Dear MSM reader,

Do mortgage payments have you pulling your hair out? In today’s issue, Mainstreet Millionaire editor Justin Ford reveals Alan Cowgill’s secret technique for setting up mortgages with no monthly payments. You can even get extra cash up front to rehab the property!

How would you like a Mortgage with No Monthly Payments?

By Justin Ford

Think a mortgage with no monthly payments sounds good? Better yet, how would you like a loan with no monthly mortgage payments plus no points, no negative amortization, and none of a bank’s typical junk fees (processing charge, administrative fee, broker needs a new BMW fee, etc.)? And how would you like this kind of mortgage loan where you set the terms yourself?

As Alan Cowgill explains at his Private Money Boot camps, those are the kinds of loans he often uses. In fact, about half the roughly 65 houses Alan buys and sells each year have mortgages with no monthly payments!

The key is to structure the right private money loan for the right deal. For instance, let’s say you buy a property for $100,000 and, once you put $20,000 of repairs into it, it will be worth $175,000. How do you get the money together?

Well, if you have good credit, you could go to the bank and put 10 percent or 20 percent down, plus have another five percent for closing costs and reserves, plus another $20,000 for the repairs. In all, you might have to come out of pocket $30,000 to $50,000 to get into the deal - plus have another few thousand handy to make monthly payments until you renovate and rent out the property or sell it.

But with private money, you can borrow the entire project cost - purchase, repairs, reserves, etc. You’d still be under 75 percent of the after-repair value, so it would be a well-collateralized loan for the lender. And you can structure the loan so it has no payments.

Who would be interested in such a loan? There are only about 40 million potential private lenders. That’s a rough estimate of the number of individual retirement accounts (IRAs) in the U.S. today. And this is the perfect type of loan for holders of self-directed IRAs.

After all, since 2000 the S&P 500 is down nearly 10 percent! With dividends, the typical investor might be up one percent a year. The Nasdaq, meanwhile, is still down over 50 percent. What does that do to your retirement plans?

And for the lucky few who are in the plus column, many of them are averaging perhaps three percent or five percent returns. And that’s after putting up with scandal after scandal on Wall Street and heart-wrenching volatility.

The trouble is - thanks to Wall Street propaganda - most investors don’t realize they have a right to change their IRAs to self-directed IRAs. I have a self-directed IRA myself, and many of my lenders are increasingly taking advantage of this option. It enables them to take advantage of a host of investments that typically have far less volatility and can offer much higher, more consistent returns than the stock market. This includes everything from purchasing real estate outright to buying businesses, purchasing tax liens, and, of course, making private money loans secured by real estate.

As Alan explained to us, he pays a higher interest rate for loans that do not require monthly payments. For instance, if you’re typically paying eight percent to your private lenders, you might pay them 10 percent if they opt for the no-monthly-payment option.

For people who are lending from a self-directed IRA, self-directed 401(k), or other self-directed retirement plan, this makes all the sense in the world. They weren’t going to be spending their interest payments anyway. Interest paid into the account is tax-deferred… so why not let it accrue at a higher rate? It’s a good cash-flow solution for the rehabber. And it provides a high tax-advantaged return for the IRA investor, secured by real estate.

Now, a few points to keep in mind: Make sure you’re buying right first, so your lenders are always making well-collateralized loans. Also, it’s best to make sure your property would cash flow if you had to make payments. That way, if you decide to rent it out, the net rents you accumulate will cover the accrued interest when you pay it off.

There are many other strategies available to IRA holders that benefit the lender and the investor. In some cases, these pertain to holders of 401(k) accounts as well. It’s a matter of following a few steps to transfer funds to a self-directed account or to set up a new self-directed account, or both.

Alan does an excellent job of explaining the process and the paperwork at his events. When it comes time for you or one of your investors to set up a self-directed account, you’ll want the guidance of a qualified custodian of these kinds of IRAs. For now, keep in mind that your universe of potential private lenders may be 40 million or so greater than you thought. And if you know people who are discouraged by the returns they’ve been getting in their stock-market retirement accounts, you may be able to provide them with a great service… while growing your own business.

[Ed. Note: To learn more about how private money can help accelerate the growth of your real estate business, click here

---

How to Call on Properties Newly Offered through Real Estate Agencies

If a property that’s just come up for sale has a real estate agency sign on it, your best bet is to see if you can get detailed information on it over the Internet before calling the agency.

Your goal isn’t to do an end run around the agency–you can’t do that, and shouldn’t try even if you think you can. It’s to save you the hassle of trying to get someone on the phone who may not be available for a while. It’s also a great way to get as much complete information as possible before you talk to the agent. And, of course, if the property is ridiculously overpriced, you won’t even have to bother calling.

If you can’t find the property on the Internet, you’ll have to call the agency to get the details. In these cases, it’s best to call at 8:30 or 9:00, when most of these offices open.

[Ed Note: Mainstreet Millionaire is a program designed to take you from your first deal through your step-by-step system on how to purchase cash-flow properties below market value and use creative financing techniques to close the deals with the least amount of expense, time, and risk.]