No Money Down - share the profits with the seller!

Do you ever find a house the would be perfect for a rehab but the owner is unrealistic about the value of the property?  Especially true if several investors have contacted the sellers making offers of $40,000 or $50,000 and they want to hold out for $60,000.  You have analyzed the house and that it will take $20,000 to get to the market price of $100,000 and at that price it will sell very quickly.  You want to keep your crew working.

Explain to the sellers that you would be interested in purchasing their house under these conditions:

If they will donate their house to the deal, you will donate your expertise, give them not only their $60,000 asking price, but will give them 5% of the profits as a bonus. After their sale, this is what their position looks like:

Sales price                  $100,000

Sellers proceeds                                            -$60,000

Profit                                                              +   $2,000

Total to the sellers                                           $62,000     This is their price and more!!

This is what your end will look like:

Sales Price                 $100,000

Sellers proceeds         -$62,000

                                     $38,000

Cost of rehab             -$20,000

Profit                            $18,000

This may seem like a small amount to some of you, but look further, you only went at risk for $20,000 and you kept your crew busy.  You are saving the cost of hard money on at least $50,000.  You got it for nothing down.  With a full price purchase of even $50,000, you would have been at risk for $70,000 to make $30,000.

Just remember the concept.  This was shown as very lenient with the sellers.  I am sure that you can do much better. 

Also, on this type of deal, you must an attorney and a CPA.