t want to get penalized with https://purchaserealestatebelowmarketvalue.com | 47 inquiries. Remember, you have a 4-week window; you can get as many mortgage quotes as you like, and only get 1 inquiry. https://purchaserealestatebelowmarketvalue.com | 48 Chapter 7 Doing This New Opportunity Over And Over again T he median household income in the US in 2019 was $68,703. Even though this was a nice increase of 6.8% from the preceding year, this amount was achieved by two people working in the same family. Let me also throw this fact in, $19.33 was the median wage per hour in the US in 2019. Now, don't get me wrong, people work very hard to earn their paychecks. Working hard is one thing but working smart is another. If you're able to go out there and purchase a home $100,000 or more below market value, that's working smart. Remember, you put a lot of time into looking for a home – that’s real work, or let me say smart work. When you go looking for homes, you can come across one that is below market value and have it renovated the way you would like. What would your financial situation look like if you do this every two years? Let's say, every two years you sell your home and walk away with $70,000-$80,000. That's like making $35,000-$40,000 a year without much work or time involved. What about once a year? That’s an extra https://purchaserealestatebelowmarketvalue.com | 49 $70,000-$80,000, which looks damn good. How much would your life change with that? You might even ask, "Hell, why don't I do this two or three times a year?" Well, you can, but you could run into a big problem if not done correctly. The truth is that when you purchase a home as an owner-occupant, you are telling the bank that you plan on living in the house as an owner occupant for at least a year. When the bank knows you are an owner-occupant, they will give you a lower down payment and lower interest rate as long as you plan on living there. If you are not going to live there, and you're buying it as an investor, your down payment will be more and you will have a higher interest rate. When you sign the papers at settlement, you sign a document that says your intent is to live in the house for at least one year. This way, the bank knows you're not an investor and you plan on living there for at least one year. The reason is that there is more risk for the banks if they take an investor's loan rather than an owner-occupant’s loan. As an owner-occupant, the banks know that you're more committed to making your loan payments and keeping up the house because you live there. However, as an investor, if you don't make your payments, you will lose https://purchaserealestatebelowmarketvalue.com | 50 your investment, but most likely you will have a house to go home to. So, this is why banks want to be sure of who they are dealing with, is it an owner-occupant or an investor? They will structure their loans according to what the buyer's intentions are. Don't get upset if you’re thinking, "So, I have to stay in the house for at least one year". Your intent can change, let's say you lose your job, you get a divorce, get transferred to another state, or any other legitimate reason, you are allowed to get out of it within one year. As long as you have a legitimate excuse, you can purchase another home right away; you don't have to wait for 1 year to pass. Now, as an investor you can purchase as many houses as you like but you cannot use any FHA loans. Let's get back to the point I was making earlier, where I talked about the average family income for a year as $68,000, before taxes. If you live in your home for at least one year then sell it, the chances are when you walk away with your profits you will pay no taxes. This is huge – think about it, after settlement you could walk away with, let’s say $80,000 and you won’t owe any taxes. That’s a nice advantage. The rule for homeownership is that you must live in your home for 2 out of the last 5 years to be tax https://purchaserealestatebelowmarketvalue.com | 51 exempt. The first $250,000 is tax-exempt, and if you have a partner, it will be $500,000. After one year, it becomes prorated. I am not an accountant; so please get professional help with your accountant on this. The benefits of buying a home below market value keeps adding up. If you make $70,000 or $80,000 every couple of years, and it's tax-free, and you just can’t beat this. Do you see why real estate can make you wealthy? You can build wealth very quickly and if you do it correctly, it can be tax-free. The whole point of this chapter is to repeat the homebuying process a few times, maybe not every year or two, but maybe every four or five years. It's going to help you build wealth and put you on the right track to financial freedom. The more often you can do it, the more riches you will have. I wish you the best when looking for your new home and finding it tens of thousands of dollars below market value. To learn more please go to Purchaserealestatebelowmarketvalue.com. https://purchaserealestatebelowmarketvalue.com | 52