How We Made $70k on a $100k Deal That No One Would Touch

When a house is on the market for years, it isn’t necessarily a bad thing. Sometimes, it can be an amazing opportunity.

Can you buy a house that’s been on the market for two years and turn it into a successful deal?

Yes, you can. We know because we just did it.

Today, we’re going to get dive into a deal that most people wouldn’t have wanted to go near. But with the right know-how and expertise, we were able to turn this into a simple, easy, and lucrative deal that went off without a hitch.

The house that wouldn’t sell

The house we’re looking at in this deal was a mailer response. Now, when we say “mailer response” what we mean is that one of our associates had sent out a postcard to this person to see if they were interested in doing a lease purchase deal.

The postcard was sent out about eight months before the actual deal. If you’re wondering how we managed to turn this into a deal, it’s not rocket science—we kept in touch with the seller every month and eventually he turned to us because the house had been on the market with an agent for over two years!

And while wholesalers might send out tens of thousands of postcards, we send out much less. We’ve found the key is to send out targeted postcards to people who are right in your target market. In our case, we send out about 250 postcards per month. This is not even necessary for someone who’s new, as you’ll have more than enough leads with FSBO, Expireds and FRBO calling.

This house was originally listed at $139,000 and over the two years that it was on the market, it dropped to $99,000. They lowered the price by $40,000 and still couldn’t sell it! As mentioned in the beginning, this sounds like a deal that most people wouldn’t want to touch with a ten-foot pole.

But let’s look at how it worked out.

We ended up buying this house for $110,000. If you’re wondering why we bought it for $11,000 more than than the asking price, there are a couple of reasons:

1. We wanted to give the seller a premium because it’s a terms deal paying down principle.

2. The higher price got his attention. Ultimately, that’s why we got the deal.

The term was 48 months, with a $400 monthly principal only payment. We turned that around and charged $850 per month in rent, creating a spread of $450.

And finally, we were able to sell the house for $139,000. Now, there is one key factor in how we got these prices...

We were dealing with a tenant buyer that was unsure about the price. Right from the beginning, she asked if there was room for negotiating the purchase price. Instead of going right to negotiating, we said, “Let’s go back and look at the house to make sure you really like it. Because the money doesn’t really matter, does it? What matters is that you get a house that you love and instead of waiting to maybe qualify with a bank someday, we can offer you terms.”

We did this because it got her emotionally vested in the house. When it came time to discuss money, she already knew she wanted the property. But we did want to make sure she was comfortable with the price, so we ended up lowering the monthly rent from our original price of $950 per month to make her feel more comfortable.

Does that difference really matter to us? No! We were totally prepared to get $850 per month, so this wasn’t a big deal for us. After all, we have $400 in monthly principal paydown on a 48-month term!

The Paydays: creating $70k out of almost nothing

So, now that we’ve covered the numbers, let’s look at the Paydays.

Payday #1 was the down payment. In this case, we got a $15,000 down payment for the house—about 10% of the total cost.e

Payday #2 was the monthly spread, which ended up being $450 per month. Over the course of 48 months, that’s $21,600. (Now do you see why we usually prefer longer terms?)

Payday #3 was the final profit on selling the house. We sold it for $139,000, which comes to a profit of $29,000. Subtract the down payment and you’re left with $14,000 in profit. Not bad, but we’ve still got the principal paydown to calculate… As mentioned above, that was $400 per month. Multiplied by 48 months, that’s a total of $19,200.

When you add everything up, you’re left with a total profit of $69,800…

And how much money did we invest in this? Well, we forgot to leave out that, because when we buy houses on owner financing, we pay the closing costs—which were $2,057, in this case.

So we paid $2,000 and got $70,000 back. Sounds like a pretty good deal, if you ask me. When we’re buying owner financing and not putting money down, we cannot expect the owners to pay to sell.

This house sat on the market for a long time because no one could finance it… And that’s the beauty of terms deals like this. We were able to get someone into this house with no financing, which ultimately made the difference in being able to sell the house in the end.

