8k In 48 Hours
This is my 3rd deal. I found a property that was heading for auction at the court house steps in a month. The owner had moved out, and the home was empty. She had a 59k payoff, but said she needed 65k to pay some bills off. The house next door just 3 weeks prior for 85,900. So I agreed to give her 65k for the house. I told her I was going to try to sell it, and had her sign a promissory not for "the difference between the sales price and 65k". Next day put a For Sale Sign in the yard at 8am and got my 1st phone call at 11am. Had 6 people waiting to look at the house at 2pm. It was like an unscheduled Open House. Anyway, I sold the property for 73k with buyer payig all closing costs. The buyer got his mortgage company, and i got the Title Company info from them. I sent them my POA for the property and the Promissory note. We are actually closing today, and I'll have a check cut to me for the 8k difference.
Couldn't believe how quick this went. My philosophy on REI is not to ge greedy. 8k in 48 hours isn't Oprah money, but its sure is alot to us working folks.
Since first coming to this site back in June, I have made over $150,000, and had only 3 real estate transactions. Own 2 houses worth 300k and this 8k deal. Total of 150k in mortgages, leaes me 158k clear cold hard profit.
My 1st transaction is the post- "Someone please help me!", which finally ended today also. I will write about my 2nd deal, when I dont have a closing to go to, hehe.
Best advice, read and learn, then just go do it. Don't hold back... unless your in my area. <IMG SRC="images/forum/smilies/icon_smile.gif">
Tim[ Edited by bgn2fsh on Date 11/26/2003 ]
Congratulations!! THanks for the inspiration.
Great job Tim!
They next ones may not always sell that fast, but they will certainly become easier to do! And besides, it only takes a handful of those 8K deals, for you not to have to be a 'workin' man any more!
Best of Success!
BAMZ
Tim,
Could we see what the promisary note would look like, or can you point me in the direction of where I could find an example?
Scott
[addsig]
Hey Tim--Congratulations--you "done" good!!!
I'll take 8k for a few hours work any day. Thx for sharing your succsss
jean
A good motivating post for us newbies.
Don't make this harder than it has to be. A promisory note is simple as just simply saying.
I GIVER agree to pay RECIEPENT the sum of:
HOW EVER MUCH $$$
Thats basically it in a nutshell. Check in your state for the state specifics if any.
Remember, dont make this harder than it has to be.
Tim
Nicely done!!
Quote:
On 2003-11-26 11:40, bgn2fsh wrote:
This is my 3rd deal. I found a property that was heading for auction at the court house steps in a month. The owner had moved out, and the home was empty. She had a 59k payoff, but said she needed 65k to pay some bills off. The house next door just 3 weeks prior for 85,900. So I agreed to give her 65k for the house. I told her I was going to try to sell it, and had her sign a promissory not for "the difference between the sales price and 65k". Next day put a For Sale Sign in the yard at 8am and got my 1st phone call at 11am. Had 6 people waiting to look at the house at 2pm. It was like an unscheduled Open House. Anyway, I sold the property for 73k with buyer payig all closing costs. The buyer got his mortgage company, and i got the Title Company info from them. I sent them my POA for the property and the Promissory note. We are actually closing today, and I'll have a check cut to me for the 8k difference.
Couldn't believe how quick this went. My philosophy on REI is not to ge greedy. 8k in 48 hours isn't Oprah money, but its sure is alot to us working folks.
Since first coming to this site back in June, I have made over $150,000, and had only 3 real estate transactions. Own 2 houses worth 300k and this 8k deal. Total of 150k in mortgages, leaes me 158k clear cold hard profit.
My 1st transaction is the post- "Someone please help me!", which finally ended today also. I will write about my 2nd deal, when I dont have a closing to go to, hehe.
Best advice, read and learn, then just go do it. Don't hold back... unless your in my area. <IMG SRC="images/forum/smilies/icon_smile.gif">
Tim
<font size=-1>[ Edited by bgn2fsh on Date 11/26/2003 ]</font>
CONGRATULATIONS
Nice job.
I like keeping track of old posts to help track which deals work out well. It helps everyone to know what works and what doesn't especially since there are so many people here who are looking to do their first deal.
I see you made 8K on this deal and approx 24K - 44K on your first deal.
So I take it you made approx 110K on your second deal?
i made 70k on first deal, 80k on second and 8 k on 3rd
I only took one mortgage, it was for 149k on 2nd deal, no mortgage on 1st or 3rd deal
Excellent!!! Thanks for sharing.
Congratulations!!!! Very inspiring to someone who is working hard to get their first deal done.
Confused though....where does the note fit in, when it sounds like all you did was flip it? Did the bank allow you to write them a note, that you took subject to, then you paid them off once you sold?
