Here’s one of the deals we will be discussing at the What Box? Seminar:
Pete’s Interesting Deal: 401 Somewhere Street
Pete’s friend, Mark, recently wanted to do a 1031 exchange. So he assigned a contract to his intermediary, Jack, to sell his house in Atlanta for $150,000. Jack, in exchange for the assignment, gave Mark a promise to deliver an acceptable property. This gave Mark 45 days to identify another property and complete the 1031 exchange.
Pete, always one to help his friends, recognized that Mark’s 45-day clock was running down, so he asked Mark what rate of return he was looking for. Mark replied that he was happy with an 8% return, but did not want the thrill of management. Pete agreed to help and suggested that Mark buy Pete’s rental house at 401 Somewhere Street for $150,000. Mark didn’t want to own a home in St. Petersburg, so Pete agreed to lease the home from Mark, with an option to buy the house back within 10 years. Mark instructed Jack (his intermediary) to purchase the home on Somewhere Street for Mark for $150,000, thereby completing his 1031 exchange.
***It’s important to note here that Pete would not have done this deal structure if Mark had not agreed to give Pete an option to buy the house back.
This gets so exciting! Stick with me here…..it gets even better!
Pete then leased the home from Mark, with the right to sublease the property, at 4%, totaling $6000/per year ($500/per month). This $6000 per year is taxed as ordinary income. The other 4% (remember, Mark wanted an 8% return), Pete added to the option to purchase. This 4% is taxed as long term capital gains.
The benefit to Mark was: he parked his $150,000 in a very safe deal (the ARV of Somewhere Street was $250,000), and avoided an onerous taxable event.
The benefit to Pete was: he essentially refied his house at 8%, but with 4% monthly payments. This ‘structure on purpose’ deal created $900 a month cashflow for Pete. And, Pete was able to help his friend. Always a plus for Pete!
Deals like these….deals that are, as Pete says, structured on purpose, are what our What Box? Seminar is all about.
Pete Fortunato & Bill Cook have over 70 years of real estate experience between them. The stories of their deals will be layed out in the What Box? Manual like you’ve never seen before.
The stories include:
*. How the Deal was found – through allies, marketing, word of mouth, door-knocking
*. What the Situation was – the debt owed, rental or owner-occupied, bank-owned
*. The Uncomfortable Circumstance – divorce, down-sizing, death. The questions asked to discover the problem
* The Benefits – for the buyer, the seller, the lender, the partner
*. The Docs required to complete the deal
*. And where the Investor was in his career – Beginner, Wealth Builder, Ender
The What Box? Seminar – If you want to learn how to do your deals better, if you want to be able to make the impossible deals profitable, then this is your gotta-be-there-event! Join us for an incredible weekend with two of the most experienced investors in the country – Pete Fortunato & Bill Cook.
For more information, go to our horrible-but-under-construction website: www.CashFlowREI.com
It’s going to be a great 2-day Seminar! Plus, all of your friends will be there. Lots of networking opportunities! So Call Kim and register today! 770 815-8728 Or simply fill out and fax or email the registration form (www.CashFlowREI.com, click on the What Box? Button).