Let me tell you about an interesting deal I just finished. A year and a half ago, I came across a motivated seller in the form of a little, old man who wanted out of his house. He didn’t want to fool with “pesky Realtors” and just wanted someone to pay cash for his home. He was going to move in with his son.
He had the house some 15 years and it looked like, well, a little, old man’s house, kind of out of style, old decorations, and it smelled like moth balls. He wanted $57,000. I did my due diligence and knew the house was worth low $70,000s.
I signed a contract with him and closed about a month later with little cash out of pocket. My broker financed the deal at $59,000. The extra $2,000 took care of most of the closing costs. The day I closed, I put an add in the newspaper something like this:
NO BANKS! Beautiful brick home on one acre in secluded part of town. 3 BR 1.5 BA. Owner financing. $73,000.
Needless to say, I took about 25 calls over the next few days. I had not had time to go fix up the place because I also work full time. I agreed to meet a single guy out there four days after I closed. My lovely wife showed him the house one afternoon, and he was ready to sign a Bond for Title. I got $5,000 down from him and financed him at $68,000 and 11.5%. The difference in interest was also going to earn me around $200 extra per month over my mortgage payment.
Here comes the bad news. He called back and said he “thought it over” and decided he did not want the house. I told him we have a binding contract that states that if there’s any goofiness on his part then he looses the down payment. We went back and forth and we eventually agreed that I would take back the house and he would get back half his down payment. I got him to sign a doc stating this. So now I have a house and $2,500 in my pocket.
Following the suggestions of the CRE Online gurus, I kept a contact list of all the calls I had received. I immediately called a single mom on my list and she agreed to meet me out there the next day. Mind you, it’s still only one week after I closed on this property. We signed a Bond for Title the next day with her putting $4,000 down and $69,000 at 11.5%, and an addendum stating she had to refinance in two years. She agreed to do all cleanup work on the house.
For the next year and a half, I never once went out to that house. I received my payment through the mail by the 15th of every month and NEVER had to go unclog the toilet or any other type of landlording. She refinanced last week, and I received a check for a little over $9,500. Never ever even touched anything in the house.