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$27,290 on Our First Deal Wholesaling Raw Land

by Joachim (JB) Bosch   

I wanted to thank Creative Real Estate Online for being a extremely good source of information and motivation. We thoroughly enjoy reading through all the information here and learning from it. We finally made it and have our first success story to share.

About two months ago, we contacted a few owners of properties with back taxes due. We just wanted to experiment with that and see if they wanted to sell their properties. (If they don't pay their taxes for a few years, the property gets auctioned off.)

One of the property owners was a lady who had a tax delinquent property in California. (We live in another state.) She was not interested, but during the conversation, we found out that she had a second property, about 12 acres of raw land in a beautiful and scenic Northern California area. She offered to sell it for $80,000.

I tried to get ahold of some comparable properties for sale, and I figured the property being worth about $120,000, perhaps even more.

Now to make my point clear, we did not have $80,000, and at that time, we could not see an exit strategy, so we just discarded it and moved on. However, somehow I could not forget that offer.

About two weeks later I was sitting on the couch watching TV when the Ron LeGrand infomercial came on. I watched it for a while, and something touched me.

Perhaps it was the fact that the people in their majority were not sitting on beaches and were not talking about how they made $20,000, $30,000, or even $50,000 in their first deals. Instead they were talking about $3,000 in 30 days or $10,000 in 90 days. That sounded more reasonable to me.

I went ahead and ordered the material. A few days later the stuff arrived, and my wife and I started listening and got super-excited by what we were hearing. We suddenly were able to see the potential in the offer from that lady for deal for doing a quick flip and wholesaling the property to someone with cash.

And not only that, suddenly we were able to see a way for us to get out of the rat race we were in. I am an IT-consultant who has to travel throughout the United States. Even though my job pays well, there are about a million things I would like doing more than this job.

With the newly gained motivation and knowledge, we decided to finally get serious about this real estate investing business.

A few days later my wife went up to the area to look at that property and meet with the owner. I could not go because I was traveling. Once there, my wife called the property owner and convinced her to accept an option agreement on the property for 60 days at a purchase price of $80,000.

We paid $50 for the option because it was a non-binding option for the seller. If the seller would have found someone else to sell to, we would have lost the $50.

We immediately put an ad in the newspaper for $110,000. We received a good number of calls showed the property to several interested parties. Within a week we had managed to receive two written offers with one of them for $1,000 above asking price.

Originally we set the price at $110,000 because we were expecting to only realize about $100,000. But apparently it was nice enough to demand offers above asking price. (This makes me think that we actually sold the property way under value.)

After receiving the offers we immediately converted the option into a purchase agreement with the owners. We accepted the offer from our buyer for $111,000 all cash. The concurrent closing (double escrow) took place this week.

After everything was said and done, we realized a profit of $27,290. We were nervous and did about everything wrong that anyone could do wrong.

We had the wrong forms, we did not know anything about the disclosures necessary in California, and we even failed to put in a timeframe for closing in the contract with our buyer. But because all parties wanted to make this deal happen, everything worked out. We learned a ton and made a GREAT profit.

Everything included we spent about $800. If I calculate that correctly this represents a return on investment of 3400% in two months. Not bad for the very first deal and an investment in an option that cost us $50 on a property that didn't even have a house on it.

And the majority of the work was done by a lovely lady who had never dealt in any of those areas before. I am proud to call her my wife.

So now that we have proven to ourselves that this works, my wife is dedicating herself full time to investing in real estate. She is about to chase down several more deals, so that I then can finally quit my job, stop travelling like crazy, and also become a full-time real estate iInvestor with her.

Every evening we discuss the potential deals, and on the weekends (when I'm home), we go out together look at properties and make offers.

I am sooo thankful for having the best wife and business partner anyone could wish for. Being on the road so much, I would have no chance of doing this on my own. And again, thank you CRE Online for being the best real estate investing web site out there.

 
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