How I made $24,000 on one real estate deal — without selling
I must admit getting a check for $24,654 was nice. But, what made it super nice was that fact I didn’t have to pay any taxes. If you made that same amount on a job you would lose over $9,000 to taxes. Since I didn’t have to pay taxes on the money, the Mrs. and I were able to take a pretty nice vacation.
But, how did I do it?
I used something called a cash-out refinance. Chances are you’ve probably never heard of that. I hadn’t either.
But, I listened to the message in Proverbs 15:22, which tells us plans without advice fail, but with advisers, they succeed. Because I sought guidance from mentors and an accountant I was blessed.
Most people who make this kind of money in real estate, do it by holding a property for a while and selling it for more than it’s worth. Or they buy the property, fix it up, then HOPEFULLY sell it for more than it cost to renovate.
I don’t like to sell any real estae. I prefer to hold it as long as possible and collect rent, which is why neither of the above options would work for me. So, I researched, sought counsel, and came up with the following strategy.
Here are the exact steps that allowed me to pull in more than $24,000 on one real estate transaction — and pay zero taxes.
Step – 1: LOCATION, LOCATION, LOCATION
I found a property in a great location and put 20% down. To determine if the property is in a good neighborhood check schools, crime rate, historic appreciation, and median household incomes.
Step – 2: LET APPRECIATION WORK IN YOUR FAVOR
Most people are impatient and try to go after the quick dollar. The Bible reveals that patience is a rewarded. So, instead of rushing to renovate and sell, I collected a year of rent to increase equity and saw the property value rise almost 10% due to appreciation.
Step – 3: RENOVATE
I added a new backsplash and countertop. I replaced the appliances. Lastly, I replaced the painting and flooring throughout. Having a high-quality property will allow you to attract the best tenants.
Step – 4: THE CASH-OUT REFINANCE
Now, that I had a property that was worth $80,000 more than what I bought it for, I decided to take $24,654 out through a cash-out refinance.
I didn’t use the money to buy a boat or a new car. I used the money to buy another property to do it all over again!
This strategy works well for me, but I can’t say it’s the best thing for everyone’s situation. There are a couple things I need to point out…
1) I had to have good credit. To get strategies on boosting your credit score watch my Bible Money Makeover. The first video is all about increasing your credit score.
2) I had to have money for the down payment. If you’re trying to save a down payment in a bank savings account it’s most likely going to take you a very long time. Or you’re going to be living with your parents for a while. There’s a much better way to save up for property quickly. I made a video discussing the exact strategy in detail. Enter your below information and I’ll send the video to you.
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