The current US Government is "the gift that keeps on giving". I dread the fact that they may not get re-elected making it so much harder to make money. But for now, you need to take advantage of every opportunity presented.
To the less informed, President Barack Obama this week will announce a series of actions to help the economy that will not require congressional approval, including an initiative to make it easier for homeowners to refinance their mortgages, according to a White House official. Read it here.
Another profit windfall is now presented to you on a platter. This is a little bit complicated so I will over simplify:
- Form a US Limited Liability Corporation (LLC) created for the purpose of owning, occupying and refurbishing real estate property.
- Fund your new corporation with $100. (yes only $100).
- For $100 you buy a HUD (Housing and Urban Development) sponsored home provided you agree to take over the existing mortgage.
- Don't make any mortgage payments. The property was probably in default anyway and it will take 6 to 9 months before anyone contacts you about your late payments and tries to foreclose.
- Under this government program, you immediately qualify for an FHA 203K loan that can be used for "repairs and renovations". You should be able to leverage up to $2,000 of loan for every $100 you place into the property.
- So let's say for each property you do this at $1000 so you can borrow $20,000. And do this for 5 properties to borrow $100,000.
- With that $100,000, purchase a truck to enable the repairs and refurbishing. Maybe buy some nice tools including that table saw you always wanted. An iPhone to keep in contact with people doing the refurbishing. Perhaps buy some major appliances for yourself and family. You get the idea....
- Now don't be stupid. You need to also make an attempt to repair and refurbish the property you just bought under this government program. The problem is that you are not very good as a repair man and you are an even worse business man.
- Your corporation is forced to declare bankruptcy. You default on the mortgage. You default on the loans. You keep the tools, truck and appliances because it is the US tax payer that is backstopping your loan because this was a government program to jump start the housing market.
WARNING: I have greatly over simplified this. Not all housing qualifies. Not every US state is participating. 203K loans do have some rules and regulations. BUT... the new rules go into effect in November and will be in place of 1 year. Techniques were used to bypass the US legislature so no laws were written-- this was via executive order.
What we do know is this:
- The government has put out the "free money" sign.
- Hordes of clever people will flood the government offices.
- The overload will ensure government employees focus merely on getting the workload "off their desk" ensuring little if any review of the applications.
- This is a US election cycle so government money will flow freely.
- Certain groups are well organized to capitalize on this "window".
So you are probably asking, "where does China fit into all this?". Well, the US government is backstopping the purchases you made with the loan you never intended to repay. The US government is also borrowing $1 for every $2 it spend from the Chinese government and the US government doesn't plan to repay the Chinese either.
Perhaps you can see now how it is your patriotic duty to capitalize on this program.
Great post. My brother-in-law has a small handy man service. He was laid off over a year ago and has been collecting unemployment benefits while at the same time being self employed. We saw the news on this and our plan is for me to do what you said in this posting and hire him to do the work. He will overcharge for the work and... well... ;-)
ReplyDeleteI don't think you can do this as an LLC. You may have to do it as a private individual and declare personal bankruptcy which has a whole lot of individual complications.
ReplyDeleteYou may be able to do it as a non profit 501C(3) corporation but I'd have to research this.
In a worst case, you can get some homeless person to be your front so that when they declare bankruptcy it doesn't really mean anything but in the interim they can actually get a cut of the cash.
While this is a good get rich scheme, I think most people would know how most of those plans typically turn out.
ReplyDeleteThis plan does assume that you are playing the game to lose. There are definitely more losses that will occur than indicated above, but I am thinking that most do not start businesses looking to fail. Some of the points in the article do indicate a decreased risk profile for the individual starting the business though, which could be a win win for all (banks, employment opps, etc).