This is why we love terms deals! Are you working terms deals into your real estate business? Have you had success? Do you need guidance? I’d love to chat about it.

Can you buy a house that’s been on the market for two years and turn it into a successful deal?

Yes, you can. We know because we just did it.

Today, we’re going to get dive into a deal that most people wouldn’t have wanted to go near. But with the right know-how and expertise, we were a

ble to turn this into a simple, easy, and lucrative deal that went off without a hitch.

The house that wouldn’t sell

The house we’re looking at in this deal was a mailer response. Now, when we say “mailer response” what we mean is that one of our associates had sent out a postcard to this person to see if they were interested in doing a lease purchase deal.

The postcard was sent out about eight months before the actual deal. If you’re wondering how we managed to turn this into a deal, it’s not rocket science—we kept in touch with the seller every month and eventually he turned to us because the house had been on the market with an agent for over two years!

And while wholesalers might send out tens of thousands of postcards, we send out much less. We’ve found the key is to send out targeted postcards to people who are right in your target market. In our case, we send out about 250 postcards per month. This is not even necessary for someone who’s new, as you’ll have more than enough leads with FSBO, Expireds and FRBO calling.

This house was originally listed at $139,000 and over the two years that it was on the market, it dropped to $99,000. They lowered the price by $40,000 and still couldn’t sell it! As mentioned in the beginning, this sounds like a deal that most people wouldn’t want to touch with a ten-foot pole.

But let’s look at how it worked out.

We ended up buying this house for $110,000. If you’re wondering why we bought it for $11,000 more than than the asking price, there are a couple of reasons:

1. We wanted to give the seller a premium because it’s a terms deal paying down principle.

2. The higher price got his attention. Ultimately, that’s why we got the deal.

The term was 48 months, with a $400 monthly principal only payment. We turned that around and charged $850 per month in rent, creating a spread of $450.

And finally, we were able to sell the house for $139,000. Now, there is one key factor in how we got these prices...

We were dealing with a tenant buyer that was unsure about the price. Right from the beginning, she asked if there was room for negotiating the purchase price. Instead of going right to negotiating, we said, “Let’s go back and look at the house to make sure you really like it. Because the money doesn’t really matter, does it? What matters is that you get a house that you love and instead of waiting to maybe qualify with a bank someday, we can offer you terms.”

We did this because it got her emotionally vested in the house. When it came time to discuss money, she already knew she wanted the property. But we did want to make sure she was comfortable with the price, so we ended up lowering the monthly rent from our original price of $950 per month to make her feel more comfortable.

Does that difference really matter to us? No! We were totally prepared to get $850 per month, so this wasn’t a big deal for us. After all, we have $400 in monthly principal paydown on a 48-month term!

The Paydays: creating $70k out of almost nothing

So, now that we’ve covered the numbers, let’s look at the Paydays.

Payday #1 was the down payment. In this case, we got a $15,000 down payment for the house—about 10% of the total cost.e

Payday #2 was the monthly spread, which ended up being $450 per month. Over the course of 48 months, that’s $21,600. (Now do you see why we usually prefer longer terms?)

Payday #3 was the final profit on selling the house. We sold it for $139,000, which comes to a profit of $29,000. Subtract the down payment and you’re left with $14,000 in profit. Not bad, but we’ve still got the principal paydown to calculate… As mentioned above, that was $400 per month. Multiplied by 48 months, that’s a total of $19,200.

When you add everything up, you’re left with a total profit of $69,800…

And how much money did we invest in this? Well, we forgot to leave out that, because when we buy houses on owner financing, we pay the closing costs—which were $2,057, in this case.

So we paid $2,000 and got $70,000 back. Sounds like a pretty good deal, if you ask me. When we’re buying owner financing and not putting money down, we cannot expect the owners to pay to sell.

This house sat on the market for a long time because no one could finance it… And that’s the beauty of terms deals like this. We were able to get someone into this house with no financing, which ultimately made the difference in being able to sell the house in the end.

This is why we love terms deals! Are you working terms deals into your real estate business? Have you had success? Do you need guidance? I’d love to chat about it.