Creative Financing can be used to either buy or control property, or to enhance the profits in particular deals. In the following cases, with a few exceptions, we'll use a property valued at $100,000. as the objective of our transaction. This will be higher than market in some areas, but lower in others. The reader should adjust all prices to market value in his/her own area in order to make these case studies as applicable as possible. We have grouped various applications together in an effort to show variations of the way various techniques can be used. In addition to the above topic, we'll also look at Horse-Trading, Creative Buying and Selling, Leasing, and the Uses of “Paper” to Build Equity and Wealth. Hang on tight; it's going to be a fast ride.
In normal dealer transactions it is customary to buy a property and then to sell it. Unfortunately, these transactions can consume hundreds of thousands of dollars in inventory and costs of interest. By reversing the process, much of the expense can be eliminated.
One of Mike's “bird dogs” turns up a free and clear house owned by an estate that has a retail market value of $100,000. The heirs live far away. None of them wants to spring for the costs of probate, since it's not clear how much money would be available to repay them out of the estate, and who will get what when the smoke clears.
Mike Offers to open probate and pay for costs if he can buy the property at 80% of appraisal for all cash. That's “found money” to the heirs, so they all sign an agreement. Mike gets the Probate Judge to approve the agreement prior to his hiring a lawyer. Next, Mike advertises the property for sale for $90,000; rapidly finding a buyer at this bargain price who gets owner occupant financing.
At sale closing, Mike simultaneously receives the $90,000 and pays $80,000 into the Probate Court where it is dispersed to the heirs minus other estate expenses. Mike keeps $10,000 profit.
Learn more about Creative Financing Solutions at www.CashFlowDepot.com in the Members Training Section
