Investing in Real Estate gives you access many possibilities such as enabling you to purchase a vehicle. One of the ways to purchase a vehicle where you do not need to use any of your own money is to setup a line if credit, lend it out as a real estate mortgage investment and finance the vehicle. The interest earned from the investment needs to pay for more than the cost of leasing or financing the car each month.
Step #1: If you do not have any assets to borrow against then speak to the bank regarding unsecured line of credits. The stronger your credit score, the more you can borrow at a cheaper rate.
Step #2: Find a borrower that require your funds for the purpose of real estate acquisition. Ask a real estate lawyer or mortgage broker familiar with private lending for more information. Interest rates are normally 8%-12% per annum. Read more about my blog on mortgage investing.
Step #3: Find a vehicle that fits with the income produced by your mortgage investment. Insure the vehicle’s monthly payments do not exceed the interest earned monthly from your investment. In fact you might get paid each month if there is a surplus.
Case Study: Jim went to the bank and asked for an unsecured line of credit. He has been working hard to perfect his credit score over the last two years. After about a month and a half of speaking to the banker, he was approved for $70k from two institutions.
He spoke to a mortgage broker specializing in mortgage investments. Within a month, the broker connected him with a borrower that will pay him 12% to borrow his $70k. After paying his line of credit, he nets about $233 per month.
Jim finds a $15k second hand vehicle at a dealership who setup the financing with him for 84 months with zero down for about $225/month.
Thus, his mortgage investment brings him $233 a month and his car payments are $225, this means he makes $8 each month after financing this car.
True Story: One can take this to another level. You can borrow against your house. A while back, I’ve borrowed $240k against a property I owned. I lent out $200k at 10% interest. I found the borrower through my mortgage broker. After paying the bank, the investment netted me about $1000 a month in passive income. With the $40k left, I used it to purchase a used vehicle for work. Thus, I get paid $1000 a month and I bought the vehicle outright (the image from above) without even touching any of my own funds.
Note, I’ve been investing for over a decade. If one is starting out, I’d strongly recommend that an investor invests in cashflow producing assets than to buy a car using debt. Although it does work, it is not the path to long term wealth. An example of a long term wealth strategy can be to use the line of credit to purchase a business where the day to day operations will be run by a manager. The cashflow from this business will bring in even more income for you. The income produced by this business will be to reinvest it back into even more income producing assets and keep on repeating. A manager will run the day to day operations where the investor should be working on the business, not in the business. Contact me below if you’d like to be part of this world.
The above blog are for illustration purposes only. Please do your own research and seek independent advice prior to any investment and strategies.