Please explain the details of how the note and POA worked in this deal.
Thanks so much! - Dave
I didnt flip it,because I never owned it. I told the owner I would give them 65k for the home. Then had them give me the promissory note and power of attorney so I could do any real estate transaction on the property I needed to do. I sold the home, not being the owner, but lawfully because I had POA and was acting on behalf of the owenr. That said, when I sold it for 73k, I sent the title company the POA and my Power of Attorney, so at closing between the buyer and me, I could sign on the real owenrs behalf, and they coudl cut my check for the 8k difference betweeh what I told th owner I would give her and what I sold it for. It was no problem with the mortgage or title company at all, becaue I had POA to sell the house, and they really dont care about the proissory note, they jsut said they woudl cut me a check. My POA has in it that I have the right to accept all monies. So either way, they would have given me the difference betwen the 59k payoff and the 73k I sold it for, then I would have just given the owner the 6k owed her, and pocketed the rest. Oh, did I also mention I had them sign to me a gift letter. That makes it non taxable income.
bgn.....Congrats on your transaction....keep up the good work and keep us posted.
Congragulations. Your experience is really motivating. I have one question. Did you get a lawyer for this transaction. I often wonder when doing deals especially creatively does one need a real estate attorney.
To Everyone,
Happy Thanksgiving!
My wife is a paralegal, so I had her attorney review all my docs, but thats about all an attorney wais needed for for this deal.[ Edited by bgn2fsh on Date 11/27/2003 ]
Great inspiration! I have one question though.. I have read that it is not legal to act as a realtor (selling property) unless you are an agent. I know you can sell a house if it is your own.. so I see the reason for a double closing when you have a property under contract. What is the legal standpoint (if any) you had to worry about in this transaction? Is it the POA that did the trick and if so what is the technicality that I am missing here.
I would love trying your method just want to make sure I do everything by the book. <IMG SRC="images/forum/smilies/icon_wink.gif">
Ciao for now,
Veronica
Carpe Diem
PS Happy Turkey day to all of you on TCI on this day.[ Edited by vlynn007 on Date 11/27/2003 ]
I didnt have any problem or act as a realtor. I signed a purchase contract, but also informed them I was going to try to sell the property.
The power of attorney gives me the power to act in the owners name and to enter into any contract or contracts for the sale, transfer, or conveyance of the owners real property and the right to act as the owner's Attorney-In-Fact and to do whatever I shall deem proper, and to collect and/or receive any proceeds on the owners behalf, and the power to disperse or pay any creditors, lien holders, or other entity as I deem proper(like myself for the promissory note).
The power of attorney gives me the right to sell, on the owners behalf. The promissory note gives me anything above and beyond what I agreed to pay them for the property. So I didn't flip because I didn't own. And I didn't act as a realtor, because the Power of Attorney gave me the same rights as the owner to do as I deem proper, including sell.
Just think CREATIVE, but simple.[ Edited by bgn2fsh on Date 11/27/2003 ]
I see. That was a great explanation. Thanks! I will have to try this method sometime.
Congrats on these deals:
Can you talk more about the gift letter. Was that from the owner or the title co? That's a very interesting way to avoid taxes.
Very inspiring and motivating! I'm new to the RE game and ready and anxious to get my wheels in motion! This website is very educational and informative! Good luck in your future endeavors!
IRS lets an individual give 11,000 a year as a gift to anyone untaxable. So you don't even have to report it on your income taxes.
Any bank know what a gift letter is.
Just get one to have a copy of one.
bgn2fsh
You might want to talk to an attorney to make sure you are on solid ground. In California they can put you in jail for that transaction, using the Foreclosure Consultant law and also the Equity buyer law. The foreclosure consultant law in california says you can not take a power of attorney from someone in foreclosure for any purpose other than to examine records. The equity buyer law says you can not ask them to sign anything for the first five days except your basic agreement, which they can cancel within that 5 day period. Both statutes carry $10,000 penalties and jail terms. I strongly siuggest that before you do more deals like these you find out exactly what the laws are in your state - the people who enforce these laws are not particularly foregiving and dont care whether you think you did the seller a favor.
It becomes a problem some time later when the person in the deal decides that he/she didnt get a good deal and goes to the state.
All that notwithstanding, congratulations on your energetic approach, and good luck.
Great Point... Always check with your local laws, and consult your attorney.
bgn2fsh...
You said you signed a purchase agreement...so for a moment, weren't you the intended buyer of the property? I would think this document is the one that would keep you out of legal trouble - would it not? So with the purchase agreement in hand, couldn't you have just had assignment rights and worked the deal the same? Just curious.
assigning could definately be another option...