[Anonymous]

Anonymous

You would need to make some modifications to apply the approach to today:

Continually run ads for buyers who have money and want to buy with seller financing. ( build a buyers list)

Get an option on properties sellers cannot afford anymore and who will agree for someone to just give them payment relief.

Get the option for 30 days max – with the contingency that you will find a buyer within that time frame.

Show the property to the buyers you have lined up

If they have $3,000 to put down, you make $2900

You can also sell with a wrap where you make money on the down payment and money on the monthly spread.

You can also sell with a wrap and keep an option for all <or part of> the upside ( which is a good thing to do with inflation coming)
AND

You can also just rent the house because inflation is just around the corner and you hould get as many properties as you can before it hits. The prices will double quickly with inflation. ( Jack talks about the price of his rentals going up $10,000 a WEEK — and that is what he means.

Selling to a retail buyer is still possible but it will be much harder and TAKE LONGER! While you are waiting to close one retail deal, you can do 10 deals where you sell with seller financing or rent out the house.

Jackie

[John Adam]

John Adam

I’d like to see if I understand the steps Jack used in the 70’s to get options and sell them:

1. Target homes in good neighborhoods in good condition. Find sellers and give $100 option fee.
2. List property on MLS as owner/optionee, with high commission and a bonus for anyone bringing in an all cash offer.
3. Buy for 80% of retail and sell for 90%.
4. Make a little money on each deal ($1000???) and do a high volume.

Thanks.
John

[Anonymous]

Anonymous

Here’s Jack’s Real Estate Lesson for this week:

Selling Before You Buy

One of the great myths of all time is that it takes money to make money. That ignores the use of leverage, timing strategies, talent, and guts. For a long time I made money as a middleman buying from sellers and selling to buyers who made money with very little cash or debt. Here?s how I did it:

First, I?d find a house that I could buy for an all cash net price of 80% of the retail market value. I don?t want to simplify this. It took weeks of talking to homeowners in order to find a likely candidate who would agree to these terms AND to a closing date at a point in time when I could find a buyer for the house. I usually tied up the transaction with a $100 bill to bind a recordable purchase contract. Before you pooh pooh this too much, consider that most of the houses listed on the Multiple Listing Service were tied up for the listing period with no cash at all.

My next step was to find a buyer for this house. As a rule, the houses Optioned with my $100 bill either had loans on them that I could pass on title Subject To; or they were within the price ranges of low or no down payment FHA or VA loans. This way I had a pretty large universe of potential buyers out there. My ads usually read:

ABSOLUTELY NO CASH NEEDED TO BUY THIS NEAT (TIDY, CUTE, COZY) 3/1 IN A GOOD AREA IF YOU HAVE GOOD CREDIT. Call Jack at ? ?? for details.

Once I had found my buyer and obtained a loan for him. (Note, that except for when MLS Brokers who earned 3% fees brought me a qualified buyer, I did all of this myself. I rarely left these essential tasks to middlemen or bureaucrats who had less of a sense of urgency, or anticipation of the profits that I had.) Then, I?d schedule both seller and buyer into separate rooms at a title company with the same closing agent. (When it is customary to open and close escrow without the principals being present, all of this can be done in escrow with a lot less timing finesse.)

When an escrow closing took place, all of the following boiled down to a paper shuffle, but at time of closing of sale on a house that I had tied up where both Buyer and Seller were present, first the Buyer would sign all the loan documents and settlement papers. Next, the Seller would sign all the seller?s settlement papers and a deed. On the Seller?s closing statement an entry would be made that the agreed upon percentage of the selling costs would be delivered to me in return for my agreeing to rescind my purchase contract. Then with everything signed and under the control of the escrow, title agent, or attorney, the loan proceeds less my ?spread? would be delivered to the Seller. Everyone would walk away happy; having received what they bargained for.

How much money could I make doing this? Read on. To make this simple, with a $100,000 house, I expected to pay out about 10% in the form of marketing costs, a price discount to the buyer, down payment assistance where permitted, improvements to make the house more attractive, settlement costs, or any combination of these. This left me with about $10,000 profit per $100,000 of sale price. The only cash I needed was for earnest money and out of pocket expenses associated with financing and closing such as inspections, appraisals, surveys, etc. I arranged for most of these costs to be paid out at closing rather than in advance.

Before you spend too much time lamenting the fact that ?investors? can?t find loans today, or that there seasoning requirements make quick flips almost impossible, reflect on the fact that the original seller conveyed the house to the owner occupant. At no time was I on title, nor did I enter into the transaction. I made my profit by clearing my contract cloud off the title; so none of these problems applied.