Sunday, January 22, 2006

Mortgaging Out Can Be Your Key to Quick Cash Flow

Mortgaging Out is an activity in real estate that's not too well understood by beginners.

Basically, here's what happens when you mortgage out:

You, we'll say, buy a property for $100,000 total price. You get a long-term First Mortgage for 75% of the purchase price, $75,000. You then need $25,000 for your Down Payment. You'll also need about $5,000 for Closing Costs.

Looking around for future potential buyers you see that, with a small amount of fix-up, you can sell the property for $145,000. You contact a Second Mortgage Lender who agrees to lend you $35,000 on a Second Mortgage.

You buy the property and come away with: $35,000 Second Mortgage - $25,000 Down Payment - $5,000 Closing Cost = $5,000 cash from Mortgaging Out.

You can use this cash for repairs, to buy another property, or bank it for future use. And since this cash comes from a loan it is not, in general, taxable at the time you receive it.

Mortgaging out can work in many other ways. We'll cover them in future posts.

Meanwhile, check out my many real estate resources that can help you get the real estate money you need. You'll find them at

Tyler G. Hicks

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