| Now understand, I live in the Chicago area, and I never
even saw this home in person.
Some of you may remember seeing this before because back in March I actually put this
out to my database hoping to refer it to someone who lived near this
address, or knew
someone he did live near this home. I had a couple responses, but no
takers.
So with this deal staring me in the face I decided the heck with it, I'll
make it happen myself!
The sellers were approaching 8 months pregnant. Had the home listed through a Realtor, (A friend
who was willing to cancel the listing) starting out at $159,900, now
priced at $154,900 The local market was soft for sellers, and no offers
were being made. They wanted to down size to reduce their monthly cost,
move closer to his work, and be closer to her family. They wanted to move
prior to her having the baby. At that price if it did sell, they were
going to have to go to closing with a couple thousand dollars because of
commission and closing cost. They owed $146,000 on their mortgage. It
looked like this:
Price
$154,900
1st Mortgage -146,000 (Monthly payment on this is
$1,465, PITI - principle, interest, taxes, and insurance)
Minus 6% -
9,294 Realtor Commission
Closing Cost - 2,000
Approximately
(2,394) Negative
My offer:
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Deed ownership of the property over to me.
"Subject To"
the mortgage.
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I take over the payments, utilities, and all
responsibility for maintenance at the beginning of the 3rd month.
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Which means they still paid these expenses the next 2
months after we closed our deal. The reason for this was to allow me
time to advertise and acquire a lease option buyer.
Their attorney advised them not to deed the home over to
me, felt it was too risky for them.
I gave them a day to consider the lost solution to their problem, and then
contacted them again with another solution that would not require them to
deed over ownership now, and help them accomplish their goal, the "Lease
Option."
So we agreed to a lease option with the right to sub-lease
with no expiration date, so I wouldn't be under any time pressure. They
still took care of the first 2 month's expenses.
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I paid for an Ad in the local paper, $237.
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Contacted a local Realtor through Realtor.com. Talked
with several before I found one who would work with me. The Realtor
confirmed the local market information for me. Inspected the home and
confirmed excellent condition, and I should be able to get $1,500 for
rent. My intent was to ask for $1,600, and give the lease option buyer
a credit of $150 toward their purchase.
I offered the Realtor:
1. $1,000 (list side, and 3% to selling
agent) to just list the home in the MLS for me, showing lease option
and owner
financing possible,
2. put a lock box and yard sign on the
home, and
3. show it to my pre-screened buyers
from my Ad.
The Realtor would not agree to that, we negotiated and finally agreed to:
1. 1.25% list side, if it was sold through
the MLS,
2. or if I sold the home to my buyer that the
Realtor showed through the home.
3. If I sold it on my own without the Realtor
showing it, no commission would be due.
-
Got several calls from my ad, people with a little bit
of money, one guy who just wanted me to give him the home with no
money up front. (Can you imagine the nerve of that guy! Bless him for
trying, and not this time.
-
The seller gave me the combination code to open the
garage overhead door. I realized that I could give that out to my
prospective buyers that I had screened and felt comfortable trusting
to let them show themselves through the home. Only problem I had was somebody locked the inside door from the
garage to the house after a couple showings. Could of been a Realtor.
My Realtor went over and unlocked it.
-
I got my own buyer from the Ad with $9,000 to put up. They gave me
$1,000 earnest money wired into my account, and then off to their
attorney with my lease option agreement.
-
After discussion instead of the lease option they
wanted a Land Contract for deed, which is basically owner financing
where they give me the down payment, make monthly payments, in this
case $1,465 PITI, plus any increase in taxes or insurance, we agreed to a 4 year balloon,
(which means the balance of the purchase price due
and payable at the end of 4 years).
Now since I'm not the actual owner, I just have an equitable interest
via my Lease Option with the right to Sub-Lease, the Land Contract for
deed required the seller's signature also. Which they had no problem
providing.
-
Oh the best part, the price is $164,900. So the
numbers worked out like this:
$164,900
Price
-
1,000 Earnest Money
-
8,000 Balance of down payment
155,900 Financed over 4 years
-
So with no Money Down (I did have the cost of an Ad
$237 on my credit card), I
got $9,000 up front, ($1000 earnest money wired into my account and an
$8000 cashiers check, see below) and I get another $10,248.41 plus, when my buyers get
their own mortgage within 4 years, and pay off the existing mortgage. It is plus
because with every payment that is being made, the principle is being
reduced by $137.53.
That is over $19,000! Over $20,000 by the time they pay
off the mortgage!
If I can do it so can you!
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I'm in the middle of another deal similar to this one
in Valparaiso Indiana right now.
Who says you can't buy properties
with No Money Down, and put money in your pocket?
Or better yet make money on real estate with out
actually owning it?
I've performed 1000's of transactions on properties over the
last 20 years using a variety of techniques. Made lot's of money and
have achieved financial independence. Those who are saying it can't be
done, can just keep saying it, while I keep doing
it, and showing those who are ambitious enough, how to do it.
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I share with my mentor students a specific detailed
game plan for making deals just like the one described above.
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You can do it, or just keep doing what you are currently doing. If
your ready for a change, return to the home page and keep
reading. Home
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