Double Your Money Every Year

Doubling Your Money Is Not Difficult If You Know How

Here is a new strategy recently developed and used by the author, Bill Vaughn. While it requires the use of some cash and credit, for those who have such assets (or will have them after investing for awhile), it is incredibly potent, and can double - or even quadruple - your money each and every year! In the process, you will have the satisfaction of helping people in dire straits.

There is certainly no shortage of people facing bankruptcy and/or foreclosure. Such people can be found in every community across the nation. This technique solves their financial problems and provides you with huge returns, if you use a certain degree of smarts.

Let's say Joe Homeowner owns a $150,000 home, and owes $120,000 on his mortgage. He is $4000 behind in his payments and the bank has sent him a pre-foreclosure notice to pay the arrears within "X" days or else they will foreclose. It is important for you that Joe has enough equity in the property to provide the necessary profit you determine you must get that is commensurate with the risk. Therefore, if this is to work for you, Joe will have already ruined his credit, and therefore cannot borrow his equity to pay his debts - it's too late for that. So, while he has equity, he cannot get at it. (There are exceptions, noted later.)

Let us also assume that Joe's credit is ruined because he has been consistently late in making payments on his $12,000 of credit card debt, and he owes $1000 in arrears to various utilities - electric bill, heat, telephone etc., or perhaps he has been late in his car payments.

The final thing you must check out carefully is whether or not Joe could recover and be timely in paying his debts IF he could just get these things squared away, and caught up. In other words - and this is critical, is Joe a hard-working, responsible man who has just hit a speed-bump that has knocked him on his butt temporarily, or is Joe a dead-beat? If the former, there is likely a nice profit to be made. If the latter, walk away - you cannot help him and can only hurt yourself.

Here is what to do once you have done the research mentioned. You could agree to pay off the $16,000 in debt and arrearages, putting Joe on solid financial ground once more. But only if Joe agrees to a few important details:

1) Using the info in the debt reduction section of "The Simple Man's Guide to Real Estate", you help Joe put together a working budget based on actual needs and requirements

2) Using our free credit manual, help Joe get his credit profile into good shape (paying off those debts will go a long way here)

3) Joe must agree - in a written contract - to follow the budget without fail, until such time as this entire deal has been finalized

4) Joe must, once his credit is looking good, refinance his home and turn the equity over to you - all within a time frame determined by you and Joe in advance. You might want to hold an unrecorded second mortgage on the property until Joe follows through. If he does not, you then record the mortgage and may then foreclose.

In the end (at least one year), Joe is in good financial shape once more - no credit card debts, no arrears, and his monthly payments are greatly reduced. And you, my fellow investor, have doubled your money in just a year! Even if Joe cannot refi to get ALL the equity out, you would simply hold a second mortgage for any balance he still owes, and collect either in monthly payments or at some other pre-determined time.

Let's say you have $40,000 equity in your own home. You could use this money to do this technique at least twice, turning your $40,000 into $80,000 in one year. Now, get on your calculator and double that $80,000 when you use this technique again next year, then keep doubling it. See just how soon you could turn that $40,000 into a million. You will find that it should take less than 5 years.

But what if Joe does not have enough equity, as is often the case? In many instances, the home has fallen into disrepair from neglect - after all, if Joe can't pay his bills, how could he afford to keep up the place? You would then determine if the value could be raised considerably if you invest a little money and have Joe do a lot of work. By increasing the value, you can often create equity. In fact, even if Joe does have enough equity, you may want to consider doing such repairs anyway, to increase the equity and the amount you can collect when the property is refinanced. In the example above, if an additional expenditure of $5000 and some elbow grease would increase the value to $165,000, you can make an additional $10,000 in profit.

Yes, Joe pays a stiff price, but nowhere near as stiff as if you were not there to help - without you he would lose the home, his credit would be in the toilet and he would have nowhere to go but down. And remember, you are not just loaning him money - you are teaching him how to stay out of trouble. You are repairing his credit. You are making it possible for him to refinance, and reduce his monthly expenses. Trust me - you are earning every cent. You are a lender, a credit counselor and a financial planner, all in one. And everyone wins - even Joe's creditors.

But that is not all. As a rule, I try to have the homeowner wait at least one full year to refinance, and here's why:

1) the profits can receive capital gains tax treatment - lowering your taxes

2) the equity is greater - another year of appreciation

3) because his debts have been paid, Joe gets a "free ride" for a year, giving him a chance to strengthen his own financial position ( a selling point if Joe balks at your profits).

Everyone wins. The object, of course, is for you to win the most.