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$70,000 Net on 1st Deal--No Money Down!

by Craig Tomlin, Florida   

Just thought that I would share my success story with everybody, since previous success stories have offered me so much inspiration. I am 24 years old and have FINALLY broken into real estate investing. After several years of busting my hump, trying to sell real estate as an agent, I decided to take the long awaited leap and invest myself.

I have been visiting CRE Online many late nights, as so many have, and I have purchased other real estate books, real estate courses, etc. This invaluable financial education has been the key to my success. Not only is a $30 book or $250 home study course cheaper than a college degree, it is also much more applicable and effective!

My first deal came after reading a very good book titled, Buy it, Fix it, Sell it, PROFIT. Now, being in real estate sales, I pretty much had the gist of rehab operations (or so I thought). However I decided that everyone needs a refresher course. Besides that, I find that whenever I finish reading a good educational book, my motivation increases tenfold.

Anyway, by the time I had read five chapters, I was off and searching for my first property. I promised myself that this weekend would be the weekend I found something, or at least attempted to. On that Sunday after only ten minutes of driving locally, I found my very first deal.

The neighborhood was in pristine condition with all landscape, paint, roofs, etc. in great shape. Just as I was trying to find my way out of this neighborhood and move on to the next, there it was--a real fixer-upper.

I mean everything seemed to be wrong with the exterior. The roof shingles were peeling completely off, the garage door was severely damaged, the front windows were broken, the paint was dirty and worn, the front lamp post was busted, and the grass was very high. I loved it!

I slowed down and wondered how to approach the home owner, but before I knew it he walked out to my car and told me he was just about to place the for sale sign. Great! I thought to myself, "I'm the first to know about the deal." He asked to show me around, and after a few minutes of talking, I got him to open up.

He explained that he was being foreclosed on and recently fell into some tough times. He needed to sell ASAP! I finished the inspection, and it turned out that the interior was not in very bad shape, just general TLC and upgrades.

I asked him what he planned on asking and he said, "Well it's been appraised for $200,000 "as is." I didn't say anything. I told him that I would be back with a contract and a written offer on the house.

I came back about an hour later. While I was gone, I scrambled to get the appropriate paperwork and run comps. Turns out that the ARV (After Repair Value) was close to $240,000. I sat down with him, pointed out the defects, and told him that the most I could offer him was $130,000.

I completely expected that to be a starting point for negotiation, so I offered him a very low offer. To my complete amazement he immediately said, "Deal!" I was elated with excitement, but I kept my composure. We signed the contracts, he "quit claimed" the deed to me, and we shook hands.

To make a long story short, it needed about $18,000 in rehab, and closing costs were expensive because of hard money loans, but I was able to do this deal with no money down, and net $70,000 in the end. Not bad for my first deal.

What was more important is that this deal gave me huge confidence and allowed me to pursue this full time! I was no longer afraid of doing deals myself. I bought my next deal a month later with $80,000 equity in it and closed on a pre-construction deal that netted me $110,000 (actually $55,000 because I had a partner/ex-girlfriend in the deal). Just think, a month prior to all of this, I didn't even have a car.

I was broke wondering when things would finally go my way. After severe perseverance however, I could finally enjoy the fruits of my labor. The point of all this is that anyone can do this. It may not pan out right away, but keep at it, and your dreams can come true. If I can do this, anyone can.

The important part is ACTION. It is easy to work a deal on paper, or read about it, but you MUST go out and JUST DO IT. The rest is all down hill.

 
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