On February 9th I received an e-mail from a motivated seller (dubbed Mr.Fitzgerald, for the sake of this story) who found me via my website. After 3 months of reading the Ron LeGrand text books and listening to the audio CD`s I had developed a healthy appetite for my first deal. Prior to this, in November, I had a good deal on contract but I made several errors with the paperwork and the sellers mortgage broker was unable to get new financing and the deal fell apart. Shortly after this I attended Barry`s Deal-Ready Document Workshop and paperwork was never an issue again.
In his initial e-mail Mr. Fitzgerald sent the mortgage information, along with the property information. I replied, "Let me ask you this, would you sell the house for what you owe on it?"
He replied, "Just please take this debt off my shoulders." Ba-boom Ba-boom Ba-boom *sound of an escalated heart rate*.
The sellers were unable to sell for several reasons; little equity, the tenants beat the crap out of the unit, and units just didn`t sell in this complex. The Fitzgerald`s owned a second property in Langdon and since their lovely tenants stopped paying rent they were floating two mortgages. Financially, they were sinking and mentally they were nearing a break down. In fact, Mr.Fitzgerald was scheduled for surgery in the next couple of weeks to remove painful gallstones. This family was mo mo mo-tivated (very motivated).
I requested a CMA from my Realtor, viewed the property with Mrs. Fitzgerald and collected the Mortgage Information Statement, then pulled the title.
The property itself was a grim scene. Red nail polish had been liberally doused on white carpet, lipstick and crayon decorated the walls, and grime thicker than tar decorated the bathtub tile. A few doors were torn off the hinges and no where to be found- which is rather puzzling.
The numbers made sense so I set an appointment with the Fitzgerald`s to sign the paperwork. My strategy was to purchase by way of Agreement For Sale with a Work For Equity/ Lease To Own exit. I met with Mrs. Fitzgerald and her husband was in the hospital- he had his surgery the day before and was in severe pain. We called him on my cell phone and I put it on speaker, I answered all of their questions and we signed the paperwork. They had no conditions. Hooray! My first deal that I will actually close.
I ordered garbage removal (they filled 17 garbage bags), professional cleaners, carpet steam cleaners, and painters. It was now clean and very presentable.
As Ron teaches I negotiated that the sellers make the next 3 mortgage payments. They objected but I used the token line "This is a deal breaker for me." Time was on my side and I started to advertise the property. It was a good thing I had 3 months because it wasn`t until 2 weeks before the closing date that I found a wonderful couple to move in. We negotiated the terms and the property is over $500 cash flow positive a month on a Work For Equity.
Up until this point everything went relatively smooth until the sellers lawyer advised that they not proceed with the deal. The sellers replied "Thanks for the advice, however, we are still closing." The lawyer then refused to represent them and fired them as clients. His advice was "Rent the place out because the market is going to skyrocket in 12 months." The Fitzgeralds said "Listen, we had tenants that destroyed our property, quit paying rent, AND it was cash flow negative each month! This is why we are selling!" In any event, the sellers found a new lawyer from their church who would represent them.
Legally, I had not taken possession of the property and my tenant buyer had already moved in, not an enviable situation. No doubt, it was my established relationship with the sellers that held this deal together. We understood each others goals and motives and worked together as a team.
Skip ahead several months and I JUST signed the closing doc`s at the multi-family boot camp in Edmonton. Ritchie Mill Law Office represented me and Barry was awesome enough to bring the closing doc`s. On Sunday he pulled me into a room and we signed off on everything. We laughed at how incredibly haphazard and unorganized the entire deal was from start to finish. By this point I had signed the original contract 7 months ago, my sellers were fired by their lawyer, and my tenant buyer had been living in the property for several months! Barry asked me if I`m working on other deals and I said "Sure, I`ve closed on several others already." We laughed again. It was a good feeling because after all of the stress, problem solving, and collaborating that went into this property it all came together. The sellers are extremely appreciative to have this debt off their shoulders and I have a cash flowing property. I`ll admit that I didn`t know what I was doing at each step but I learned and now I do know- as Ron says "You`ll get it when you implement it."
