My Second Real Estate Investing Deal, A True No Money Down Deal
My second deal was a sandwich lease option deal and a true nothing down, no credit needed, real estate deal. I rented the house from the seller with an option to buy, and rented the house to my buyer at a higher rent and a higher price to buy.You may remember that I did an all cash deal for my first deal. It took several months before I entered my next deal. While I did speak to several sellers and received many leads I was short on cash to do my next deal. I have been self employed most of my life and havent had good credit for quite some time. I have paid my bills on time for several years but havent done well at obtaining the types of credit that strengthen ones credit scores. I had planned on borrowing out the cash I put into my first deal but was never satisfied with what loans I could receive against it and never did put a mortgage on that property.
About three months after the first deal this second deal of mine came about as a referral from a mortgage broker who had contacted me about selling his own property. This referral was a client of his who had to move from Memphis to Minneapolis due to a job transfer. The home was beautiful and required no work. The only money I spent on the house was to have the leaves bagged as it has a half acre lot with mature trees and a beautiful pie shaped lot with 80% of the yard being fenced in the back. The home is 4 to 5 bedrooms with 3 and a half baths with a very nice open floor plan and good solid construction. The area the property is in was being over built by new builders and used homes simply are not selling. The average selling price in our county is around $175k and this home had been on the market for $225k and not selling. Without all the overbuilding in the area it might be worth $245k or more.
When the seller contacted me they let me know they owed $215k and had an $1850 payment including taxes and insurance. All they wanted was to cover the note. I had taken Wendy Pattons course on lease options and I knew that was a strategy I wanted to use. I agreed to cover the note once I had a suitable tenant/buyer and collected funds. I ran my first ads for the property in November which isnt a great rental month. At first I tried to ask for a $6k option fee and $2195 per month rent. Had it been Feb or Mar I may have gotten it. I had little inquiry about the property. I had a yard sign with flyers and pictures online and ran ads in the local paper. Typically I got a call or two a week and had someone look at the property every couple of weeks. I had someone fill out the paperwork and seemed ready to pay their money twice and they couldnt come up with the money and move in. Finally after almost 3 months I had a doctor and a nurse take the property with a $3000 non-refundable option fee and $1950 per month with a $100 credit for each month of on time rent. The agreed upon sales price was $249k which is the best part of the deal for me with a 24 month term on the lease. We did build in for the rent to go up to $2050 after 12 months. This tenant pays the rent on time almost every month and I think in the end they will likely buy the property. Most of the $3k option fee was eaten up with about $1500 in newspaper ads for the house. I make a $100 profit on the monthly rent. While I did spend about $1600 out of pocket I did get the $3000 up front. This is a very thin deal but if the current tenant doesnt exercise the option I think I will be able to go up to $260k on the next tenant and get a bit more rent and option fee.
What you can learn from this deal: 1. I agreed to pay too much rent on this property. $1850 was too much and should have been more like $1600 per month so I could have made better cash flow. I think if I had held out another month I could have gotten more up front and a little more rent. A good rent guideline is to not pay the seller more than .6 times my selling price which would have been $1500 in this case. 2. We filed a memorandum of option on the property title. This shows the world that we have an interest in the property and it cannot be sold or refinanced without our approval. 3. This sandwich lease option only works if the seller has good credit and should continue to do so. 4. This property was really too expensive for a lease option and is much better in my market on a property that would sell between $100k and $200k. 5. It is hard to find sellers who will agree to this but there are lots of them out there, you just have to keep asking sellers to agree to this kind of deal. 6. Lease options are great for selling as you get tax benefits, and multiple paydays.
How many deals like this do you need in your pipeline to close each year to be financially free if each one made you an average of $30k?
David offers a free E-course on quick start strategies at:http://www.FreeRealEstateInvestingCourses.com. Find more about David at http://www.RealEstateTeleClinic.com.Extra Kid Make Money Ways
Make Money Online Survey Taking
10 Make Money Top Ways
Free Ebook About How To Make Money
Make Money Quick Ways
Make Money Giving Away Free Stuff
Earn Money Online Work Online To Make Money At Home
Easy Fast Make Money Way
Christmas Extra Make Money
Make Money While Surfing The Internet
Building Can Downline I Make Money
Make Big Money At Home
Business Business Home Home Home Home Make Make Money Money Online Online Opportunity Opportunity
Make Money Online Today
make money online forum
Good Ways To Make Money Fast
Easy Make Big Money
How To Make Money In Coin Right Now
Use Your Home Computer And Make Money
Credit Easy Internet Make Money Ways
Ways To Make Extra Money At Home
Make Extra Money On Ebay
Computer Make Money Use
make money in stock market
Business Internet Make Marketing Money Online Small
Easy Fast Loan Make Money Ways
Make Money Completing Survey
Business From Home Make Make Money Money Online Online Onlinedealsspotter
How Kid Can Make Money
Different Internet Make Money Ways
Email Marketing Law
Affiliate Affiliate Make Make Money Money Online Online Program Program
20 Easy Make Money Online Ways
Based Business From Home Home Make Money Newsgroup
Easy Ways To Make Money For Child
Make More Money At Home
Cheap Ways To Make Money
Business From Home Make Money Opportunity
Make Free Pay Pal Money
Make Money Fast From Home
Internet Make Marketing Money Network
Ways To Make Money On The Computer
By Internet Make Market Money Online Selling Writer Writing
How To Make Money With Stock Option
All4homebusiness
Make Money Fast Computer
From Home Internet Make Money
Fast Make Money Uk
Fake Make Money
Legally Less Make Money More Pay Rich Tax
Make Money Searching Internet
Easy Fast Make Money Online
Make Fast Money Online Legally
In Make Market Money Stock
Business Home Make Money Online Success Work
Can Extra Make Money Woman
Craft To Make Money At Home
Ebay Exposed Make Money Secret
Free Make Money Quick
Can Make Money Online Really
make money paid survey
By Internet Make Money
2 Easy Make Money Runescape Ways
Best Internet Make Money Ways
Quick Scams To Make Money
Credit Easy Make Money Online Ways
Doing From Home Make Money Simple
Work From Home Canada Make Money At Home
Easy In Make Money Runescape
Book E Extra Make Money
Legit Make Money Online Ways
Make Money Teenager Ways
How To Make Money In The Stock Market Fast
Based Based Business Business From From Home Home Home Home Make Make Money Money Work Work
5 Make Money Online Today Ways
Home Job Make Money Online Opportunity Ways Work
Adsense Easy Make Money Quick
Make Easy Money Runescape
Easy Easy Kid Kid Make Make Money Money Ways Ways
Estate Make Money Profit Real Rehabbing
Ebay Make Money Secret
Make Money Online Casino
Make Money Online Simple Way
Fast Home Make Money Need
Make Money Online Trading
Home Make Money Online
Earn How To Make Fast Money
Business Home Internet Make Money Work
Based Based Business Business Home Home Make Make Money Money One One That That
From Home Make Make Money Money Online Online Onlinedealsspotter
How To Make Quick Money Fast
Business Internet Make Money Online
Fast Make Money Runescape Ways
Business From Home Internet Make Money Opportunity Work
Ways To Make Money From Home
All4homebusiness
Make Money With Internet Auction
make money in real estate
Ebay Make Money Selling Site Web
Quick Ways To Make Money Fast
posted by eduvguw @ 6:17 PM
0 comments
