What if I get a deal?

4 Replies

Hi BP,

After reading the ultimate beginners guide (awesome resource by the way josh and Brandon), I've moved forward with commitment and doing something. I posted on Facebook to all my friends that I was going to start a REI business (commitment) and started telling my personal network in my target market (do something) that I want to help people who think they need to get out of their house and don't want to put it on the market for whatever reason.

My goal is to help folks who have few options on their home and don't have time, energy, etc. to sell retail. Those that do have the time to sell retail I will refer to my agent. The market here is hot and people should get the most out of it they can, in my opinion (this helps me build trust and credibility).

The question I have is, what do I do if I get a deal where I can get the property at a good price (read below retail) and they need to close in less than a week? I'm not a cash buyer. I have a friend with cash but I don't want to involve friends and family in my first deals to protect this relationship?

So what world be good strategies to acquire such a deal?

Originally posted by @Tony Hernandez :

The question I have is, what do I do if I get a deal where I can get the property at a good price (read below retail) and they need to close in less than a week? I'm not a cash buyer. I have a friend with cash but I don't want to involve friends and family in my first deals to protect this relationship?

So what world be good strategies to acquire such a deal?

Do you have 25% to 40% of the purchase price in cash?  Can you finance the remainder if you have time to close a loan?

Your friend should be able to loan you money with a relatively low-risk.  You would also need to make sure the investment was relatively low risk.  Nothing would be worse than having your friend in the position of being an accidental hard money lender.

If the seller owns free and clear - very short-term seller financing could be an option to let you cash them out.

Even with these scenarios even for very motivated sellers they will be a lot better off waiting the 2 or 3 extra weeks for a lender to be able to fund the sale.  If a lender can't close in 4 weeks, look for one that can.

I think significant earnest money is likely to be nearly as strong as an "all-cash offer".  Also a willingness to close as soon as financing is lined-up could make your offer appealing.


Hi @Tony Hernandez !

@Jesse T. has some great points. Yes - if you have a significant amount of the purchase price, you've got options. Hard and private money are plentiful once you start looking. Doing a JV with someone who has the rest of the cash is an option. As so many recommend, keep studying, reading, listening, etc. It will come together! The first one is the biggest hurdle.

Jonna Weber, Real Estate Agent in ID (#SP41257)

@Jesse T. Thanks for the info. Unfortunately almost all of my cash went into my personal residence for the remodel we're doing. On top of that, we did a remodel loan so I don't think I'll have any equity there and even less cash when its all said and done. I've got some money I borrowed from my 401k that I could use but it would not be 25% to 40% of the purchase price in this area. It would be more like 15% - 19% assuming I could get the property at 70% ARV.

I'm sure my friend could roll the whole thing but that makes me nervous. My friendships are way more important to me than the learning (aka mistakes) I will have on my first deal.

@Jonna Weber A partnership with a seasoned investor might be best as I would get their experience and their money. I would just be concerned with working on my first deal with someone I don't know who has a financial interest to do what's best for themselves and I don't know enough to protect myself, basically a sitting duck. I know that sounds cynical but worse things in the world have happened.

Thanks for the advice!

Here is a "cheat sheet"

Pretty Houses, no equity -   sub2 -> rent out,  lease 2 own;   wrap -> rent out, lease 2 own  lease option -> assign

Pretty Houses, 20% equity - list with agent; sub2 and note ->rent out, lease 2 own; wrap -> rent out, lease 2 own; lease option -> assign

Pretty Houses 20% - 95% equity - list with agent; sub2 and note -> rent out, lease 2 own; wrap -> rent out, lease 2 own; lease option -> assign; lease option and sub lease-sub option, possible equity split

Pretty Houses - 100% equity - installment sale, payments to seller substantially less than market rent; Possible 2 Notes, do a partial sale at a discount of front end 60 payments on 1st note

Minor Rehabs - Joint Venture with the Seller (give note for equity, pay off note after resale), JV with Money Partner

Major Rehabs - Wholesale Contract; JV with Money Partner, Hard Money Lender, Private Lender IRA Loan, Use your IRA Loan

@Steve Vaughan may want to add to this.