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September - October 2009 . Personal Real Estate Investor 1www.PersonalRealEstateInvestorMag.com
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September - October 2009 . Personal Real Estate Investor www.PersonalRealEstateInvestorMag.com48
0INVESTOR STRATEGIES
By Andrew Waite
Howard Walton is a bus driver for the Regional Transit Authority in Euclid, Ohio. At 50 years young, and the prospect of working another 10 years, Walton worked out that if he wanted to have a comfortable retire-ment, he would need more income than his pension and social security could provide. His solution: rental real estate. That was the good news. Now Walton finds that managing the financ-ing he needs to borrow, buy, rent, and debt service some 12 separate proper-ties is a significant task. “These num-bers can be put on spreadsheets,” says Walton. “But this does little beyond laying out the extent of the debt.” Enter Diana Easley, a board mem-ber of the Greater Cincinnati Real Estate Investors Association, a former mortgage broker and now a United First Financial agent. As an investor and former loan officer, Easley fully understands the mortgage manage-ment issues facing active real estate investors, particularly those following a buy-and-hold strategy.
SPREADSHEETS ALIVE “The biggest issue for me was figur-ing out the money flow,” said Walton. “Where it came from and where it went, especially when it came to pay-ing each of the separate mortgages for each of the 12 properties I own with various banks as my lenders.” “Without each mortgage consid-ered as part of a complete picture, it was impossible for Walton to under-
stand how to apply payments intel-ligently to reduce interest with the greatest effect,” said Easley. “The soon-er money is applied to principal, and not interest, the sooner the mortgage balance, and thus interest due, drops. Understanding how to emphasize Mortgage A versus Mortgage B can massively reduce interest obligations.” Without seeing the overall pay-ment effect, Walton would not get the most from his payments.
INTEREST INTELLIGENCE The solution Easley proposed to Walton was using the latest version of the United First Financial Money Merge Account™. This system man-ages multiple mortgages for multiple properties. Version 4.2 of the Money Merge Account was tested with investors for six months before it was released in Q’4 2008. “This is a great for investors as it allows me to shoot for another goal beyond just investing,” says Walton. “The way the real estate financing cri-sis was going and bank reactions to toxic loans and underwriting lapses, this could have become an issue for me. By using Money Merge I can see the big picture and where to best apply payments and manage interest. With the Money Merge tools and software I can see ‘my road map to zero.’” Walton will retire at 60. “At 50, and looking at 30 years of mortgage pay-ments, I could not see real equity till late in my life,” says Walton, “but now that I better understand how financ-ing works for the financial industry, I
am making it work for me to get more equity in my investments earlier. I expect to pay off most of these loans in 15 years with rent proceeds. Then, it can be almost pure positive cash flow.” After using this for just two months, major principal reductions have not yet arrived; but Walton can already see an impact through dynamically applying current cash, as well as a clearer path to a more stable retirement income and a debt-free asset base.
WHO CAN HELP Diana Easley is a triple threat. She was a loan officer, so she under-stands the mortgage business well. She is a board member at The Greater Cincinnati Real Estate Investors Association, and an investor. She is also a successful United First Financial agent who specializes in understand-ing how the Money Merge Account™ can help buy-and-hold investors achieve more equity, earlier, in multi-property portfolios.
RESOURCES
Investor SpecificDiana EasleyUnited First Financial independent [email protected]
Other Money Merge Account™ inquiriesUnited First Financial www.u1stfinancial.com
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