I actually have 2 things to celebrate today:

1. This is my 5,000 post to Bigger Pockets!!!

2. The last payment was made on a property I bought in 2012 using peer to peer lending on a 3 year loan!

What better way to celebrate my 5,000th post than a success story of using creative finance to buy a house without much money?

Here's the story:

Back in late 2012, I found a 3 bedroom property that was on the MLS for just $23,000. I thought "Wow, I have to see that one!" (This was back in the days when more houses could be bought in the sub-$30k range.)

I contacted my Realtor and he contacted the seller's Realtor.  I didn't hear anything and tried to find out what was going on. My Realtor said "the listing agent said the tenants are being difficult and aren't letting anyone see the property".

So, being the type of person that doesn't let a little thing like that stop me, I drove over to the property and knocked on the door.  A woman answered and I let her know that I understood the house was for sale and I was looking to buy a property like this as a rental property.  I asked her if I could please see the interior.  She said sure, and gave me such a great tour.  She was friendly and personable and when I told her what the listing Realtor said, she said she's never been "difficult".  She did point out a few deferred maintenance items that the prior property manager (who was also the listing Realtor) never fixed.  I asked her what she was paying in rent and I told her I would lower her rent by $75/month and she hugged me, she was so happy! She said her and her husband are on a fixed income and that $75 would make so much of a difference in their lives.

I did an internet search and found the email for the seller directly (oh, the things you can find on the internet these days!) and emailed him and said "I would like to buy your house and I will pay your asking price and I will pay cash."  He seemed a little suspicious but said I would need to go through his Realtor.  So I had my Realtor write up an offer and submit it to the listing agent.  He then accepted the offer.

Meanwhile, I hopped on the Peer to Peer lending site Prosper, and requested a loan for $18,000.  (I had the other cash saved up to close.)  I deposited my earnest money and waited for my loan to fund which was extremely quick and I got a large deposit to my bank account within 2.5 weeks.  I then closed on the house!

After closing, I took care of the deferred maintenance items:

a) Water heater was extremely old, rusty, and leaky - replaced it.

b) Leaks in the shower and the toilet would always run.  Fixed both of them.

c) Insurance company required a railing be added to the front steps.  Added it.

d) Home inspection turned up that the chimney needed to be tuck-pointed.  Got that done.

Overall repairs cost me about $1,600 and in the 3 years I've owned the property I've also had one furnace repair that cost about $400.

So I paid $5,000 out of pocket for the hours, then $2,000 for repairs.  In the 3 years I've owned the house, I've collected $875/month in rent.  That's $31,500 in rent over the course of those 3 years, which is more than what I paid for the house and the repairs together!  Best of all, my Prosper loan payments were in essence paid for me by the tenants through their rent.

The same tenants are still with me to this day, and I've gotten compliments by the local landlord association on how nice they keep their house and yard. 

To me, this was a "home run" deal!

Congratulations on both - 5000 posts and the tremendous success story

@Dawn A. - Congratulations!  Great success story!

Great job on that financing! I will look into that as an option. Thanks for posting

congrats but I don't agree on paying down your mortgage.  I like lower taxes at the end of the year 

wow dawn. That is awesome

Love reading this, I remember hearing about Peer to peer on your podcast. I've invested with Prosper, now I need to borrow too, to invest of course. 

Congrats all around. 

congrats

Congrats @Dawn A.

That's an awesome way to celebrate 5,000 posts. Congratulations Dawn!

What do you have planned for your 10,000th post? 

Awesome story! Congratulations! After hearing this, I'm going to look into Prosper. 

@Dawn A. Congrats!  Just goes to show, with creativity and motivation, almost any challenge can be accomplished.  thanks for sharing.

Congratulations! I need to look into this peer to peer leading you speak of. I have never heard of that before.

Congrats Dawn! Man if i could pay a house off in 3 years ..... too bad these Chicago prices wont allow that. 

Congrats on both.  What a difference a little bit of friendliness and kindness will bring you. Really great approach across the board.  

Thats amazing!!  Never thought to use prosper!  I also wish I could find something near that here price wise!

