What are REAL DEALS by the MOB? Real deals are actual real estate transactions being conducted by Tracy Caywood. You can visit the posts to get updates as they progress. They won’t all have a happy ending, but you can see for the first time what REALLY happens in the business. This is real shit right here.
Date of Initial Contact by the Seller: July 6, 2013
Where This Lead Came From:
This seller came from a QUIT CLAIM DEED Postcard Mailing.
What was the Seller’s Situation:
His mother signed over a quit claim deed to him, as she was tired of being a landlord. Him and his sister (they’ve agreed to split the money) aren’t interested in keeping the house. The house is currently rented for $350 by a tenant who has been there for 3 years. The tenant pays the rent on time and keeps reasonable care of the house. THe house hasn’t been updated in quite some time, but there is nothing that needs immediate attention. The seller is a REALTOR. (Not even kidding)
The house is located in a SOMEWHAT ghetto neighborhood, but it’s not in one of those zip codes that make me cringe. The area does stink a bit since there is a Glidden paint factory nearby. Kinda smells like fart. I think the neighborhood residents are used to the smell.
Initial Offer: July 6, 2013
I didn’t visit the property in person. Instead, I looked on Google Maps to see what the house looked like. I called him on the phone and told him that I would be in the range of $6,000 – $10,000.00 to buy the house for cash. He agreed to $6,000 right away, and I sent him the contract via HelloSign.
Accepted Offer: July 9, 2013
It took him a few days, but he finally signed the contract on July 9, 2013.
Marketing the Property:
We ran into some issues right out of the gate. The seller didn’t want the tenants”bothered” by showings, which was one of the reasons he sold it for quick cash instead of listing the property on the MLS himself. So it was a bit challenging showing the house with a tenant in there and keeping the wish of the seller. We did run some ads on Craigslist and put out some bandit signs, but no bites. So Dan listed the house on eBay – on a 7 day auction. He received numerous inquiries, 1200 Page views and 120+ watchers. But in the end, not a single bid.
At this point, I’m a little surprised because this is literally a smoking hot deal. Our asking price was $9,900 for a house that was rented for $350!! How can you go wrong there? Uhh I don’t know. It’s nearing our closing date, and Dan or I just can’t let this one go. It’s just too good of a deal.
I made an offer to a MOBSTER who I knew was watching the eBay auction, and he agreed to go 50/50 on the deal with us. Our plan was to collect the rent until the house sells for $12k – $15k. (that’s what the 2/1 houses are going for in this area). We were to buy the house in a Land Trust, with each of our corps a 50% partner. Then, something came up with him, and he told me he was unable to move forward with the deal.
Renegotiations: August 14, 2013 (The Power of Leverage)
I called the seller and let him know that we weren’t going to be able to close on the house at the current terms, but that I had another offer that might work for him. I presented an owner financing deal with the following terms: $6,000 Purchase Price (same as before). I will give him $2,000 as a Down payment, and the balance to be paid over the next 18 months. My monthly payment will be $222.18 (I offered ZERO interest). I told him that we could close whenever he’s ready. The rents, of course, will cover the payment to the seller, and leave us with some positive cash flow. After 18 months, the entire rents will be positive cash flow and we’ll own the house free and clear.
The seller didn’t give me any objections. He told me to write a new contract and email it to him. He would “present it” (he’s a Realtor, remember) to his sister, and let her know what’s going on. He said that they were using the cash to pay for some pre-paid funeral expenses for the mom.
New Contract sent to seller: August 15, 2013 at 8:32 a.m.
I’m waiting on a response or a signature via HelloSign.
Response from Seller: August 15, 2013 3:23 PM EST (Via Email) He responded with:
I must decline the new offer. I appreciate your interest in the property but the new offer just doesn’t work for me.
Well, this kinda sucks. Ok so I’m now thinking I need to just let it go. I’m running out of time. My contract expires on the 20th of August, and I have no buyer. But I’m not giving up yet. I still have 5 days left. The seller sent me a text and said he was just going to list the property and see what comes up. I said NOT YET, I have until the 20th. He disputed it at first, until he got out his copy of the contract and read it. Then he agreed and said “OK , keep me posted”.
Update August 16, 2013 – So last night I got an offer on another one of my properties, and the guy was telling me that he was buying up a heap of houses. His business model was to buy them super cheap, do light rehab, and then rent them out and sell them to another investor as a cash flow. He makes $8,000 – $10,000 on each deal (that’s his goal anyway). So I told him about this deal and I sent him some pictures. I told him that we HAVE to close by Tuesday, August 20 since that’s when my contract expires. This morning he emailed me and said it’s a “go ahead” and asked me to send him the assignment of contract! I sent it to him. I’m waiting on the signed docs back now.
August 20, 2013 Today my contract expires with the seller, and the communication from the buyer isn’t that great. He just doesn’t have the same sense of urgency that I do when it comes to closing a deal. He says everything is fine…we’re closing today at 4:30 pm. Well, that’s the same time that my Yoga class starts, so I won’t be around to answer the phone if shit hits the fan. The shit USUALLY doesn’t hit the fan, but JUST IN CASE.
4:00 pm The seller called me and told me that he was on his way to closing. He told me he didn’t have any keys. I told him it’s no biggie.
6:00 p.m. No news is good news and there’s noone at the title company to confirm this deal closed. I’ll send her an email and ask her so that she can reply first thing in the morning.
August 21, 2013
Conclusion: The deal closed. It was down to the WIRE of a last minute. But we pulled it off. Here’s the HUD-1 with the assignment fee. I’ll be picking up the check this afternoon and I’ll post a copy of it.
And Finally, The Check: The amount of the check sucks, but it’s better than no check at all!