I read JP Vaughan’s How-To Article, How To Create Your Own Mortgage several times to really understand what she was saying.
Found a Property:
1. Checked on value of the property by comparisons of same or close to the same properties that have sold in the last six months.
2. Checked and bid out work that needed to be done; compared other properties in the area (with repairs completed) for price.
3. Checked with owner to get a feel of what the selling price would be. I knew my bottom line, what profit I wanted, and what repairs would cost.
4. Negotiated price with the owner at 47% below market value. Told the owners I would get back with them.
5. Looked for an investor who would do a short term deal with a high return on their investment (18%) for 18 months with payment of six months interest in advance. Got $60,000.
6. Found investor–a retired construction man who caught my vision. He looked at my offer and the property, and we had a hand shake deal.
Made Deal With Owner:
7. Called owner, told him I could close in one week for a $46,000 price. He agreed, a contract was sent (regular state-approved buyer’s contract).
Note and Mortgage:
8. I contacted my attorney to write the note and mortgage, which cost $90.
9. I contacted a title company to be the third party in the transaction. They did title search and prepared closing documents.
10. Title company sent documents to sellers for signatures.
11. There were two closings. The first was closing on the property with no disbursement. The second closing was with the investor who funded the deal. Both closings occurred at the title company within minutes of each other.
12. I called the people who bid the painting, repairs, and carpets to schedule the work. The work took six weeks to complete.
13. I called a real estate appraiser to do a “walk-through” with me. He gave me his “short form” appraisal. His appraisal was between $98,000 and $96,000 with the work completed.
14. I set my price for resale at $98,950. I did not list the property with a Realtor, but told a couple of Realtor friends that I would pay them a 3% commission to find me a buyer. Two weeks after the work was completed one of my Realtor friends brought me an “able and willing” buyer, and we closed in 15 days for $96,950.
15. After paying the investor, rehab cost, insurance for the 4-plex, cost of sales, etc., I netted $33,484.76. This all happened in the space of five months.