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Burned-out Cop Makes Over $10,000 on First Deal

by Jim Mitchell, North Aurora, IL   

I was a cop for almost a decade. I had become burned out, and most days dreaded going to work. I knew there had to be something else for me, but did not have a clue as to what. All I knew my whole adult life was law enforcement.

One of my nights off, I was sitting awake in front of the TV and saw the Carlton Sheets infomercial for the umpteenth time. I decided then and there, "What the heck, I have NOTHING to lose." So I ordered the course. I read and re-read the course several times, NEVER taking any action.

After a few weeks' time, I made up business cards, called ads, and even placed an ad of my own in the local paper. I also talked to a couple of local investors (not creative ones), and soon became discouraged. So I quit trying.

I originally had this idea that I could buy properties with no money and no credit and become wealthy instantly, like on TV. I had no real goals and no direction.

Many months went past, and my job was getting worse. So in May 1998, with the support of my wife, I decided to quit being a cop. I dove in head first to the "unknown." I knew from past experience that the only way I'd ever succeed at anything was by being backed into a corner.

I knew that realistically I'd not be able to do real estate investing full-time right away, so I started a Private Investigations and Legal Process Service company of my own for a steady income. Then I went about buying as many books as I could find about real estate investing. I still had no set goals or direction.

Then one night while "surfing the net," I stumbled on this website, CRE Online. That changed my whole outlook. Here was a place that was full of great people and resources. I read about flipping houses, lease options, and all the other facets of the business.

I decided a few days after coming here, to try my hand at wholesaling and, of course, finding some keepers if they produced good cash flow. I knew from my reading that real estate investing was possible with no cash and bad credit, but I also knew that it never hurts to have cash available.

My first deal was actually quite simple. I needed to reduce my own bills, and my mortgage note seemed like the place to start. I went to a relative and asked him to purchase my home and get a lower interest rate than I had. I showed him the tax advantages to owning another home, and then asked him to lease option it back to me, for the exact amount they bought it from me.

He agreed, and we went ahead with it. We pulled out $11,000 in cash and lowered the monthly payment. I used the cash to do some "credit rebuilding" per the Carlton Sheets methods and pay off some bills. (We had filed a bankruptcy about the same time I bought the Carlton Sheets course.)

We also put an addition on the house and increased its value. And, of course, this was a deal with NO cash from me. With our new attitudes in tow, we set out to learn more and find some deals.

I purchased Ron LeGrand's book and read it in two days, then re-read it. I then gave it to my wife, and man did it inspire her. She lost her skeptical attitude and started helping me to look for deals. We ran an ad in the paper that said:

Do you buy homes for cash?
If so call xxx-xxxx
Investors and Wholesalers welcome!

We now have a list of seven qualified cash buyers and their criteria for buying. All we had to do was find a few homes to "flip" to them. Sounded easier than it really was, but it is in the works.

While reading the paper one night, my wife came to me and said "Jim, here is a townhouse that has been in here for a while, but something is funny." We looked up the previous ads for it, and something was funny. The price had dropped DRASTICALLY. We called the agent, and sure enough, it was a bank REO.

We found out that it had been sold, but the deal fell through when financing could not be obtained. The bank wanted this off the books yesterday. I wrote up an offer and presented it for even less than the new low price.

The bank played around for a week and then answered me with a counter offer stating that they had three offers total on this townhouse. They said that if I could "prove the funding" then I'd get it because I was first.

I told them that I was an investor and that the final details of funding were not set, as we used many different methods to fund deals, and if the offer and earnest money were not enough, so be it. On to the next deal. They took my bluff and signed my offer.

Now I was panicked! I had to find a buyer for my deal. I did not have the funds, and knew I could not get them. I made some tentative calls to my list of cash buyers and many sounded very interested. I knew that I'd pull this one off.

Over dinner one night with my parents, I shared my good news with them. My father said, "Son, I'm retiring soon, and would like to buy a rental property for tax reasons, can you find me a deal like this one? Maybe we could share one." Here is how the deal went down.

I did a simultaneous close to my parents on this townhouse. I paid $43,000 for it, and they paid $58,000 for it. It is worth almost $70,000 after clean up and minimal rehab. I agreed to "give" them the cash for rehab, after close (approximately $4,000). I walked from closing with $10,800 after paying them for the rehab.

And, because I did this deal with my parents, they want to put the townhouse in a Land Trust, with me as the co-beneficiary. Then we are going to lease option it and split the profit when that closes. So, again, I got a property with no money down, no credit, cash back at close, and profit at the end, plus a monthly cash flow from the lease option.

I did not forget about my "cash buyers" list. I am looking at three homes this weekend that should fit the bill for them.

All my skeptical friends are calling me saying, "WOW, can you help me?" I even have an acquaintance who is divorcing and wants me to "take over" his home, so he and his wife can move on. He wants nothing but to be out of the home. This one will not be a huge profit for me, but I'll take a few thousand dollars for minimal effort. Plus there's the benefit of helping out a friend.

Thanks to the supportive people at CRE Online and my wife for seeing my desire and believing in it. I am on my way. See you at the Creative Real Estate Online Convention

P.S. The Realtor who was with me on this townhouse has a big mouth, and now the calls are coming in from others with properties for me to "look over." What a RUSH! Rock and Roll, baby!

 
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