How I plan to raise $500k in 50 days. Day 7

Day 7

Today is the Lucky Friday the 13th.  I am one that follows the great Yakov Smirnoff that says that everything in Russia is backwards.  I joke, I have not been to Russia but close. My wife is Ukrainian and we lived there for 18 months.  The people of Ukraine and the Russians that I met there were all great.  I volunteered to teach English and do you know what the #1 thing they asked me was?  Scott, how do I start a business.  Every one of them would ask me this.  Some were 12 years old others were 50.  Why do I bring this up?  Because it struck me that on this day that everyone will be focusing on how unlucky they will be, focusing on a negative.  There are people around the world that are planning on how if they were given the chance would start something and create their own luck.  That is such a novel idea here in the states now days. Create your own luck.  Do people still do that.  Yes, I do.  I have always been of the mindset that I will work my way into luck.  It has never failed me yet.  Just this morning I got an email from an asset manager saying that they have some distressed loans that they need to sell.  Just like that out of the blue.  Why is that, because every day I and my team at Northstar Investment Group is working on developing new relationships with asset managers, new joint venture partners and servicing partners.

Lets take a look at a deal that we are currently working our way into.  The property is in Palatka FL.  Now the first thing that you need to know about Palatka is it is on the St. Johns river and a very beautiful little town.  Only problem is that there aren’t many sales there.  So with that info we know that if we acquire this asset that we most likely will not be able to sell it to recover our investment.  Most other investment companies stop right there.  No deal to them.  Not for us, since the seller really has no options that is where we can create a smoking deal.  The offer that I submitted goes like this.  We will assign the mortgage to a FL trust that the seller and our company are join 50/50 partners.  We will then clean up the file to re sell to a new buyer and carry back the financing. We know that the property’s will rent for $600.00, so that means that we can sell to a renter and lower their payment to $500.  This is a net $250.00 for each party.  We will get between $2,000.00-$5,000.00 down and carry the note for 10-15 years.  Here is the great thing for Northstar.  Any costs or fees that we incur to get this deal back on track will be repaid first.  My cost estimate is about $3,000.00.  That will be paid with the down payment money.  SO now Northstar is into a positive cash flow, AND the property is owned by the borrower so we reduce our liability, they take ownership so if the water heater breaks, it’s their issue not mine in the middle of the night.  We are into and out of a deal that will take between 4-8 months and thus have an infinite return.  You may be saying, well Scott $250.00 is nothing and you may be right, but if you are a landlord.  How large of a house do you need to buy to NET $250.00?  How much capital do you need to tie up?  I would guess around $50-80k AND you have all the risk.

I will take may option every day of the week.

If you have any questions, please contact me at scott@northstarinvestmentgroup.com

 

Respectfully,

Scott Schmitz

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