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Do not rent, renting is expensive
How expensive can simply renting be, it could cost you up to 50% more to rent than to own.
Follow through the example below to see why. With so many people losing their homes and being forced to downsize, they
are looking to simply rent. This is so expensive when you have better options available to you. Just because you lost
your overpriced home to a short sale or, even worse, a foreclosure, you can still have the benefits of home
ownership! Even if you add in a bankruptcy.
For this example let us assume you are paying lease of $1,800/mo on a home. Do you realize
that without the advantages of being able to write off interest and taxes, you need to earn $2,700/mo to pay that
lease? IRS and your state will tax you about 33% of your money (assuming you are in the 33% tax bracket). Take out the 1/3
off $2,700 for income tax and $1,800 is left.
How much would it cost you in 36 months, at 1800/mo? About $64,800. But, you would have
to earn $97,200, over 36 months, to pay that amount in lease. (Note: That figure will be higher, when lease increases are included.)
Now look at Equity Holding Trust Transfer method, your
payment would be $2,100/mo. You will get interest and tax deductions, so, you could save about $18,000 in extra income
taxes over 36 months. Your net lease payment would be $2,100 minus tax savings of about $900 per month would equal a net
payment of $1,200. You would only have to earn, in 36 months, $75,600 to pay the $43,200 in net lease. You
will save 21,600. That is like giving yourself a $7,200 a year pay raise!
***Note, this is just an example of how it might save you money. You need to discuss this
with your tax advisor before entering into a this kind of a lease agreement.***
This does not include any principal buy down or appreciation.
In this example, your principal reduction would be about $300 per month. That would make
you net payment $900.
Add in some modest appreciation, say 3% per year, and you would be gaining $300 per month,
making your net payment $600 per month.
So, the choice is yours, earn $2,700/mo to pay $1,800/mo in rent or earn
$2,100/mo to pay a net payment of $2,100/mo. Remember, beside saving $600/mo off the bat, you will get about
another $600/mo in tax savings.
How it works:
There are three steps to achieve the benefits of home ownership. First, the property
has been placed in the seller's (also known as the Settlor) Equity Holding Trust. Second, in a separate action, you
will be named a beneficiary of that trust. The last step is to sign the occupancy agreement. This is a "triple Net"
lease, which means you are responsible for the lease payment, maintenance, and any repairs; in return you get a
share of the equity and take total income tax deductions [according to IRC 163(h)4(d)]. You may be able to use the
equity gained at the end of the term as a down payment to finance into your name. Also, your refundable
contributions for closing cost fees may be use toward the down payment.
You can now enjoy all the benefits of homeownership without the
hassle of getting a mortgage, needing to save an unreasonable amount of money, and with dinged or even
horrible credit. You will have ample time to clear your credit. By the virtue of equity sharing, you will gain the
monetary reserves to easily buy this property. But, for now, just enjoy the pride, freedom and benefits of
homeownership.
When we reach the termination point of the trust, you have the first right to purchase the
property. This is what we have been working towards. If you decide to complete the process and purchase the home, you
can use your share of the principal buy down and appreciation towards your equity for a new loan. Also,
your contributions for the closing costs are refunded at this point and that can be applied to the closing costs of
the new loan or the down payment. Being a beneficiary of the trust, you are look upon by the bank as a co-owner and
oft times, you can refinance into your name, which may include the closing costs. If you decide not to purchase,
your contributions, including any gains, will be returned upon completion of the sale of the property. It is your
duty to remain in the property and take care it, just like any other owner would do, until it is sold.
This method does resemble a rent to own, lease option or lease purchase,
but the big differences are no option, just the first right to purchase and solid documentation for every one to go by.
Credit is not really an issue to get started, even if you
had a foreclosure or bankruptcy, you can do this. Using the company below, you can get your credit restore to
easily get your own mortgage in 6 months to 3 years.
If you want to enjoy the benefits of home ownership, then...
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