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I Bought a House for $10!

by Fran Felts   

First off I would like to start off by thanking a few people that really helped to put this deal together: Angel Gutierrez, for helping me to think outside the box, and Ed Garcia and Terry Vaughan for allowing me to attend their How to Get Lender's Fighting to Give You Money Workshop, without which I would never have met Angel.

On to the deal...

I received a call on my newspaper ad; these people were desperate to get rid of their monthly house payments. They bought a new house and were making two house payments a month. Mind you, these houses are in Northern California, so one they were paying $1,800 a month on and the other they are paying $2,500 a month. That's a lot of money going out, especially when one of those houses is vacant.

So I go over to inspect the house, 3 bedrooms, 1.5 baths, 1300 square feet. Nice neighborhood. The house comps at $230-$235K. The market has slowed here, so this house would probably sell rather quickly for $210K, but it needs some work. Carpets are stained pretty bad, needs paint, a door replace and a couple of screens. So I estimate about $5,000 to take care of all that. But I bet you are really wondering how I got the house for only $10, right?

As Angel says, back them out of the deal. This is pretty much how it went:

$210,000 - What they could list the house for
$ 12,600 - Realtor fees (if they sell the house at full price)
$ 5,000 - Repairs
$ 2,000 - Closing costs

$190,400 - What they would get
$194,000 - What they owe

$ 3,600 is what they would have to spend to sell their house. Of course, this is considering that they get a full price offer, right? What if they only get an offer for $200K? Boy that means that they will be out closer to $14K. Not to mention the house payments while they are waiting to sell on top of that.

So, I helped them see the light! We put the house into a Land Trust, assigned to me the beneficial interest and I paid them $10 for the interest in the property. They will be making the November 1st payment, since that is actually for October, and I now own a house. There was also a charge of $70 for the notary. So I actually have put out $80 and will pay another $16 to record the deed. Still for under $100 I was able to get someone to deed me their property.

I never knew it could be so easy! Now I want to do more deals like this.

What has been absolutely great about this business for me is that I have several creative ways of solving problems at my disposal. My partner, Tony, and I have a total of four houses that we are either rehabbing or selling. The first one we bought on conventional terms, through a Realtor, the second one we bought on a wrap, another one I put an option on, and this last one I just got the deed. Rehabbing is very rewarding, especially if you get a really ugly house.

But the ease of getting the deed is by far my favorite one so far. I just need to get someone in the house before December 1st!

To everyone who reads this, thank you for all of your support over the pasts several months. I am looking forward to posting more of these as they come up. To Angel, do you prefer white or red wine? To your success!

 
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