About two months ago, I was on this site re-reading many of the How-To Articles and course descriptions. My wife happened to look over my shoulder while I was on JP Vaughan’s article How to Buy Real Estate for 1/2 Price.
So, the next time she had to meet with my Realtor to sign papers on an investment property, she told the agent to find one for us to live in at about 1/2 price. Yeah, right, I thought, if there’s anything out there at 1/2 price, I’ll buy it so sell, NOT to LIVE in!
A few days later, my agent called to tell me to keep an eye on an REO she knew of. She said if it hit the market below 50k I should think about buying it to live in. She knew that for a flip or rental, I wouldn’t be too interested at that price, but it fit for my wife: Good sized home, huge lot, big pool, nice area, other houses in the area run 70k – 80k.
A couple weeks later it did hit the market, but not for 50k. It came out with a asking price of 34.5k! So, with my money tied into real estate investments in the works, I submitted a full-price offer with almost 20% down in hopes they would carry the mortgage on it. They kicked it back.
The sellers are in the “property disposal” business, not the mortgage business. With my wife’s insistence, I put in another offer for all cash. And, since the house was now on the MLS, I figured I’d better go ahead and be willing to pay their asking price.
Right after I made the offer, I met with a “hard money” lender at the property. He looked it over and agreed with me that it needed only about 4k in repairs to bring it to full market value of around 70k. When I asked him about loaning on it, he actually laughed at me and said, “This one is a no brainer; of course I’ll loan on it!”
After eight LONG days of not hearing an answer, I had decided someone must have offered more, and we wouldn’t get the deal. Then I got the call…The offer was accepted!
The kicker for me in all this is that there is a small 20 x 20 building on the back corner of the lot with a full bath. I’ll drop in a little “kitchenette” for about $500, fence it off for about $100, and have it rented for an easy $250 before my first payment is due!
Once I’m able to take the time to put a “regular” mortgage on this property and get away from the “hard money” loan, my payments will be about about $260. Subtract the rental and add their utilities, and it will only cost me about $55. What does $55 a month work to be for my cost? At 8% for 30 years it would be a loan for $7,496! Which works out to less than 11% of value.
The courses, articles, and feedback from this site have put me way beyond where I could have possibly been without them. I’ve been investing in real estate for about five years and only had seven properties. With this deal, that makes three more properties in just the three months, since I found this site!
And all three have been no money down, 2k to 4k in repairs, minimum $20,000 equity. THANKS to JP, and EVERYONE on this site.