Thanks REIN, Ron, Barry, this forum, and everyone who has offered their advice to me. Creative Real Estate is absolutely, without a doubt, for sure,... awesome!
In his initial e-mail Mr. Fitzgerald sent the mortgage information, along with the property information. I replied, "Let me ask you this, would you sell the house for what you owe on it?"
He replied, "Just please take this debt off my shoulders." Ba-boom Ba-boom Ba-boom *sound of an escalated heart rate*.
The sellers were unable to sell for several reasons; little equity, the tenants beat the crap out of the unit, and units just didn`t sell in this complex. The Fitzgerald`s owned a second property in Langdon and since their lovely tenants stopped paying rent they were floating two mortgages. Financially, they were sinking and mentally they were nearing a break down. In fact, Mr.Fitzgerald was scheduled for surgery in the next couple of weeks to remove painful gallstones. This family was mo mo mo-tivated (very motivated).
I requested a CMA from my Realtor, viewed the property with Mrs. Fitzgerald and collected the Mortgage Information Statement, then pulled the title.
The property itself was a grim scene. Red nail polish had been liberally doused on white carpet, lipstick and crayon decorated the walls, and grime thicker than tar decorated the bathtub tile. A few doors were torn off the hinges and no where to be found- which is rather puzzling.
The numbers made sense so I set an appointment with the Fitzgerald`s to sign the paperwork. My strategy was to purchase by way of Agreement For Sale with a Work For Equity/ Lease To Own exit. I met with Mrs. Fitzgerald and her husband was in the hospital- he had his surgery the day before and was in severe pain. We called him on my cell phone and I put it on speaker, I answered all of their questions and we signed the paperwork. They had no conditions. Hooray! My first deal that I will actually close.
I ordered garbage removal (they filled 17 garbage bags), professional cleaners, carpet steam cleaners, and painters. It was now clean and very presentable.
As Ron teaches I negotiated that the sellers make the next 3 mortgage payments. They objected but I used the token line "This is a deal breaker for me." Time was on my side and I started to advertise the property. It was a good thing I had 3 months because it wasn`t until 2 weeks before the closing date that I found a wonderful couple to move in. We negotiated the terms and the property is over $500 cash flow positive a month on a Work For Equity.
Up until this point everything went relatively smooth until the sellers lawyer advised that they not proceed with the deal. The sellers replied "Thanks for the advice, however, we are still closing." The lawyer then refused to represent them and fired them as clients. His advice was "Rent the place out because the market is going to skyrocket in 12 months." The Fitzgeralds said "Listen, we had tenants that destroyed our property, quit paying rent, AND it was cash flow negative each month! This is why we are selling!" In any event, the sellers found a new lawyer from their church who would represent them.
Legally, I had not taken possession of the property and my tenant buyer had already moved in, not an enviable situation. No doubt, it was my established relationship with the sellers that held this deal together. We understood each others goals and motives and worked together as a team.
Skip ahead several months and I JUST signed the closing doc`s at the multi-family boot camp in Edmonton. Ritchie Mill Law Office represented me and Barry was awesome enough to bring the closing doc`s. On Sunday he pulled me into a room and we signed off on everything. We laughed at how incredibly haphazard and unorganized the entire deal was from start to finish. By this point I had signed the original contract 7 months ago, my sellers were fired by their lawyer, and my tenant buyer had been living in the property for several months! Barry asked me if I`m working on other deals and I said "Sure, I`ve closed on several others already." We laughed again. It was a good feeling because after all of the stress, problem solving, and collaborating that went into this property it all came together. The sellers are extremely appreciative to have this debt off their shoulders and I have a cash flowing property. I`ll admit that I didn`t know what I was doing at each step but I learned and now I do know- as Ron says "You`ll get it when you implement it."
Thanks REIN, Ron, Barry, this forum, and everyone who has offered their advice to me. Creative Real Estate is absolutely, without a doubt, for sure,... awesome!
