If you ask a devout Catholic, they'll tell you that “the greatest lie the devil ever told was convincing the world that he doesn't exist.” Do you know what the greatest lie in real estate is?
“The greatest lie the bank ever told was convincing the world that they do not own their properties.”
Who makes more money off of a rental property – the bank or the landlord?
Try not paying your mortgage and see who really owns your property. They'll take that property back from you without batting an eye and there's very little you can do about it.
Here's the truth about your arrangement with the bank…
- The bank owns your property and the respective cash flow.
- You own all the liability.
- Now wouldn't you say that the bank has one pretty creative arrangement with you?
Fact: Fractional reserve banking is incredibly fraudulent.
The system isn't exactly set up fairly. Most people don't know that when a bank lends money, they're actually allowed to lend out 9 times the amount of money that they actually have in their holdings. The remaining 9/10 is created artificially and new money goes into circulation in that country. The result is what we call inflation, which is actually the money constantly going down in value and consequently losing buying power. When you experience inflation, it's actually due to money value going down and not prices going up.
Fact: You can't change the system but you can change yourself.
Changing the corruption in the system is a monumental task. Changing yourself for the better is a whole lot easier. If you learn to understand the system, changing the flow of passive wealth to your bank account is actually quite easy. The bank needs very little interaction with you to get rich from your property. You can create a similar business model for yourself.
Fact: You can write a contract that works the same way the bank profits.
The point of bringing the corruption to your awareness wasn't to get you upset. Believe it or not, it should inspire you to want to have your own creative contracts too. You can just as easily have a contract that pays you and gives someone else who wants the liability associated with property ownership. The contracts are actually quite easy to set up.
If you buy equity and then sell that equity in a creative mortgage note, you are essentially collecting money for the perceived value. You aren't really selling anything that exists much like the bank isn't actually lending anything that actually exists. You collect all the cash flow and the other person owns all the liability even though they may not perceive it that way. After all, that's not how the landlord perceives it, right?
Fact: You can make your wholesale and short-sales more attainable by holding financing
By offering “down payment assistance” to the end investor into your wholesale and short sale double closes, you can add a whole new level to the types of deals that you do. You can hold secondary financing in addition to making a difference on the profit spread between your purchase price and your investor's purchase price. You'll not only get cash now but you can generate passive cash flow for years to come. It will help you profit more per deal and actually make it more attractive to the investor you resell the property to.
Think Rich Like a Bank
The bank profits from you by holding a creative contract on the property. Think like the bank and hold your own financing to make your deals work for you. Be your own bank through contractual agreements.
So next time you go to close a real estate deal, ask yourself this. Am I making money like the bank through a creative contract or like a landlord doing all the work and accepting all the liability?