Pay Option ARMs & Negative Amortization Loans For Real Estate Investors

Investor Pay Option ARMs

Who Else Wants To Know How To Double The Cash Flow On Your Rental Property Without Trying To Squeeze More Money Out Of Your Tenants?!

Dear Real Estate Investor,

Have you heard about all the bad press about Cash Flow ARMs, Pay Option ARM, Smart Loansand all the other variations of loans with negative amortization? A lot of it is warranted! This loan is a tool and just like any tool, there is a right way to use it and a wrong way!

Most people that get Pay Option ARMs do it simply to get a lower payment on the house that they live. They couldn't afford it any other way. They finance the house to the hilt and suddenly they get upside down!

Using Pay Option ARMs are a good choice when your home is seeing good appreciation (5% or more) because this type of loan has the ability for negative amortization (the loan balance can actually increase over time). In this case the amount of appreciation will easily out pace any increase in the loan balance.

Pay Option ARMs are good for property that you are financing under 90% of the value. In fast appreciating markets you can get away with a higher amount but leaving 10% equity in the house is bare minimum. Why? Well, If you sell the house through traditional means, your selling cost could be anywhere from 9-15% of the sales price! No one likes the idea of having to come out of pocket to get rid of a house! You want to make money!

We have found the ultimate use for Pay Option ARMs!

How did I find out? Well, I am an investor, too! In trying to maximize the income on my own property, I gave it a shot. I put a Pay Option ARM on one of my houses and HOLY. . . I'll show you an example in a second. But first, I have a few questions for you.

Do you own investment property? Do you plan on holding on to it for 3 years or less? Do you have at least 20% equity or are you putting at least 10% down on a purchase?

You may want to take a serious look at using a Pay Option ARM. We already discussed basic ideas about appreciation, but let's look at an example of how this type of mortgage can send your cash flow through the roof!

Let's say you have a duplex worth $200,000. You currently owe about $140,000 and you are paying 7% for a P&I (principle and interest) payment of $931.42. We will assume that the T&I (taxes and insurance) is approximately $500 a month and that you get about $1800 a month in rent. This gives you gross cash flow of $368.58. Not bad.

Now letâ€™s look at this same example using a Pay Option ARM! Using that same loan amount with a payment based on 1% gives you a payment of $450.30! When adding in the taxes and insurance, your cash flow jumps to $849.70!!! You have just DOUBLED your income on this property! Actually MORE than Doubled!!!

This is a simple example but is shows the power in using Pay Option ARMs! If you refinanced 4 property similar to this, you could add almost $2000 to your monthly income! How much of a difference would that make to your business?

In addition to the extra cash flow they you will get look at some of these other benefits:

If you have a vacancy, how would it feel to know that your holding cost during that time is 33%, or more, less than what it was before?
If you have a repair that pops up out of the blue, as they always do, how would you feel knowing that the expense won't kill most, if not all, of your profit on the property for the YEAR?

How would you feel once you knew that you had the cash flow cushion to be able to hire a professional manager to take over day to day operations while you spend more time finding more deals?

The possibilities are endless!

I am not even going to mention the tax benefits! ;-)

Be sure to check out our other real estate investor loan products!

To Greater Profits!

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