A few months ago I got a call from the agent I work with asking me to look at a place that her office had just listed. The seller had done the usual cosmetic "make it ready to sell" and it "showed" real nice.
But; it looked like some termite damage and a quick look in the crawlspace showed the original (maybe the 1950s iron drain pipes, always a worry. Told her I'd bet it had termites and I HATE crawling around in the winter time doing drain lines. But, as it was offered at $55K, I offered them $43K and waited. They countered at $51K and I kind of ignored it.
About 6 weeks later the agent called me, turns out the sale they had had fallen apart at the last minute. This was after the seller had termite treatments and replaced a tiny bit of wood, and had all the drains replaced. Turns out the seller would like to get his sale done "timely" and the last offer to me was their "counteroffer" at $51K, and could I close a week from Tuesday?
We were going to be out of town until Thursday, and besides, I need to get a buyer lined up. "No problem" she says. You run your usual ad, telephone screen the prospects, refer them to me for showing and we'll get it done.
We ran the ad, got the usual ton of calls, she wrote a contract on the second couple that looked. The long and short of it is at 2:00PM on Thursday we were in the Title Company closing to buy, and at 4:00PM we were in the agents office (she's a notary), closing to sell.
I love it when it all comes together.
Nice Cash! Patience certainly pays, right.
What did you flip it for? I couldn't figure you out here. You got it for $51k, right? Advertise it for $55k?? What did you pull here.
Anyway, cheers :beer:
Whoops, left that detail out!
They had listed it originally at $55K. I got it for $51, sold it for $66K. My usual deal; $2K down, $500 legals (I prepare the docs, so that all goes to me), 2 months prepaids (escrowed with me), and one year's insurance paid up front. I finance it the balance, in this case 9%, 30 year amortization, 10 year balloon.
Some people think I'm too generous with my interest rates, but I'm getting 9% on the $64K loan. However, I've got a NET of $49K in it, so the income stream works out to about 12.25% on this deal.
One other thing, obviously the agent didn't charge me any commission on showing the place to my buyers. She's sold me about $500K over about 18 months.
Sounds like a great deal! That's fantastic. Do you start to advertise before you get into a contract on such a deal? Also, how do you find interested parties? Lastly, why would someone agree to buy from you knowing that you got it for less? Wouldn't they think that they are getting the shaft here?
Nice deal Cash. I guess you can help me and some others here out. How many deals do you do a year like this one?
Looks like it was a great thing for you to stay in their good graces. Well done with your nice deal.
Sorry, I've been away for a week of skiing, no access to a computer unless I visited an "internet cafe" and paid for it.
Now to your questions:
Do you start to advertise before you get into a contract on such a deal?
No, I usually wait until I've got a firm closing date, or until it's ready to show, if it needs any fix-up, clean-up etc.
Also, how do you find interested parties?
I run an ad in the local paper the says; "XX neighborhood, X bedrooms, X baths, owner will finance with $2500 down payment". I usually get LOTS of calls
Lastly, why would someone agree to buy from you knowing that you got it for less?
Not to be too flip about it but, the buyer wants the house, and the down payment and monthly note are in his range.
How many deals do you do a year like this one?
All that I can find, I've done as many as four, and I've gone as long as 18 months between deals.
This post has been removed.
Yes I paid cash.
I'm not sure if it could've been done with a mortgage. That would've required two appraisals, within a month of each other, $15K apart. I figure that's not too likely.
Plus if I had financed I would've paid (in round numbers) the following fees:
On the purchase side
Extra $100 or so in legals/documents
Survey $275 (?)
Appraisal $300 (?)
Other junk fees
So on the purchase side I would've laid out about $1,000 for which I would've received nothing tangible, of value (to me).
On the selling side:
Title Policy $556, in Texas there is no proration on Title Policies. A place can be sold 20 times in one month and there is a FULL COST TITLE POLICY EACH TIME.
And I wouldn't have earned the $500 I charge for document preparation.
Again what makes my deals so appealing to the buyer is THE FINANCING, not the house, there's lots of houses, not very many "low money down" deals.
All Cash it sounds like you've got some good stuff going on. How did you get your start in real estate, if you don't mind my asking?
Thanks for all the info Cash!
Nice deal cash! Got any others you want to share with everyone here???
Free eBook from BiggerPockets!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!