* Based on average mortgage rates from 1992 to 2003: 6.97% for 15-year and 7.43% for 30-year.

* Based on average mortgage rates from 1992 to 2003: 6.97% for 15-year and 7.43% for 30-year.

chart). In general, shorter terms on your mortgage loans will lead to higher monthly loan payments that have a direct negative impact on your Cash Flow but a major positive impact on your Equity Buildup. As you can see, after 16 years the 15-year loan is completely paid off (which means you'll experience a big jump in Cash Flow). In contrast, at year 16 the 30-year loan still has 75 percent of the principal debt remaining.

Millionaire Real Estate Investor Ron Garber adopted a strategy of acquiring a single property and then aggressively paying down the principal by using any income he and his wife had. Together, they acquired foreclosure properties in California and effectively turned 30-year mort-

gages into 12- and 24-month mortgages. Admittedly, the first few houses were the most difficult and required the strictest personal budgeting. But they stuck to the strategy because they "couldn't stand having debt." They wanted their assets free and clear, and so only when they had paid off one property fully would they acquire another and then apply all the cash flow from all the paid-off properties to the new one. Each property that was paid off accelerated the process, and in a matter of years the Garbers assembled an impressive portfolio of investment properties that generated big Cash Flow with almost no financial liabilities.

While these debt-averse investors represent an extreme version of Equity Buildup, their aggressive strategy made them Millionaire Real Estate Investors and gave them financial freedom. As we discussed in the section on the Financial Model, if you don't need the cash flow today, why not reinvest it for tomorrow? Reinvestment can put you on the fast track to financial freedom.

With your Net Operating Income and Principal and Interest sub-worksheets completed, you're now able to plug in the final pieces of your purchase terms at the top. This is where you are considering four things at once: the best purchase price, what kind of loan to use, how the seller might provide additional help with the financing, and whether you want to do this deal. If the Terms Worksheet shows you that the numbers will work with conventional (15-year or 30-year) financing, you will be willing to make an offer. If the seller is unwilling to meet these terms or if you need additional, low-cost owner financing to make it work and the seller is not willing to do that, you will not be able to accept the deal. With your options exhausted, you will, with no attachment to this property, move on in your Criteria-based lead generation. If the seller agrees to what you have offered (based on your thorough analysis of the numbers on the Terms Worksheet), you have a deal and will make the investment.

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