Hello everyone! Just thought I would share a (long overdue) success story with all of the wonderful people on this site who have helped me along my way. In January, I put four houses under contract through my Realtor. Each one was scheduled to settle in mid-to-late February. The details are as follows:
House #1:
Seller: HUD
Purchase Price: $2,000
Value after repairs: $50,000
Repair Estimate: $10,000
House #2:
Seller: HUD
Purchase Price: $2,000
Value after repairs: $50,000
Repair Estimate: $12,000
House #3:
Seller: HUD
Purchase Price: $5,000
Value after repairs: $50,000
Repair Estimate: $6,000
House #4:
Seller: Bank
Purchase Price: $26,000
Value after repairs: $80,000
Repair Estimate: $18,000
I marketed the properties through a Sunday ad in our local paper and also using a flyer at the local investors club, advertising them for sale at $8,000, $8,000, $11,000 and $31,000, respectively. I received a fair amount of calls, particularly on House #4. Within three weeks, I had found buyers for all four, selling them for $8,000, $7,000, $11,000 and $31,000 respectively.
Actually, I didn’t do much selling. The houses sold themselves. All I did was give my buyers the addresses to the houses, and they called back if they were interested. Most of the calls were generated through my ads in the local paper, and I was able to add a number of people to my buyers list.
House #1 and House #2 were sold to cash buyers. Like many investors, my buyers for House #3 and House #4 needed help with financing, so I took them to a private lender that I knew. After signing contracts and collecting deposits from my buyers, I ushered the deals through to settlement, making sure that everyone (buyers, lender, title companies) did what they were supposed to do.
Since I try to always stay in control of my deals, I wanted to use my own title company, if possible. The buyer for House #1 used his own title company, but I knew he was good for the money. I took my buyer for House #4 to the title company preferred by my private lender, so there were no surprises there either.
For Houses #2 and #3, I wanted to try out a new title company that had been courting my business. The attorney has a lot of experience in the area and is very established. As such, I figured that he knew what other people were charging, and I took him at his word when he said that his settlement fees were reasonable.
As it turns out, although his service was above average, he was VERY expensive, a good 50% above everyone else. Ouch! Since I had chosen the title company, I felt obligated to absorb these excess costs in order to preserve my relationship with my buyers. (Apparently this worked. One of them has since bought another property from me.) In the end, I still did OK.
After paying some closing costs and the extra commission that I give to my Realtor for these low-end deals, I netted cash profits of $4,000 for House #2 and $4,000 for House #3. I also collected $5,000 cash for House #1 and a second mortgage of $5,000 at 14.9% interest for House #4. Technically, this second mortgage is due in a year.
Realistically, the buyer who owes me the second mortgage is a mortgage broker who will rehab and sell this house in a shorter time period, giving me my $5,000 profit plus a little interest.
Due to delays created by problems with the title or difficulties in scheduling the settlements with the seller, my settlements slipped into the first part of March. Even so, in the first two weeks of March, 2001, I collected cash profits of $13,000 and a short-term note for $5,000. Not bad for a few weeks’ work.
And the best part is, I didn’t do anything special. I didn’t do anything that anyone else couldn’t have done. All I did was find bargain properties using a Realtor and flip them to other investors.
Since closing my first deal in April of 2000, I’ve been able to quit my job and pursue real estate investing full-time. Altogether, I’ve wholesaled eleven properties with an average profit of $5,000, and that includes taking about two months off for the birth of our first child as well as the Thanksgiving and Christmas holidays.
March of 2001 was a record month, and two pending transactions scheduled to close in early May will break this record, netting me $25,000 in profits (one for $7,000 and one for $18,000!). These successes have me looking forward to blazing more trails of financial success.
Not to mention that I’m totally free to do what I want whenever I want. If I want a day off, I take it. If I want a vacation, I take it. My life is virtually stress-free, and I don’t have to deal with the hassles of a boss or employees. LIFE IS GOOD!
Investing in real estate is definitely my wealth-producing vehicle of choice. I enjoy the challenging, problem-solving, money-making opportunities that it presents, and I’m sure I’ll continue to pursue some aspect of it until I don’t feel like playing anymore (in other words, for a long time). I’ve been blessed with many successes in this business, and fortunately, so can you.
At this point, I’d like to issue a special thank you to Steve Cook. I had lunch with Steve in June of 1999, and at the time, I was still working a full-time job. Though the bulk of what I do now–including the four deals mentioned above–is the result of my own efforts, Steve drastically cut my learning curve as I was first getting started with his help and guidance.
Whenever I had a question, Steve took the time to answer it. I wouldn’t be as far along as I am today without his selfless assistance, and for that, I want to thank him. Steve has made a definite difference in my life. Because of him, I’m able to look forward to more $18,000 months.
In addition, he is one of the most honest, ethical, and decent human beings that I know. I’m proud and fortunate to be able to call him my friend.
Finally, thank you once again to JP, Terry, and everyone at CRE Online for all of your help. Your posts, your articles, success stories, and support have made a difference and continue to make this a great community in which to take part. Best of luck in your investing! May you all achieve success beyond your wildest imagination! You deserve it.