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Wraparound Mortgage & All Inclusive Trust Deed (AITD) | Creative Real Estate Investing | Video 9 - YouTube
Channel: Epic Real Estate Investing
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You don't have a money problem,
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but rather an idea problem.
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You see, you don't need a lot of money
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to invest in real estate.
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You just need some creative ideas.
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Boom!
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And in the world of the
epic real estate investor,
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we call these creative ideas "Terms".
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Terms like equity sharing,
options, lease options,
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agreement for deed, seller
carry back, subject to,
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wraps, all inclusive trust
deed, and so much more.
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And you'll see links in
the description below
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for the entire series on these terms.
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Right now though, I'm
going to show you a wrap
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and how it works.
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Wrap is short for wraparound mortgage.
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Some states refer to it as
the all-inclusive trust deed.
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Doesn't sound terribly exciting, I know.
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But with the amount of no money down
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income property you can buy
using wraps, it's pretty slick.
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Your financial freedom, not to
mention your overall wealth,
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can grow 10 times faster.
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I did say 10 times faster,
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than all of those people
going to work every day,
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making sacrifices, saving their
money in things like a 401k,
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and having to wait 30 to 40 years
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before they can even begin to enjoy it.
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Can you believe that's the plan
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we've all been told to follow?
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Life is short. You've got
options, much faster options.
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And wraps can be an instrumental part
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of picking up the pace and retiring early.
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But before we go there,
click the subscribe button,
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ring the notification bell,
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because I post cool stuff
like this each and every week,
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and you don't want to miss it.
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Let's do it!
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The term wrap or wraparound mortgage,
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those are used interchangeably
and pretty loosely at that.
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Most of the time, when
someone mentions a wrap,
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they're talking about an
all-inclusive mortgage
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or all-inclusive trust deed (AITD).
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It depends on which state you live in
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as to which one you'd use,
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but they're both pretty
much the same thing.
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A wrap, it's a type of junior loan,
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which wraps or includes
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the current note due on the property.
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Typically, we begin with
a "subject to" deal,
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what we discussed in the last lesson,
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and then add to it a
seller carryback mortgage,
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what we discussed two lessons ago.
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It's called a wrap because
we're taking the newly-created
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seller carryback mortgage
and wrapping it around
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the seller's existing mortgage
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to form one single mortgage,
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or an all-inclusive mortgage.
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It looks like this.
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We'll take this house valued at $300,000.
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And the motivated seller has
accepted your offer of $250,000.
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The seller has an underlying
mortgage on the property
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of $175,000 at 6% interest.
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And you don't have the
money to pay that off
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so you suggest to the seller
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that you'll take over the
payments of that mortgage,
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and then pay the difference
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in the form of a second
seller financed mortgage.
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The seller agrees and carries
back that second mortgage
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in the amount of $75,000 at 8% interest.
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The existing mortgage payment is $1,049
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and the seller carryback
mortgage payment is $550.
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You'll wrap that second
mortgage around the first
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to form an all-inclusive mortgage,
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or an all inclusive trust deed
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like I said, depending on
what state you live in.
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You then make a combined
payment of the two of $1,599.
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$1,049 goes to the existing mortgage
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and $550 goes to the seller.
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Now, if a wraparound mortgage
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is even just a little
bit more clear to you,
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let me know by blowing up the like button.
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But wait, there's more to wraps.
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We've only cracked the surface.
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The wrap is key in getting
control of more property.
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The name of the game - control.
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Creative financing like
this, this is the tactic.
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And by wrapping a new mortgage
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around an existing mortgage
with a lower interest rate,
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you can often save money too
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due to the blended nature
of the new interest rate
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created by the combination
of the two mortgages.
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You have a 6% interest
rate on the first loan
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and an 8% interest rate on the second.
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And at first glance,
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you might think you're getting
a combined interest rate
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of 7%, but that's not the case.
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Due to the amount of each individual loan,
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the actual blended rate will be closer
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to the lower rate than the higher one
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because of the larger
amount in the original loan.
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Another benefit of using wraps
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is that they offer more flexibility
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and allow you to negotiate
many more terms than you could
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than by just taking over
the property subject to
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and paying boring old
cashflow, the difference.
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Why pay with your cash when
you can pay with "Terms".
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These negotiable terms
include, but aren't limited to:
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the payment amount, interest
rate, maturity date,
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equity sharing, moratorium, deferments.
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I mean, every single ingredient
in the whole enchilada
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is 100% negotiable.
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You're only limited by
your own creativity.
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For a complete list of these ingredients,
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these negotiable creative terms,
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you can grab a copy of
the same cheat sheets
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that I give to my private REI Ace clients.
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You can get those at EpicBreakthrough.com.
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In the next video of this series,
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I'm going to show you how to present
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these creative offers to a seller
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so that they don't feel like
you're trying to scam them.
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And they'll be more inclined
this way to consider
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and accept your offer of
where you'll both end up
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in a much better position
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having created a win-win
solution for you both.
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That's always the best outcome.
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And then I'll show you how to find
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these types of creative deals
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so you can use more of
your new creative ideas
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than your actual money
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to build your real estate portfolio
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and your overall wealth.
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So click the Subscribe button right now
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because you won't want to miss that
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and many more of these ideas to come.
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And who do you know that
also may be interested
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in creative real estate
investing like this?
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When that person comes to mind,
please share this with them.
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Thanks for watching. See you soon.
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