@Dawn A.   Congratulations on both feats! That was really brilliant to turn to peer to peer lending for a small loan like that.  I'll have to file that away in my brain for future reference  :)

@George P. I love leverage too, but there is something to be said for using leverage conservatively.  I know Dawn has many other RE investments, so I'm sure she's well-mortgaged!

That's a beautiful story Dawn.
I really enjoyed reading it, thanks for sharing.
I love how you went and knocked on their door and took action.

Originally posted by @Dawn A. :

I actually have 2 things to celebrate today:

1. This is my 5,000 post to Bigger Pockets!!!

2. The last payment was made on a property I bought in 2012 using peer to peer lending on a 3 year loan!

What better way to celebrate my 5,000th post than a success story of using creative finance to buy a house without much money?

Here's the story:

Back in late 2012, I found a 3 bedroom property that was on the MLS for just $23,000. I thought "Wow, I have to see that one!" (This was back in the days when more houses could be bought in the sub-$30k range.)

I contacted my Realtor and he contacted the seller's Realtor.  I didn't hear anything and tried to find out what was going on. My Realtor said "the listing agent said the tenants are being difficult and aren't letting anyone see the property".

So, being the type of person that doesn't let a little thing like that stop me, I drove over to the property and knocked on the door.  A woman answered and I let her know that I understood the house was for sale and I was looking to buy a property like this as a rental property.  I asked her if I could please see the interior.  She said sure, and gave me such a great tour.  She was friendly and personable and when I told her what the listing Realtor said, she said she's never been "difficult".  She did point out a few deferred maintenance items that the prior property manager (who was also the listing Realtor) never fixed.  I asked her what she was paying in rent and I told her I would lower her rent by $75/month and she hugged me, she was so happy! She said her and her husband are on a fixed income and that $75 would make so much of a difference in their lives.

I did an internet search and found the email for the seller directly (oh, the things you can find on the internet these days!) and emailed him and said "I would like to buy your house and I will pay your asking price and I will pay cash."  He seemed a little suspicious but said I would need to go through his Realtor.  So I had my Realtor write up an offer and submit it to the listing agent.  He then accepted the offer.

Meanwhile, I hopped on the Peer to Peer lending site Prosper, and requested a loan for $18,000.  (I had the other cash saved up to close.)  I deposited my earnest money and waited for my loan to fund which was extremely quick and I got a large deposit to my bank account within 2.5 weeks.  I then closed on the house!

After closing, I took care of the deferred maintenance items:

a) Water heater was extremely old, rusty, and leaky - replaced it.

b) Leaks in the shower and the toilet would always run.  Fixed both of them.

c) Insurance company required a railing be added to the front steps.  Added it.

d) Home inspection turned up that the chimney needed to be tuck-pointed.  Got that done.

Overall repairs cost me about $1,600 and in the 3 years I've owned the property I've also had one furnace repair that cost about $400.

So I paid $5,000 out of pocket for the hours, then $2,000 for repairs.  In the 3 years I've owned the house, I've collected $875/month in rent.  That's $31,500 in rent over the course of those 3 years, which is more than what I paid for the house and the repairs together!  Best of all, my Prosper loan payments were in essence paid for me by the tenants through their rent.

The same tenants are still with me to this day, and I've gotten compliments by the local landlord association on how nice they keep their house and yard. 

To me, this was a "home run" deal!

Excellent and many congrats to you. I'm sure you will rinse and repeat. Thanks for sharing.

Kudos,

Mary

Great achievement :)

Great stuff!

@Dawn A. , I have used Prosper to make loans, and I did get one just to see how it worked. They ask what you are going to use the money for. I'm curious, what did you tell them you were using the money for? They don't do traditional mortgages, or at least didn't 3 years ago when I was more actively lending. 

Congratulations. What an awesome story. 

That's freakin awesome!!! I love reading the success stories in hopes to one day posting my own

@Dawn A.

Congrats and that is a great story.  Way to not let any obstacles get in your way!

Many congrats @Dawn A. !  Love the paid-off asset side of the story combined with a creative purchase, a hurdle (go and talk to the resident personally) and a 5,000th post  milestone!   You rock!  

I hope you keep it paid-off and enjoy the peace that brings!

@George P. - There are SOME good arguments for not paying off a mortgage.  Tax advantages are not one of them.  Send me $10,000 and I'll return $2500 to you any day of the week.