Yesterday I had mentioned a juicy deal I had lost almost two years ago.
Today I’ll continue the juicy details of that deal and show you what Andy and one other creative advised to do after.
Here’s the story:
The seller was homeless in San Diego.
Yes, you heard that right he was homeless, living in his car and various hotels. He owned a house that was passed down to him from his mother but the mother died in the house so he had superstitious fears of going in there.
Anyway, he needed the money obviously.
At first, he wanted $210k for the house (his house is probably worth $230 at the time). We came down to $180k. He said that’s his bottom number. Still, not at a number I can get a HML on to flip.
So, I offered him this instead: That I can give him $180K only with $10,000 down at the close of escrow then $1,000 a month until it’s paid off. (at the time it could rent for $1,300-$1,500)
(by the way, I had no idea what I was doing at this time)
He agreed, and even though it was a better deal for him.
So I had a contract and immediately opened escrow (conversation and contract done over the phone and email since he was in San Diego… I was up at midnight making sure the contract went through and signed).
I hadn’t seen the house yet, so I thought, it might be a good idea to see the house.
So, I knocked on the door (seller told me there are tenants), and to my surprise the tenants refused. They said they have been living here for 10 years and they have a verbal agreement with the seller to buy it from him at $200k but he hasn’t bought it because of bad credit.
I told the tenant “you do what you have to do, and I’ll do what I have to do”.
Right after, the tenant must have gotten on the phone with the seller, because the seller went MIA.
So…I solved the problem for the seller… but not the tenant.
Two Solutions:
Andy’s: I could have gone into agreement with the tenant, where he has the first right to buy it but he continues to pay me rent until he can get that loan. The terms of the agreement would be that he maintains the house and if his rent is late one day he loses that first right of refusal.
“You have a tenant that’s already paying and can’t get a loan. Makes sense to keep him there and continue you paying rent”
Stephen McKee’s solution:
Sell them the house. As soon as the confrontation happened, I could have gone into a formal agreement to sell them the house for that $200K but with $10k-$15k down and $1,300 a month. Double close in escrow, and then I have a cash flowing note with $20k of equity.
So, there you go, per the request of a reader.
The break down of a deal.
And these two creatives both spoke at the 2017 Millionaire Makers The Next Generation seminar where it’s a whole lot of creative talk on deals so that you can pull these deals out of nowhere and get your self some more deals per leads all because you know how to buy them in different ways.
You can see a clip of the seminar here: https://www.youtube.com/watch?v=xfAKwh9sHXk&t=168s