I just wanted to offer thanks for the information available on this website and tell you about the two real estate investments I’ve made in the last month that made me $30,000 with no money down! I found the CRE Online website about five weeks ago and read all of the How-to Articles in that afternoon.
The next morning, I got the legal classified ads out and looked at the bank foreclosure sale listings. I went to the courthouse and looked up the judgments on each of that day’s listings.
Back home, I visited our county’s property appraiser’s website and found one of the cases involved a property where the judgment was for slightly less than the assessed tax value. Since tax assessments are 30% to 40% lower than market rates in our county, I knew this one was a good prospect.
A Realtor friend gave me the MLS market comps on the property by fax that showed fair market value for a home that size, in that neighborhood was about $92,000. The home was only five years old, in a nice neighborhood, near a large lake, shopping, schools, and a golf course, and the judgment was for only $67,000.
I drove the fifteen miles to the house and spoke with a neighbor who said that the couple had divorced and declared bankruptcy, but they had defaulted on the bankruptcy and it was discharged. He also indicated there was some minor damage to the master bathroom shower, but otherwise the house was in good shape.
I called the foreclosing bank’s lawyer and offered to purchase the bank’s judgment for $60,500, which the bank accepted. The lawyer even offered the bank’s five-year old $74,000 appraisal, the survey, and the title abstract. I contacted a friend with enough cash to buy the home and make the repairs, with the agreement that we would evenly split all profits, and he gave me a cashier’s check that day.
We recorded an assignment of the judgment. No one else showed up at the foreclosure sale the next week. We bid the minimum bid of $100, paid the documentary stamps of 70 cents, and the house was ours!
The shower required a complete rebuild, and since the house was so close to perfect, I replaced the carpet and a dishwasher, repainted, and landscaped, all for about $4,500. I did the labor myself on the weekends. (Note: Replacing shower tile is not all that fun and will be hired out next time.)
We took out a classified ad and put a sign in the yard with my cell phone number and found a cash buyer at $93,000! Net result: After taxes, prorations, and closing costs, my share of the proceeds was $13,100–for no money invested and a month of weekends!
MEANWHILE, while waiting for the first house to close, I found a second house only three years old in a nearby neighborhood with similar property values. The bank in that case was not interested in selling its judgment, so I went to the sale, again with my friend’s money. The bank bid $52,740, the full amount of its judgment. I bought the house for a dollar more.
Waiting in line for the clerk to issue a Certificate of Sale, a process server who had served the complaint and had seen my house for himself offered $75,000 on the spot, which I reluctantly turned down. An hour later, the distressed previous owner of the house called and said she would do anything to keep the house.
She had $8,000 in cash, and she and her husband had good paying jobs, but her baby was born sixteen weeks premature, and they fell behind on the mortgage. The bank would not let her reinstate the mortgage, and she hoped I would be more compassionate.
After some discussions with my money partner, we offered her a six-month lease option with a sale price of $94,000 (with no financing provided by us), less the $8,000 down with credit for 50% of her $940 per month lease payments, provided she pays all rent on time.
She also had to allow an inspection, provide copies of all home documents, give us a set of keys, and fill out a credit application showing her employer, accounts, income, etc. She gratefully accepted and promptly presented a cashier’s check for $8,000 and a personal check for the first months rent.
She now has a second chance to keep her home, which seemed very important to her. We get to sell the house at full price without ever spending a dollar on repairs, and we get to feel good in the process. Will she make the rent payments on time? Who knows. But it’s her choice.
Either way, we make out quite well. The way I figure this deal, after paying taxes and insurance and applying her credits, she will pay us just over $40,000 for the equity in her own home, and she is thanking us for giving her the opportunity.
In our worst case scenario, she stops paying rent, and we evict her three weeks later, and we then fix up the house and sell it for $90,000 to $94,000, and keep her $8,000 and all the rent! That seems like a no-lose, but we’ll see.
Based on the success of these two deals, we formed a corporation and took out a line of credit to buy more houses. Now, I know not everyone has access to endless supplies of cash, but I will personally make at least $30,000 for the past five weekends of work with no money down. Not a portfolio of low-rent properties or mobile homes–hard cash–while keeping my day job.
That’s just mind-blowing to me. The most work I did was absorbing the free techniques available on this website. So thanks very much for providing this information and keep up the good work!