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The Terry Hale Show Episode 22

Cash Out Refinance

TRANSCRIPTION

Hey, this is Terry Hale, commercial real estate trainer wealth builder out here in beautiful
West Palm Beach just got through locking down yet another apartment building.
It’s kind of crazy, my social media platforms, people are saying things like
“Hey, where can you possibly find a seller that’s going to carry -? Do these really exist?
Or, “Yeah, sure. Show me.” And what they don’t understand, what they they fail to understand,
Also, is that we’re working with a different type of product. We’re not working
With property that is operating in it’s highest and best use. We’re not working with property
Where the sellers are jumping up and down because of the income that they’re receiving every month.
These properties are distressed, I mean, they’re not environmentally challenged.
These are not dilapidated. They’re not structurally-challenged, by any means.
They’re good looking property, typically, C and B Class. We rarely roll out on
A class property, that’s newly built in in super hot areas. These are B and C. This one’s a 50-unit,
In a great area right outside of West Palm Beach. And the backstory is that the seller
Has neglected the property, they basically take anyone that can fill out an application.
There’s no background check. So the tenants can be a little problematic,
Because they’re not bringing in quality tenants that pay their bills.
And the place needs a little bit of rehab, some fix up. And it is what it is the thing’s underperforming.
It doesn’t qualify for bank financing. So in that regard, there’s two ways to buy it two ways.
One way is an all cash. That’s a lowball offer. And the second way is to have the seller carry paper.
So it wasn’t advertised, it was offering seller financing. It was my strategy,
And part of my negotiation tactics to point out for mutual benefit, that the seller becomes the bank,
They carry the paper, we go in and fix the rehab issue. We fill it. Stabilize it with good strong
P and LS Profit Loss Statements. At that point, its operating in its highest and best use
And we pull a cash out refinance. We actually increase the value. We buy it down here,
We increase it to up here. And then, when we actually trigger a refinance, is a cash out.
So we actually get cash at closing with that cash at closing that goes into our pocket.
We don’t pay taxes on that money until we sell the project. And then we refi
It with low-interest permanent debt. And then, from that low interest permanent debt,
We carry it for cash flow, and that cash flow comes into our bank account, every single month.
Financial security creating generational wealth, and we never sell the property
So we’re not paying tax on that cash out. Now, if we do decide to sell the property,
We still don’t pay taxes on the cash out money. Because we’ll roll it into a 1031 exchange.
And that’s building wealth, taking it from a C class and moving it to a B class in a better area.
Something that’s got more meat on the bone. So I hope you dig this segment justifying
That there are deals out there. Again, I’m doing my final site visit on this one
And got a lot in the pipeline, I can show you how to do it. It’s just a matter of
Understanding the key identifiers and being open-minded and getting creative.
And that’s exactly how people are building exponential wealth and creating generational wealth.
Alright, so if you dig it, click the link below. I appreciate it. Or better yet,
Just go to https://terryhale.com/.
All right. Take care and talk to you real soon. Bye.
To learn more strategies and techniques, visit https://terryhale.com/ or go ahead
And click the link in this video description. And I look forward to engaging with you real soon.

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