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I noticed back in September Jackie asked “What are you going to do in the next 30 days?” and only one person answered.
I missed that post originally, but I will tell you what I have done in the last 30 days and plan to do in the next 30.
I have done 3 subject-2/rent-to-own deals over the past 4 weeks. Yes, it took a lot of hard work and making a lot of offers, most of which were not accepted, but the 3 deals that were accepted…WOW!!! I used Jackie’s suggestions of using Craigslist, FSBO.com, forsalebyowner.com, etc. to find motivated sellers.
Oh. let me say this first. Before I sought out the deals that I could get sub-2, I first used online and newspaper ads to generate leads of people who were candidates for Rent-to-Own programs. I made sure I did a strong and thorough background check on these folks to make sure I have the type of folks I wanted. I have a RTO buyers list now of 8 people.
Here is one deal that I did. Owner was paying 2 mortgages…one on his own house and one on a house he had bought for his daughter who moved out and to a new city. He was desperate to get out from under the payment but wanted some “equity” from the house. He owed $145,400 on a 5-1/2% loan with PITI of $1100/month. I took over the payments and he signed the deed over to a TRUST of which I am the beneficiary. He was planning on listing it with a Realtor at $169,900 just to try get it sold “quickly”, but the true market value is closer to $179,900. His net if he got full price at the $169,900 would be approx. $157,200 after 6% agents fees and 1.5% closing costs. I gave him a note to pay him $11,800 plus 8% simple interest when the house closed with a RTO buyer in 24 months ($157,200-$145,400). I then placed a RTO buyer in the house who signed a contract to buy it in 24 months at $179,900. His payment is $1437/month. I got a 5% down payment from the RTO buyer.
So here is what this deal looks like: I have $8995 in my pocket now (5% of $179,900). I will receive a $347/month positive cash flow after paying the original loans PITI. The RTO owner gets a $150/month credit towards the purchase price for each month he pays the rent BEFORE the 1st of the month. In 24 months I get a check at closing for $167,305 ($179,900 – $8995 – $3600). I pay the owner his $13,764 which leaves $153,541. By now the original loan has amortized to $141,300 so I pocket $12,241. So in total I make $8995 + $4728 = $12,241 = $25,964.
The other 2 deals were straight subject-to take over payments…no additional cash outlay.
I have collected almost $27,000 in down-payments in 4 weeks, have an additional monthly cash flow of over $1000/month. AND I plan on doing at least another 3 of these in the next 30 days!! AND the next 30 days…
WHO says that there are no deals?
Don’t wait…now is the time to make your “fortune”!
-patrick
Patrick
CONGRATULATIONS!!!
I’m glad someone besides me is using my FSBO marketing system to do deals.
Are you having fun yet?
Jackie
Patrick,
The only thing I think you should do differently is get an option for a 2 years extension from the seller if necessary. Then another 2 years, etc etc
You should not get yourself boxed in to a corner with a 2 year window.
The market is too uncertain now.
What would happen to the deal if your buyer could not get financing in 2 years?
Jackie
Patrick,
This is a fun and EASY way to make money. The big benefit is that you get cash up front, cash in the middle, and cash later.
However, if you just rent the houses, you can build WEALTH too! It’s nice to have a mix of both.
Keep up the good work Patrick! Let us know about your next batch of deals!
Jackie
May I submit your post in the Success Stories contest that end December 31st?
YOu could win a ONE YEAR Membership for free!
Jackie
Jackie,
Just got in from looking at some houses and heard your VM…thank you. And thank you for your words here.
I do not have a contractual fixed time-frame with the owner…what we agreed to in the note was that I would pay him the principal of $11,800 plus 8% simple interest (this because I am sort of using his money…I could get a Private Investor to just pay this off but I have been giving PI’s 12%) WHENEVER the RTO buyer does purchase the house and that he has 24 months to do so. If the RTO buyer buys prior to the 24 months then the owner gets less interest, if it goes over 24 months, the owner gets more interest and will be paid whenever the house does close: he is OK with this…he sees it as better than a long term CD…and he just really wanted mortgage payment relief.
If the owner should want his $$ at 24 months I’ll get a PI to put up the money as a second position on the house and pay him out.
BTW, the RTO buyer’s contract states that if he does not buy the house in 24 months, the price will increase by 5% ($179,900 to $188,895). If he moves out, then repeat the process.
This is FUN, and easy. BTW, I am liking this better than wholesaling…more $$ up front, a steady cash flow and a cash out position down the road. It is IDEAL!
I just finished the manual insert for the December cruise. In it, I went in to great detail about how to implement my FSBO marketing system that Patrick used to build a new business model.
If you’re going on the cruise, my presentation will be on Friday morning before we arrive back at San Diego.
I also added TWO NEW ELEMENTS that I have not revealed to anyone yet. They really SHORT CUT the whole system to get to a YES much faster.
In January, I’ll do a special conference call to go in to detail about this exciting systems which WORKS great in every market!
Jackie
Rafael,
I advertised online in Craigslist, Backpage, the local newspapers online ads (free), a couple of local web sites for rentals, and signs around town. Craigslist and the local newspaper ads pulled the best.
My ad was something like:
“PLS Home Solutions has an ever changing list of nice homes in nice areas that are available as Rent-To-Own or Lease/Option properties. 5% down payments and great terms. Call XXX-XXXX today or go to our web site at…”
I answered all calls personally or called back immediately if they left a message on my VM or left contact info at my website.
What I have learned over the years is “Take Action”
Don’t over analyze everything…don’t look for a “magic bullet”…just do a lot of things and find what works best for you or your area.Advertise every day!!
Make offers every day!!Look at it like this…even if it takes you 30 days to get a property Subject-2 and get an RTO buyer in, but you can get 3% to 5% as a down payment on median priced properties ($170K in my area) that’s %5100 to $8500 a month income not including monthly cash flow from rents. Do this every 30 days and….
Patrick,
Good job!
When pre-qualifying your buyers, do you run their credit or just ask them some questions about their income, debt, and self-stated credit?
I continue getting some leads through one of my websites after I rented the house I had on it, but I have not qualified the new leads beyond a few questions I ask on the online form.
Thanks,
PedroExtension –
If, before Dec. 31st, 2012, the Buyer does not pay $435,000.00, then, the monthly payment from the Buyer to the Seller will increase to $2,500. each month beginning Dec. 31st, 2012 and the term of this Option to Purchase and of Buyer?s occupancy and possession will extend for one month with each $2,500. so paid.
Patrick,
I am impressed, good job. I am so glad you took action after the conference call. I am a procrastinator.
“Jackie is our inspiration” I should really focus on sale by owners like Jackie suggested. I really like sub 2 deals we don?t have to worry about getting financing. I have been making 5 offers a day REO, and short sale on MLS, 3 of my offers got accepted. My goal is to focus on sale by owners from December, I?ll keep you all posted.
Jessie
Ok Patrick,
It’s been about 30 days since your last post. What’s the update?
Jackie
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