Torie, thanks for sharing your experience to this point. By doing so, you will help other forum members understand the AWESOME POWER of
"Creative Real Estate Investing". I hope you are able to secure an investor and close on this deal quickly, and I look forward to celebrating in your SUCCESS!
QUOTE (tcarlson @ Nov 13 2009, 09:02 PM)
Absolutely! Wow what a week! I will outline the whole deal and explain the process that I have gone through to get to this point. I have been a REIN member for two and a half years and have two revenue townhouses bought since joining REIN.
I must first express my deep appreciation to Mr. Tony Peters who honestly has been incredible in terms of answering my questions, educating me, and giving me things to think about that I have never thought about before, in term of real estate. I know that I would not be at this point without his guidance.
On November 5th I received an email from my friend and fellow REIN member. We attended the Ron LeGrand event together and have been encouraging each other on in this venture (I obviously owe him alot in this too). I contacted the vendor who explained his situation to me. He is a business owner who had to close his business this Fall due to the downturn. He is still expected to make payments on his machinery and has not been able to do so. He is two months behind on his house payments.
He was asking $385K but would take $340K on a quick sale. He figured that the ARV was $500K to $525K, as is at $450K. I told the vendor that I was interested and would go to work to do my research and find the cash to close this deal quickly. This is about the point that I made this post and this one
http://myreinspace.com/search/rein_members_only/Canadian_Quick_Turn_Real_Estate/108-13984-70775-Need_Perspective_on_a_deal_please.html#70775. I also took a gamble and emailed Tony and Barry McGuire not expecting to get a reply.
Tony graciously connected with me and gave me his thoughts and asked me some good questions in order to get me to think a bit differently. Tony pointed out that TIME is the motivator here and so I needed to act quickly. He helped me develop a plan of attack thinking of my entry and exit strategies instead of just jumping in like I was doing.
I contacted my realtor about the deal and asked for comps and for him to pull the title. He told me he was familiar with the property. He thought that he had a buyer who would pay $425 if I spent $20K for carpet, paint, and cleaning...and they could sell their house. Hmmm I thought to myself....distracted by more money. Yet, as Tony reminded me, I don't have the time to get a mortgage in order to upgrade and hold to sell. I need cash quickly.
The title showed two liens. Tony then suggested I work backwards with the following formula. First, what is the Market Value of the property. Second, subtract $50,000 from that number in order to account for the time of year, the fact that it is an acreage, and this becomes my quick sell price. Third, figure out what realtor and closing fees would be and subtract that (~$20K). Fourth, decide how much profit I want and what would be attractive to an investor ($50K). Then go to the vendor and give him that number. I called the vendor, told him I was not intending to steal his home. I also assured him of my intentions and was open and honest about my calculations and indicated to him that the most I could pay would be $300,000. My thoughts at this point were...really...as if he is going to go for that.
He did but then in all sincerity asked if there was any way I could try for $307,000 as he had two liens against the property that would take an extra $7000 to discharge. At this point I decided that I would give him $310,000 and we would both be happy with the deal. I then set to work on the exit plan.
There are three exits that I now see. One is to find an investor or investors who can bring $310,000 to the table this week in order to close immediately. I would then list the property at the reduced price and work for a quick sale and hope to split the $40K to $50K with the investor. I called my JV connections and posted a classified here:
http://myreinspace.com/search/classified_ads/Joint_Ventures/74-14062-71218-Seeking_310K_for_all_Cash_Quick_Turn_Deal.html#71218 A second option was to assign my rights to someone interested in adding it to their portfolio or who sees the quick turn potential. I posted that here:
http://myreinspace.com/search/classified_ads/Joint_Ventures/74-14067-71225-All_you_need_is_Money_-_Ready_made_deal_with_up_to_150000_equity.html#71225 A third strategy was to call my realtor, offer him double his commission if he could sell the property this week and bring the buyer to the close.
So...now I am in the process of seeking out the quick cash to seal the deal and make this a win-win-win situation. Any ideas out there on where else I can look?
